FCRA Law: How Does the Fair Credit Reporting Act Protect Consumers?

Daniel Cohen
Daniel Cohen
New York, NY, New York
Consumer Fraud / Protection
877-395-2227
About
I lead the Consumer Finance practice at our firm. Practice areas are: credit reporting errors, background check errors, deceased reporting etc.
Last updated on: December 17, 2024
Sometimes it feels like credit reports are stories that Agatha Christie or Stephen King concocted. They can be mysterious. They can haunt you. They can be omens of future calamity - especially when you’re applying for a mortgage, renting an apartment, buying a car, or interviewing for a job and discover something amiss in your credit report.
FCRA Law: How Does the Fair Credit Reporting Act Protect Consumers?

Your credit report can play a big role in the decisions others make about you. This means that the companies that prepare those reports play a big role in your life, whether you know them or not. The Fair Credit Reporting Act (FCRA) - is a powerful law that gives you rights and puts obligations on the consumer reporting agencies (CRAs) that prepare and sell the reports to ensure they handle your information responsibly. We asked an FCRA lawyer to explain how this law works for you.

Your Rights Under the FCRA

The FCRA is designed with consumers in mind, making sure you have control over your credit information. Here are the six key rights the FCRA gives you:

  1. The Right to Dispute Errors. Found a mistake? The FCRA has your back. You can file a dispute with the credit reporting agency; they must investigate. Whether it’s a mix-up on your personal details or a fraudulent account, the agency has to look into it—usually within 30 days. If they can’t verify the accuracy of the information, they must correct or remove it. 
  2. The Right to Know When Negative Information Is Used Against You. Imagine being denied a loan or a job and not knowing why. The FCRA ensures that companies must tell you if a negative item on your credit report was why they turned you down. This is called an “adverse action notice,” it allows you to check your credit report for errors and, if necessary, dispute any inaccurate information.
  3. The Right to Access Your Credit Report. Keeping tabs on your credit is key to maintaining a healthy financial life, and the FCRA makes this easier by giving you access to one free credit report each year from each of the three major CRAs - Equifax, Experian, and TransUnion. This right lets you monitor your credit.
  4. The Right to Control Who Can See Your Credit Report
  5. Your credit report isn’t something anyone can just peek at. Under the FCRA, only businesses or individuals with a legitimate reason can access your report. For example, lenders, landlords, and employers (with your permission) are allowed access, but random companies can’t just pull your credit info for no reason. 
  6. The Right to Privacy and Data Security. We live in an age of data breaches, and your credit information is sensitive. The FCRA mandates that CRAs must take steps to safeguard your data. If your personal information is compromised, you can hold the CRA accountable and even pursue compensation for damages.
  7. The Right to Seek Damages. When anyone violates the above rights, you can take legal action against them and recover actual, statutory, and punitive damages. We recommend getting a credit lawyer to help you with this. 

Obligations of Credit Reporting Agencies

While the FCRA gives you important rights, it also puts several obligations on credit reporting agencies. 

  1. Reasonable Procedures for Accuracy. CRAs must follow reasonable procedures to ensure that the information they include in your credit report is accurate. This means they can’t just collect and report data without verifying it. If a CRA knows - or should know - that the information they’re collecting is wrong, they must fix it. No shortcuts allowed!
  2. Notification of Dispute Results. When you file a dispute over inaccurate information, CRAs must investigate and notify you of the results within 30 days. If your dispute results in a change, they must provide you with an updated credit report at no cost. This ensures transparency and allows you to review any updates they’ve made.
  3. Limiting Information Sharing. CRAs can’t just sell your report to anyone. The FCRA restricts access to your credit report to those with a legitimate need. For instance, potential employers must get your permission before reviewing your credit report. This ensures that your sensitive information isn’t being passed around carelessly.
  4. Retention Limits on Negative Information. The FCRA limits how long negative information can remain on your credit report. The maximum is seven years for most negative items, such as late payments. 
  5. Assisting Identity Theft Victims. If you’ve been a victim of identity theft, CRAs are required to help you by placing fraud alerts on your credit report and blocking fraudulent information. This is crucial in helping you recover and ensuring fraudulent accounts don’t drag down your credit score.
  6. Data Security Requirements. CRAs must have adequate measures to protect your personal information from breaches or unauthorized access. If they fail to do so and your data is compromised, they can be held accountable under the FCRA.

Call the Detectives

The FCRA is a powerful tool for protecting your credit information and ensuring that credit reporting agencies play fair. If you ever deal with inaccuracies on your credit report or feel your rights under the FCRA have been violated, contact an FCRA attorney. 

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