The Fair Credit Reporting Act (FCRA) is a U.S. law that ensures the accuracy, fairness, and privacy of the information collected by credit reporting agencies, which are companies that gather and maintain information about your credit history. This law aims to protect consumers by regulating how these agencies collect, store, and share your credit information.
In simple terms, the FCRA gives you certain rights when it comes to your credit report:
- Access to your credit report: You have the right to request a free copy of your credit report from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion) once every 12 months.
- Accuracy of information: If you find any incorrect or outdated information in your credit report, you have the right to dispute it. The credit reporting agency must investigate and correct any errors within a specific time frame.
- Privacy protection: Your credit information can only be accessed by parties with a legitimate reason, such as lenders, landlords, or employers, and only with your consent in some cases, like for employment purposes.
- Notification of negative information: If a lender or creditor plans to take negative action against you, like denying your credit application, they must inform you of the reasons and provide you with the name and contact information of the credit reporting agency that supplied the information.
- Limited time for negative information: Negative information on your credit report, such as late payments or bankruptcies, can only remain on your report for a certain period, usually seven to ten years, after which it must be removed.