What Is the Fair Credit Reporting Act?

The Fair Credit Reporting Act (most often referred to as the FCRA) is a federal law designed to make sure that the information that is kept by Credit Reporting Agencies (CRA) about you is accurate and that it is only released to those who have a legitimate interest in needing this information.

Under the FCRA, a CRA such as Experian, Equifax and TransUnion must use reasonable procedures to make sure that your credit, personal, insurance and other information that they have gathered about you is accurate and relevant.  The CRA is also required to make sure that those who get this sensitive information about you have a legitimate reason to have the information.

The reason for the accuracy of this information?  The information gathered by a CRA is used on a regular basis for the purpose of determining whether a lender will give, deny, increase, decrease or cancel credit to an individual.  The information can be used to determine or increase the interest charged to an individual, and is used by employers in determining whether to employ an individual.

The FCRA requires that when the information provided by a CRA results in adverse action such as the denial of credit, that the consumer be informed of the source used in the denial of credit.  It also sets forth procedures for the individual to obtain a copy of the report and to dispute the information contained in the report.

Both the CRA and the furnisher of the information to the CRA (usually a credit card company,  mortgage company or a debt collector)  have an obligation under the law to participate in what is known as the "reinvestigation".

If you think that A CRA is reporting inaccurate credit information about you, you should contact an attorney such as those in the Credit Law Network to see what can be done to correct the situation.