In 1970, the United States government enacted the Federal Credit Reporting Act or the FCRA. This law governs the collection and distribution of consumer credit information. It ensures the accuracy, fairness and privacy of private credit information that is compiled by credit reporting companies. The most recent amendment to the law was in December 2003.
Credit reports are widespread and commonly used in the United States. The original objective of a credit report was to estimate the creditworthiness of a person for obtaining credit but at the moment credit reports are also used for such things as insurance underwriting and employment applications. As of this time, it is completely lawful for an individual to be turned down for insurance or denied or terminated employment based on what is contained in a credit report.
Credit reporting agencies accumulate, compile and vend credit information on consumers. There are three major credit-reporting agencies in the United States. They are Experian, Equifax and TransUnion.
The FCRA protects consumers from undue, incomplete and erroneous reporting on a credit report. Under this law a consumer has the right to dispute and contest any information on a credit report that is imprecise, incomplete or erroneous in any way. As a consumer you have the opportunity to provide a dispute to the credit bureaus. After receiving of your dispute letter they will have 30 days in which to either prove the accuracy of their reporting or to erase it from your credit report.
Under the FCRA, a consumer is also allowed to be given one free credit report from each of the credit bureaus one time per year. In order to take delivery of your credit report you just need to offer a request. If you are denied credit because of something that is listed on your credit report you as well have a right at that time to receive a credit report. The credit bureau that is reporting the negative information must offer a report to the consumer.
Frequently derogatory credit listings are deleted from credit reports after a dispute because the credit bureaus were unable to prove the truth within the time period. If information is removed the credit bureaus cannot reinstate the listing without notifying the consumer in writing.
The Federal Credit Reporting Act also governs the period of time that derogatory information can remain on a credit report. A listing cannot stay longer than 7 years following the delinquency for most things, but, a bankruptcy can remain on the report for 10 years and a tax lien for 7 years after it has been satisfied.
It is worth the time and energy it takes for a consumer to provide a dispute to the credit bureaus. It has been predicted that as many as 40% of all disputed listing are removed because the information can't be verified within the time period. Accurate and truthful information should not be disputed and should stay on the report but a consumer should try to get all incorrect information removed through the dispute process provided by the Federal Credit Reporting Act.
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