Understanding the Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act (FCRA) credit law governs the activities of the consumer reporting agencies, also known as credit bureaus. Consumer reporting agencies assembles consumer credit information for the purpose of providing credit reports to third parties (such as credit card companies, lenders, service-providers, employers etc.).

The FCRA sets guidelines for credit bureaus that regulate:

• What information goes into your credit report
• Who can have access to your credit report
• How long your credit information can be reported
• The accuracy of your credit report information

What information cannot go onto your credit report?

Although most credit information such as credit card accounts, bank loans, collections accounts and other common credit accounts may be reported, there are many things that cannot be reported by credit reporting agencies, such as:

• Bankruptcies dated more than ten years prior to the date of the credit report
• Lawsuits and judgments dated more than seven years prior to the date of the report
• Paid tax liens that precede the report by more than seven years
• Collection accounts that are beyond seven years from the date of the report
• Any other negative information that precedes the report by more than seven years (except accounts that concern the U.S. Government).
  

Who can have access to your credit report?

Generally, credit reporting agencies are authorized to disclose your credit information to anyone who claims to have a reasonable and valid purpose. Not only are you entitled to know what’s on your credit report, but so are the following:

• Lenders
• Insurance companies
• Landlords seeking credit check for renters
• Credit card companies
• Employers (only with written consent)
• Government agencies considering your application for license or benefit
• State or local child support enforcement agencies
• Other organizations you’ve initiated

How long can your credit information be reported?

There are two statutes of limitations when it comes to credit reporting. The federal statute allows credit bureaus to report your credit information for up to seven years. The state statute, however, limits the amount of time creditors and debt-collectors can legally collect payment from you. This time varies state-to-state, but no state statute goes beyond 15 years.

This means that credit reporting agencies cannot allow information to remain on your credit report for more than 10 years (under federal statute). Collectors, on the other hand, have only until the state statute runs out to attempt to collect from you. On average, this is generally between 4 and 6 years, but some states, such as Kentucky, Ohio, and Rhode Island have statutes that give them up to 15 years to collect or sue you in court.

How can I be sure my credit report is accurate?

The FCRA entitles consumers to have their credit report information verified by the reporting agency. If you, for any reason, believe that some of the information on your report is inaccurate or incomplete, you can send a dispute letter to the reporting agency. This will require them to verify the information within a reasonable amount of time (usually about 30 days). If the information under dispute cannot be verified with supporting information, it must be corrected or removed from your report.

The Federal trade commission has detailed information about consumer reporting agencies and the rules that govern them at www.ftc.gov.

To learn more about your credit report and the agencies that generate them, contact a consumer credit repair expert at MyCreditGroup.