Introduction
Your credit report plays a significant role in your financial life, influencing everything from loan approvals and interest rates to employment opportunities and insurance premiums. Given its impact, it is essential to understand your rights concerning your credit report and how to protect yourself against inaccuracies, unfair practices, and identity theft.
The Fair Credit Reporting Act (FCRA) and the Fair and Accurate Credit Transactions Act of 2003 (FACTA) establish consumer rights regarding credit reporting, ensuring fairness, accuracy, and privacy. These laws give you the ability to access your credit information, dispute errors, and take action against entities that violate your rights. Whether you are reviewing your credit report for accuracy, seeking to correct misinformation, or taking steps to safeguard yourself against identity theft, knowing your legal protections can empower you to maintain financial stability and security.
This guide outlines your rights under FCRA and FACTA, providing you with the knowledge you need to manage your credit effectively and address any concerns regarding your credit report.
What are your rights under the Fair Credit Reporting Act (FCRA)?
You must be told if information in a credit file is used against you
If anyone obtains a copy of your credit report and uses it to deny you credit or other benefits, they must notify you. This rule applies to anyone, including a lender that denies you credit, an employer that denies you a job, or an insurance company that denies you a policy. You must be notified and given the name, address, and phone number of the credit-reporting agency that provided the report.
You have a right to know what is in your credit file
If you make a proper request, the credit-reporting agency must give you the information in your file. Requests may be made by mail, the Internet, or by telephone. You can obtain a copy of your credit report anytime you like. Unless you are entitled to a free report, you may have to pay up to $9.50 for each copy.
You have a right to know who has seen your report
Your credit report must include a list of anyone who has requested a copy of your credit report in the last year (two years in the case of employment-related requests). If information in your report is subsequently removed, or if you file a consumer statement regarding a disputed item, you may ask that anyone who has received your report be notified of the change.
You have the right to dispute inaccurate information in a credit file
If you notify a credit bureau that you dispute information in your credit report, the credit bureau generally must investigate the disputed information within 30 days of the date that it receives the notice from you. If you send additional information within the 30-day period, the credit bureau may have an additional 15 days to complete its investigation.
Inaccurate or unconfirmed information must be corrected or deleted
If, during its investigation, the credit bureau verifies that your credit report contains errors, the information must be removed or corrected. If the credit bureau is unable to verify whether the information is accurate, it must remove the information from your report. The credit bureau must give you a written report of its investigation. If the investigation results in any changes to your report, the credit bureau must give you a new copy within five days after completing its investigation.
You have the right to include a consumer statement in your credit file
If an investigation of disputed information does not resolve your problem, you have a right to add a 100-word consumer statement to your report. The statement should set forth your side of the story regarding the disputed information. The credit bureau must include a summary of your statement (written by them) with each copy of your credit report that is sent out in the future. If you request it in writing, a copy of the statement will be sent to everyone who made an inquiry about your credit in the last six months. There may be a fee for this service. Unfortunately, consumer statements are often ignored by creditors.
You have a right to dispute inaccurate items with the source
If you tell your bank, credit card company, or anyone else who reports to a credit bureau that you dispute a particular item on your account, then they may not report that information to the credit bureaus without including a notice of your dispute. Further, once the creditor has been notified in writing, it may no longer report that information at all, if the information is incorrect.
Outdated information must be removed from your file
You can request that outdated information be removed from your credit file. Typically, information on a credit bureau report may remain there for seven years. However, there are exceptions:
- Bankruptcies: 10 years from date of bankruptcy discharge
- Lawsuits/Judgments: 7 years or until the statute of limitations expires, whichever is longer. (A few states have longer statutes of limitations).
- Any derogatory credit: Indefinitely, if you are applying for a loan of $150,000 or more, or life insurance, or if you are applying for a job with an annual salary of $75,000 or more
Access to your file is limited
There are limitations regarding who may acquire a copy of your credit report. Generally, only people who have a legitimate business need (e.g., creditors, insurers, employers, landlords, or other businesses) may obtain a copy.
Your consent to issue a report must be obtained in certain instances
Your written consent is required before your employer or a prospective employer can obtain a copy of your report. Likewise, your written consent is required before medical information about you can be reported to creditors, insurers, or employers.
You can exclude your name from solicitor lists
Many creditors and insurers use information obtained from credit bureau files to identify targets for unsolicited offers of credit and insurance. If you get one of these offers, read it carefully. The offer must contain a toll-free number that you can call to remove your name and address from future lists. If you call the toll-free number, your name must be removed from the list for two years. If you complete a form provided by the credit bureaus, your name must be taken off the list indefinitely.
You can seek damages from violators
Under federal law, you can sue a credit bureau, a user of a credit bureau, or, in some cases, a provider of credit bureau data, if they violate the Fair Credit Reporting Act.
What are your rights under the Fair and Accurate Credit Transactions Act of 2003 (FACTA)?
You have the right to one free credit report annually
All consumers are entitled to one free credit report annually from each of the three major credit bureaus. You can make a single request for copies from all three credit bureaus by contacting a centralized source that has been established for this purpose. You are also entitled to a free credit report in special circumstances (e.g., you become a victim of fraud, or you are denied credit).
You have the right to be informed if a creditor reports negative information about you
If a creditor that routinely furnishes information to a credit-reporting agency provides that agency with negative information about its transactions with you (e.g., late payments, delinquency status, charge-off or other default), it must inform you it is doing so. This notification must be given to you prior to, at the same time as, or within no more than 30 days after submitting the information to the credit bureau. The notice must be clear and conspicuous, and may be included with any billing statement, notice of default, or other material provided to you.
You have the right to know and understand your credit score
If a credit bureau maintains or generates a credit score that it furnishes to creditors, it must provide you with that score if you request it. It must supply the current score on file, the date the score was created, the name of the person or organization creating the score model, the range of scores possible under that model, and (if appropriate) a list of up to four key factors that may have adversely affected the score. If one factor adversely affecting the score is the number of credit inquiries in your file, it must be listed. You may be charged a small fee for this service.
You have the right to place fraud alerts on your credit reports
If you think you have been or are about to become the victim of fraud (including identity theft), you can ask the credit bureaus to place an initial fraud alert on your credit reports. For at least the next 90 days after your request, any user requesting your credit report or credit score will be notified that you don’t authorize granting any new credit, extensions of existing credit, or additional (or replacement) credit cards for existing accounts unless the user identifies the person making such a request.
If you have been victimized by fraud or identity theft and you file a report with any appropriate law enforcement agency, you may then request that the credit bureaus place an extended fraud alert on your credit reports. Unless you terminate it sooner, this alert will then be sent to users of your credit report or credit score for seven years from the date of your request, and will automatically exclude your name for five years from any prescreening lists generated by the credit bureaus.
You have the right to block information that is the result of identity theft
If you have been victimized by identity theft, you can block a credit-reporting agency from including information on your credit report about transactions that were a result of that theft. To do this, you must provide the credit bureau proof of your identity and a copy of an identity theft report filed with an appropriate law enforcement agency. You must also identify the information on your credit report that you claim is the result of the identity theft.
Once the block is in effect, the credit bureau must notify the creditor submitting the information that the information has been blocked. The creditor must establish procedures to prevent resubmitting the information, and the credit bureau must take precautions to ensure that the blocked information doesn’t reappear on your credit report.
You have the right to dispute inaccuracies directly with the furnisher
You can dispute an inaccuracy on your credit report directly with the creditor who furnished the information to the credit bureaus. The creditor is obligated to investigate your dispute and notify you of its finding. If the investigation verifies that the disputed information was incorrect, the creditor must then correct the inaccuracy at the credit bureaus to which it reported the inaccurate information. The creditor must also develop procedures to prevent the incorrect information from being resubmitted to the credit bureaus.
A creditor can decide not to pursue an investigation of your dispute if it determines your dispute is frivolous. Your dispute may be deemed frivolous if it is substantially the same as a dispute you’ve recently submitted that has already been investigated. If a creditor decides not to pursue an investigation because it deems your dispute frivolous, it must notify you of that decision within five business days.
Conclusion
Your credit report is a powerful financial tool, and understanding your rights can help you maintain control over how your financial history is presented. The FCRA and FACTA provide essential protections, ensuring that you can access your credit information, dispute inaccuracies, and take proactive measures to safeguard yourself against identity theft and unfair credit reporting practices.
By regularly reviewing your credit report, knowing your rights regarding credit disputes, and staying informed about how credit information is used, you can protect your financial reputation and take action against any inaccuracies or violations. If you believe your credit reporting rights have been infringed, you have the ability to file complaints, seek corrections, and even pursue legal remedies.
Scarlet Oak Financial Services can be reached at 800.871.1219 or contact us here. Click here to sign up for our weekly newsletter with the latest economic news.
Source:
Broadridge Investor Communication Solutions, Inc. prepared this material for use by Scarlet Oak Financial Services.
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on individual circumstances. Scarlet Oak Financial Services provide these materials for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
