Fair Credit Reporting Act

Federal act to ensure that credit bureaus are fair and accurate protecting the individual's privacy rights enacted in 1971 and revised in October 1997.

The Fair Credit Reporting Act (FCRA) is a United States federal law (codified at 15 U. S. C.  § 1681 et seq. ) that regulates the collection, dissemination, and use of consumer information, including consumer credit information. (Full Statute (PDF). ) Along with the Fair Debt Collection Practices Act (FDCPA), it forms the base of consumer credit rights in the United States. It was originally passed in 1970, and is enforced by the US Federal Trade Commission and private litigants.

Consumer reporting agencies (CRAs) are entities that collect and disseminate information about consumers to be used for credit evaluation and certain other purposes, including employment. Credit bureaus, a type of consumer reporting agency, hold a consumer's credit report in their databases. CRAs have a number of responsibilities under FCRA, including the following:The three big CRAs — Experian, TransUnion, and Equifax — do not interact with information furnishers directly as a result of consumer disputes.

They use a system called E-Oscar. In some areas of the country, however, there are other credit bureaus. For example, in Texas, if a consumer tries to dispute information with Equifax directly, they must go through CSC Credit Services which is linked to the Equifax database. In addition to the three big CRAs, the FCRA also classifies dozens of other information technology companies as "nationwide specialty consumer reporting agencies" that produce individual consumer reports used to make credit determinations.

Under Section 603(w) of the Fair Credit Reporting Act, the term “nationwide specialty consumer reporting agency” means a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis relating toBecause these nationwide specialty consumer reporting agencies sell consumer credit report files, they are required to provide annual disclosures of their report files to any consumers who request disclosure.

A partial list of companies classified as nationwide specialty consumer reporting agencies under FCRA includes: ChoicePoint, Acxiom, Integrated Screening Partners, Innovis, the Insurance Services Office (ISO), Tenant Data Services, LexisNexis, Retail Equation, Central Credit, Teletrack, the Medical Information Bureau (MIB aka, MIB Group, Inc. ), UnitedHealth Group (Ingenix Division), and Milliman.

Although the major CRAs Experian, Equifax, and TransUnion are required by law to provide a central source website for consumers to request their reports, the nationwide specialty consumer reporting agencies are not required to provide a centralized online source for disclosure. The FCRA Section 612(c) merely requires nationwide specialty consumer reporting agencies to establish a streamlined process for consumers to request consumer reports, which shall include, at a minimum, the establishment by each such agency of a toll-free telephone number for such consumer disclosure requests.

An information furnisher, as defined by the FCRA, is a company that provides information to consumer reporting agencies. Typically, these are creditors, with which a consumer has some sort of credit agreement (credit card companies, auto finance companies and mortgage banking institutions, to name a few).

However, other examples of information furnishers are collection agencies (third-party collectors), state or municipal courts reporting a judgment of some kind, past and present employers and bonders. Under the FCRA, these information furnishers may only report to a consumer's credit report under the following guidelines:Lenders have an important role to play in ensuring credit reports are accurate:(This notice doesn't have to be sent as a separate notice, but may be placed on a consumer's monthly statement.

If sent as part as the monthly statement, it needs to be conspicuous, but need not be in bold type. Required wording (developed by the US Federal Treasury Department):Notice before negative information is reported: We may report information about your account to credit bureaus. Late payments, missed payments, or other defaults on your account may be reflected in your credit report. Notice after negative information is reported: We have told a credit bureau about a late payment, missed payment or other default on your account.

This information may be reflected in your credit report. )Users of the information for credit, insurance, or employment purposes (including background checks) have the following responsibilities under the FCRA:A large portion of consumer credit reports contain errors. A study released by the U. S. Public Interest Research Group in June 2004 found that 79% of the consumer credit reports surveyed contained some kind of error or mistake. However, the General Accountability Office released a study disputing US PIRG numbers.

The Federal Reserve Board issued a similar study noting that "the proportion of individuals affected by any single type of data problem appears to be small. " () In 2007, the Consumer Data Industry Association which represents the credit bureaus testified that less than two percent of 52 million credit reports had data deleted because it was in error.

The accuracy of credit report data was also mentioned in written testimony by Allstate Insurance before the Michigan insurance department in 2002. ()By law, consumers can invoke their rights under the FCRA to review and correct their credit reports. The Fair and Accurate Credit Transactions Act ("FACTA") of 2003 has allowed easier access to consumers wishing to view their reports and dispute items.