5 things you need to know about the Fair Credit Reporting Act

Image source: Getty Images

Know what your rights are as a consumer.


Key points

  • Your credit report and history could play an important role in your finances.
  • The Fair Credit Reporting Act is designed to help protect consumers in several ways.
  • The FCRA gives you free access to your credit report and allows you, among other things, to dispute any errors in it.

Your credit report can be one of those things you don’t often think about. But in fact, it is quite a large collection of information.

Lenders generally rely on credit reports to determine whether they will lend money to a particular applicant and at what borrowing rate. It is therefore important to know what your credit file looks like and what your rights are to manage it.

This is where the Fair Credit Reporting Act comes in. The FCRA is designed to help protect consumers and give them proper control over their credit reports. Here are some of the protections you need to know about.

1. You have the right to check your credit report for free

As a consumer, you are generally entitled to a free credit report every 12 months from each of the three main credit bureaus –Experian, Equifax and TransUnion. You should also be aware that checking your own credit report will not affect your credit score in any way. Until the end of 2023, you can even access free weekly reports.

If you are applying for a mortgage, auto loan or credit card, the lender or credit card company in question will need to check your credit report to make sure you are a reputable borrower. But while it’s okay for these entities to check your credit report, that doesn’t mean a legacy company can pull your credit report and take a look. In fact, even if you are applying for a loan or credit card, you will always need to give the lender or company you are applying for permission to access your credit report.

Keep in mind that if your credit report is pulled for borrowing purposes, it counts as a thorough investigation. One serious request could have a modest impact on your credit score, so you don’t want too many of these requests in a short time.

3. Credit bureaus should take disputes seriously

While checking your credit report, you may find information that does not appear to be correct. It is beneficial to report any errors you encounter to the office that issued your report. And this office must investigate and respond to your dispute within a reasonable time – usually 30 days.

4. Negative information can’t stay on your credit report forever

Not everyone has a perfect credit history. But yours should only hold you so long. Under the Fair Credit Reporting Act, credit bureaus must remove negative information from your credit report after a certain amount of time (the exact amount of which depends on what is reported). A foreclosure, for example, must be removed from your credit report after seven years.

5. You have the right to freeze your credit report

Freezing your credit report could prevent a criminal from opening a new loan or credit card account in your name. If you have reason to believe that your personal information has recently been compromised, it may be beneficial to freeze your credit. This freeze won’t be permanent – you can unlock it when it comes time to apply for a loan or credit card.

Reading about the Fair Credit Reporting Act might not seem like the most fun weekend activity. But as a consumer, it’s important to know your rights, so you might want to spend at least some time learning about the credit protections you’re entitled to.

The best credit card waives interest until 2024

If you have credit card debt, transfer it to this top balance transfer card guarantees you an introductory APR of 0% for up to 21 months! Plus, you won’t pay any annual fees. These are just a few of the reasons why our experts consider this card a top choice to help you control your debt. Read our full review for free and apply in just 2 minutes.

Comments are closed.