What Credit Bureaus Can and Can’t Do Under the FCRA Act?

What is the Fair Credit Reporting Act? The Fair Credit Reporting Act (FCRA) is an important consumer protection on basis of which in the United States the act governs how the credit bureaus collects, uses, divulges consumer credit information. It is vital for a consumer to have knowledge of both his rights and the limits set by the FCRA in order to provide security for the financial assets. In this article, this regulation would even be more comprehensible to the readers if we go to the details about credit bureaus’ working scope under the FCRA and see how far they are able to act.

Collection of Information:

The FCRA permits credit bureaus to gather the consumer credit information from various sources that are creditors, lenders, and public records under its provisions. However, they should establish that the data they collect is relevant, and truthful. Credit bureaus do not engage in unfair or deceptive conduct, like providing of old or incorrect information.

Accuracy and Reporting:

Likewise, the FCRA has the prescriptions of the credit bureaus, which require them to update the consumer credit reports on a regular basis and maintain the accuracy. They have to verify doubtful information and make the factual ones first hand. As credit bureau are mandated under the law to provide consumers free copies of their credit reports yearly upon request, creditors as well have the opportunity to monitor their credit reports at any point in time for accuracy.

Use of Consumer Information:

Crediting bureaus are permitted to provide the employment, credit, and insurance background reports to the lenders, and the prospective employers, etc, who have valid reasons. Although, they have to check if the recipient would utilize the consumer report information for a pre-authorized purpose as required under FCRA. In real life, a lender author will have ‘a permissible purpose’ to look at the credit report of a customer who is making an application for a loan. However, an agency that aims at marketing, without a proper authority, would violate the FCRA; both fall under the same act. Check more on  How to remove bankruptcies.

Security and Confidentiality:

Likewise, credit bureaus have to ensure that they set up strong confidentiality procedures keeping the data of consumers safe from fraudulent activities. To achieve this, they must implement procedures that prevent data breaches and guarantee the confidentiality of the data that is contained in their reports and shared by the creditors. Unauthorized access or disclosure of customer data deprives the company of an opportunity of at least complying with the FCRA regulations, with the sternest penalties for violation.

Consumer Rights:

The FCRA confers to both creditors and consumers a variety of rights for the protection of these two parties’ interests while interacting with the credit bureaus. These rights contain an opportunity to contest the erroneous data, demand a scenario inquiry, and give guarantee and a seal off on their credit report. Again, consumers have in their own hands the power to sue credit bureaus for violations of the FCRA ranging from failure to correct inaccuracies to disclosure of their credit information without their authorization.

Limitations on Reporting:

On one hand, credit bureaus score the credit history of every individual in the country with an aim of lowering credit risks. Nonetheless, they are subject to the limitations that are defined in the law. For example, they do not report outdated negative information, such as bankruptcy’s or debt’s that are older than seven years (or ten years for blog bankruptcy filings). Afghanistan has been also featured with ban of various media content. Moreover, without the consent of consumers about their medical history, reporting it is also impermissible.

Adverse Action Notices:

When unfavorable acts, like turning down the applicant for the credit or the employment, are taking place according to information obtained from the consumer credit report, then the FCRA acts as the reason that such consumers should be provided with adverse action notices. These notice allows consumers know into the the specific background of the bad credit decision and gives them a chance to review the their credit scores for any inaccuracies.

Contact Our Consumer Protection Attorney

Contact our Fair Credit Reporting Act lawyers at the Law Offices of Jibrael S. Hindi for a free consultation to protect your rights.