FCRA – Understanding Your Rights! Part 2
The Fair Credit Reporting Act (FCRA) sets rules to control the collection and release of credit history. It obliges credit bureaus to respect citizens’ privacy. This law also places many obligations on credit history suppliers. Other FCRA sections give customers the right to see their credit reports and get errors corrected.
Customer Rights to View Credit Data
The FCRA gives credit bureau customers the right to know what’s in their credit history files. If they prove file data is inaccurate or outdated, the credit bureaus must correct it. The law also restricts the right of other people to see private individuals’ credit reports. They only have the right to get information they need for loan or business risk assessment.
Most discussions of the FCRA law focus on the credit bureaus’ obligations to their customers or the customers’ rights to information. These FCRA regulations affect every citizen, so this focus is easy to understand. However, the FCRA’s role extends beyond credit bureaus and customer relations. An equally important element of the law sets out the relations between the credit bureaus and their data sources. Many people don’t know this section of the law. They are not credit data providers, so why should they be expected to know it?
Credit Sources are All Important
Credit bureaus depend on credit history data that businesses and organizations supply. Most of this information comes from banks, credit card companies, and other financial institutions. Government agencies also supply bankruptcy details and other kinds of citizen credit data.
Credit history has to be 100% accurate. For example, if a credit card company wrongly records payments as delayed it affects credit ratings. It might make it harder for the customer to get a loan. In extreme circumstances, it could lead to a job rejection.
If customers find errors on their credit reports, they usually contact the credit bureaus. The bureaus take up the matter with their credit history supplier. If the supplier tells them this data is correct, the customer’s complaint might not go further. This situation increases the importance of avoiding mistakes in original source information. Credit bureaus invariably hold their sources accountable for errors.
Credit Data Supplier Duties
The FCRA forbids financial institutions or other organizations from supplying inaccurate credit history data. It also obliges these credit data providers to correct any errors brought to their attention. Customers have the right to know if their report shows loan defaults, late payments, and other bad credit data. The law gives credit history suppliers 30 days to warn customers about a negative credit history report.
Credit history suppliers have additional obligations. For instance, the growing identity theft problem places further responsibilities on financial institutions. They must be able to quickly respond to identity theft reports. For example, they must stop sending credit information from a compromised account.
If the customer contests their credit history in writing, the information supplier must respond; in most cases, the law requires a 30-day response. If the customer contacts them in the meantime, this time limit is increased by another 15 days. In certain situations, the FCRA frees them of the duty to answer a customer. For instance, consider the case of a customer who reports an error to the credit bureau. The credit bureau asks the bank to check their data. If the bank responds to the credit bureau, they don’t have to deal directly with the customer.