What is the Fair Credit Reporting Act?

The Fair Credit Reporting Act (FCRA) is a federal law that was passed in 1970 to protect the privacy of consumers and to ensure that credit reporting agencies and lenders provide accurate information to credit reporting agencies. The FCRA is a part of the Consumer Credit Protection Act, and it requires that lenders or credit agencies report only accurate, verifiable information about a person’s credit history and financial past. The Act also provides consumers with a way to dispute inaccurate information and prevents lenders and credit agencies from reporting outdated or incomplete information. Under the Act, consumers have the right to request a free copy of their credit report from each of the major credit reporting agencies every 12 months. The credit report will provide information about a consumer’s creditworthiness, such as whether they have made late payments, and it can also contain information about their repayment history. Consumers also have the right to dispute inaccurate information in their report, and credit reporting agencies must investigate any disputed information. In addition, the FCRA establishes rules for the use of credit information in determining loan eligibility and other credit-related decisions. The Act requires that lenders provide consumers with written notice of their credit score and offer an explanation of how the score was determined. It also limits the amount of time that current credit information can be kept on a consumer’s credit report and requires lenders to establish procedures for correcting incorrect credit information. The Act also prohibits lenders from using certain factors, such as race, gender, national origin, religion, age, and marital status, in determining creditworthiness. By requiring lenders to strictly adhere to these rules, the FCRA helps protect consumers against potential discriminatory practices.

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What is the Fair Credit Reporting Act?

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