FCRA or Fair Credit Reporting Act was created to regulate collection, distribution & use of any consumer’s credit information. There are some responsibilities as well as guidelines that information furnishers & consumer reporting agencies have to follow regarding collection and distribution of consumer information.

In this article we will look at the responsibilities of consumer reporting agencies and information users, as well as the guidelines to be followed by information furnishers while reporting consumer information.

Consumer reporting agencies

CRA is an entity which collects & distributes information about consumer which is used in credit evaluation & some other specific purposes.

Under FCRA, they have the responsibility to:

1. Supply consumer information about concerning him in credit reporting agency’s files & take steps for verifying information accuracy if consumer disputes any information in his credit report.

2. Not re-insert any negative information that was removed because consumer had disputed that information as wrong. CRA can re-insert the information but only after consumer is notified in writing within 5 days.

3. Not retain negative information about consumer for an excessive period of time. The details of how long negative information can stay on consumer’s credit report have been clearly specified in FCRA. Typically, negative information can stay for 7 years from the date of first delinquency. But bankruptcy & tax liens are exceptions as bankruptcy stays for 10 years while tax liens stay for 7 years from the time they are paid.

Information furnishers

First let us know who is described as information furnisher. It is a company which provides information to credit reporting agencies. Normally, they are creditors with whom a consumer has any form of credit agreement.

According to FCRA, information about consumers can only be reported as per following guidelines:

1. The information provided to credit reporting agencies should be accurate & complete.

2. Information furnisher has the duty to investigate any information that is disputed by consumer.

3. They have to inform consumers within 30 days if any negative information has been or would be placed on consumer’s credit report.

Now let us look at the responsibilities of information users when such information is to be used for insurance, credit or employment purposes:

1. Such users should notify consumer if any adverse action will be taken based on consumer’s credit report.

2. Information users have to identify company which provides them the report so that completeness & accuracy of such report can be verified or contested by consumer.

Many will ask what if FCRA is violated.

Well in such situation, a consumer has rights to seek statutory damages, plus actual damages, attorney fees & cost and punitive damages up to a maximum of $1000 for willful noncompliance of the act. To enforce the act, any consumer can file a lawsuit in any state or federal court.

FCRA along with FDCPA forms the base of credit rights of consumers in the country. So it is very important for everyone to have some basic understanding of these two acts.

In this article we have covered some of the important sections that are necessary for every consumer to be aware of. Those interested to read more about this consumer credit rights protection act can go through the details provided at FTC website:

http://www.ftc.gov/os/statutes/031224fcra.pdf

This entry was posted on Monday, September 17th, 2007 at 5:45 am and is filed under Credit, Personal Finance. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.