The Pocket Guide to Your Credit Rights

Everything you need to know about your credit rights pretty much begins and ends with the Fair Credit Reporting Act (FCRA). The law was first enacted in 1970 and has been amended more than a dozen times over the years. The FCRA is 84 pages long and outlines the rules and regulations for the credit reporting industry, as well as consumer protections to promote accurate credit reporting practices and insure that your sensitive credit report information is kept private and secure.

The FCRA covers a lot more than just consumer protections and is chock full of credit reporting industry regulation legalese. To save you the time and headache of reading through 84 pages of the law, we’ve created this pocket guide to give you a quick, comprehensive summary of your credit rights under the FCRA.

Free Access to Your Credit Reports

By law, you have the right to request a free copy of your credit report from each of the three major credit reporting agencies — Equifax, Experian and TransUnion, once every 12 months.

You also have the right to request a copy of your credit report at any time, and the report must contain all of the information reported in your credit report at the time of your request. However, you may have to pay for a copy of your credit report if you have already used your annual freebies.

You are also entitled to a free copy of your credit report if:

You’ve been adversely affected or “denied” credit, insurance or employment due to information contained within your credit report
You think you are (or may be) a victim of fraud or identity theft
You are unemployed and plan to search for a job within the next 60 days
You are on any type of public assistance

Your Right to Request Your Credit Score

We all have the right to request access to our credit score(s). Though, unlike the free credit report disclosure rule, you’ll have to pay to obtain a copy of your credit score(s). However, if you are applying for a mortgage loan, your mortgage lender must disclose your credit score(s) and any key factors associated with the score(s) for free.

Your Right to Dispute Inaccurate Credit Report Information

If you find any inaccurate or incomplete information within your credit report, you have the right to file a dispute to have the information corrected or removed. By law, the consumer credit reporting agencies have 30 days to complete an investigation and resolve your dispute.

Permissible Purpose Limits Who Can Access Your Credit Report

In order for anyone to obtain access to your credit report information, they must first have permissible purpose to do so. The FCRA defines permissible purpose as any one of the following instances:

In response to a court order or subpoena
In response to a consumer’s written authorization or approval
For the purpose of granting credit — in which case, if you are approved, the credit grantor may also access your credit report for periodic account review purposes
For the purpose of collecting a debt
In response to an employer or potential employer for employment screening purposes
For the purpose of underwriting insurance
For the purpose of determining a consumer’s eligibility for a license or other benefit granted by a governmental entity required by law to consider an applicant’s financial responsibility or status (for example, a builder or contractors license — not a driver’s license)
If the information will be used in connection with a valuation or assessment of the credit and repayment risks associated with an existing credit obligation for a potential investor, servicer or current insurer
If there is a legitimate business need
In response to a request from the head of a State or local child support enforcement agency for the purpose of establishing a consumer’s capacity to make child support payments

Employer Credit Checks Require Your Consent

Even though an employer or potential employer may have permissible purpose to access your credit report information, legally they can only do so if you grant them authorization.

Notification of Adverse Actions

If you are ever denied a job, credit or insurance because of the information on file in your credit report, the employer, creditor or insurance issuer must notify you and tell you so. They must also tell you which credit reporting agency provided your credit report information, and they must do so in writing. This notice is called a “notice of adverse action,” which is required for any adverse action taken by an employer, creditor or insurance company based on the information in your credit report. This includes any unfavorable changes or actions, such as an increase in charges, a reduction in coverage, a denial or even a cancellation, whether it involves the underwriting of insurance or a credit application — or employment.

Statute of Limitations On Reporting Negative Information

Negative information has a statute of limitations on how long it can be reported in your credit report. Under the FCRA, credit reporting agencies cannot report negative information after it has expired. Most negative information will remain in your credit report for seven years, however there are a few exceptions to the rule:

Chapter 7, 11, and 12 bankruptcies remain for 10 years from the date filed.
Chapter 13 bankruptcies will be reported for 7 years from the date discharged, 10 years at the most
Paid tax liens remain for 7 years from the date filed
Unpaid tax liens remain indefinitely

Your Right to Opt Out of Prescreened Offers

This may come as a surprise but credit reporting agencies make money from their data by selling your information to companies that would like to solicit your business. If you don’t want to be included in these “prescreen” lists, you have the right to remove or “opt out” of these prescreen lists. You can opt-out by visiting the federally mandated website at www.OptOutPrescreen.com, or by calling 1-888-567-8688.

Image: Pittaya Sroilong, via Flickr