Acme Lending denied Han’s application for a car loan due to a low credit score. Curious about his credit history, he requested a free copy of his credit report. He noticed several inaccuracies, including accounts that didn’t belong to him and payments that were incorrectly reported.
Han disputed these errors with the consumer reporting agency. Its investigation found that Han had entries on his credit report for a person with a similar name and that a credit card he’d had in college hadn’t bothered to report several of his payments, making it look like he still owed them money.
Now, Han’s driving around in his brand-new sports coupe thanks to a law known as the Fair Credit Reporting Act, which made fixing all that for free within about a month possible. And the FCRA could do the same for you — if you know your rights.
What Is the Fair Credit Reporting Act
The Fair Credit Reporting Act protects your credit report from misuse. It applies to consumer reporting agencies — like credit bureaus, tenant or employee screening services, and medical information companies — and the businesses that report information to them.
The FCRA limits who can see your credit report and provides you the right to know when negative information played a role in an application denial. It also ensures all information provided on your credit report is private, accurate, and fair.
The FCRA went into effect in 1971 and was the first law to protect consumers from willful misconduct on their credit reports. When it went into effect, the Federal Trade Commission oversaw it, but it has since transferred to the Consumer Financial Protection Bureau.
It was one of the country’s first data privacy laws and has changed a lot over the years to protect consumers from ever-changing threats.
Credit Cardholder Rights Under the FCRA
Laws like the FCRA may seem intimidating, and it may feel overwhelming to take action if someone violates your rights. But issues with your credit report can spin out of control, affecting other facets of your life, so taking action if someone violates one of these rights is a must.
1. Right to Access Consumer Reports
The FCRA provides consumers the right to access all information any bureaus collected about them. By law, consumers have the right to one free annual credit report from each agency.
That includes the three major bureaus — Experian, TransUnion, and Equifax — and any smaller or niche bureaus, such as those that collect employment, insurance, and fraud information. You can find a list of smaller bureaus on the Consumer Financial Protection Bureau website.
Thanks to widespread fraud during the pandemic, consumers had access to free weekly reports from each credit bureau from AnnualCreditReport.com. However, for years, the major credit bureaus have given consumers access to much if not all the same information through free online accounts.
Regardless of which agency you wish to obtain your credit report from, you must provide adequate identification, including verifying your Social Security number.
2. Right to Dispute Credit Report Inaccuracies
Discovering inaccurate information on your credit report can be frustrating, but the FCRA gives you the right to dispute it.
Each credit bureau has a method you must use (usually a link on their website) to file the dispute. The agency investigates your claim unless they consider it frivolous.
If the investigation determines the information in dispute is inaccurate or the credit bureau can’t verify it, they must remove or correct it. Typically, they have 30 days to investigate, though it can take up to 45 in some circumstances. After that, it may take a few days to notify you and update the report.
To learn more, read our article about disputing errors on your credit report.
3. Right to Know When Credit Information Caused an Application Denial
If a would-be lender or creditor denies your application, it must supply you in writing with the name, address, and phone number of the credit agency used to decide and a reason for the denial so you can see the information yourself. This document is called an adverse action notice.
4. Right to Place a Security Freeze on Your Credit Reports
You have the right to place a free security freeze on your credit profile whether or not you’ve experienced fraud or theft. A freeze just means no one can access your credit report without your authorization.
If you apply for a new loan or credit card, it could delay the process because the credit bureau must first get your permission to access the file before sharing it with the creditor. But that inconvenience is a small price to pay to protect your finances.
5. Right to Place a Fraud Alert on Credit Reports
If you’re actively experiencing fraud or are afraid you might, you can place a fraud alert on the affected credit bureau files. A fraud alert is free and typically lasts one year. However, if you’re experiencing identity theft, you get a free seven-year fraud alert.
6. Right to Place an Active-Duty Alert on Credit Reports
If you’re deployed, the FCRA allows you to make note of that on your credit reports. If a creditor or lender sees that you have an active-duty alert, they can’t extend credit without verifying your identity.
But don’t worry. The government recognizes that if you’re deployed, you could be completely unreachable. So you can also assign a representative to oversee your account while you’re gone.
7. Right to Opt Out of Pre-Approved Credit Offers
Some lenders and creditors do soft credit pulls, which is a way to partially check your credit that doesn’t affect your credit score, allowing them to pre-screen you for offers. You can opt out of these offers by visiting OptOutPrescreen.com or calling 888-5-OPT-OUT (888-567-8688).
All offers you receive must include a toll-free number to call and opt out of that company’s offers.
8. Right to Require Consent Before Employers View Your Credit Report
Consumer reporting agencies may not provide information about your credit file without your consent. Therefore, you must give your current or prospective employer written permission for them to have access.
Note that if they use an employment screening service, they may receive information about your credit history in addition to prior employment, salary and education, and professional license verification.
9. Right to Have Outdated Negative Information Removed
Consumer reporting agencies must remove most negative information after seven years, whether you’ve resolved it or not. For bankruptcy, that number is 10 years.
However, note that there are things you can do to inadvertently restart the clock on collections. For example, if you newly admit you owe funds to a creditor, make a payment, or negotiate with them, they can restart the clock on your debt.
10. Right to Medical Privacy in Credit Decisions
Creditors generally may not use private medical information to form credit decisions. They may have access to the amounts you owe and the names of creditors, but they aren’t allowed access to your diagnosis or prognosis and can’t use them as part of the decision-making process.
If they somehow obtain that information — for example, they receive it unsolicited from the creditor or you orally explain it to an agent of the company — they still can’t use it to make a credit decision.
Steps to Take if a Company Violates Your Credit Cardholder Rights
If you feel a company violated your rights, you can take certain steps. Exactly what you do depends on the type and severity of the violation and whether you experienced real harm because of their actions. Your options include:
- Contact the consumer reporting agency. Start by contacting the relevant consumer reporting agencies to resolve the issue by filing a dispute so you have concrete evidence of the violator’s response. That also allows you the chance to work the issue out. But in case things don’t go your way, take notes and keep any written communications so you have as much evidence as possible.
- File a complaint with the Consumer Financial Protection Bureau. With evidence in hand, file a complaint with the CFPB. You can file the complaint even if you resolve the issue through the consumer reporting agency. But it’s best to do so only if you believe there’s likely a pattern of bad behavior (rather than a one-off error).
- Hire a consumer law attorney. If the CFPB is unable to resolve the FCRA violation to your satisfaction or if you need additional help, hire a consumer law attorney with FCRA experience. In fact, since many attorneys offer free consultations, it’s always worth talking to one early in your journey to find out if and when you should turn it over to them.
Knowing your FCRA rights is important. But you can do a lot to protect yourself before any violations occur.
Sign up for free accounts with all three major credit bureaus and download the apps. That makes it easy to freeze your credit report to keep it protected, then unfreeze it temporarily when you’re applying for credit.
To take it a step further, set aside a weekend each month to request one of the lesser-known or niche reports. That way, you can see what potential employers, insurers, or utility companies might see.