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Fair Credit Reporting Act

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What Is The Fair Credit Reporting Act?

The fair credit act is a law that regulates the way credit-reporting agencies collect, access, use, and share the data they collect in consumer reports. In the bid to regulate, everything that should be seen by the owner only is the same, whether or not they are present or absent.

Deeper Definition

Passed in 1970, the FCRA helps consumers understand what actions they can take regarding the information in their credit reports. Information is being gathered about consumers all the time; other organizations may collect and use your information. For example, banks and credit unions may use information from your credit history to determine your eligibility for a loan.

Your credit history affects more than just your ability to get loans or the annual percentage rate (APR) on your credit cards. For instance, prospective landlords could check your credit report to see your creditworthiness when deciding whether they can trust you to pay your rent on time. In some states, employers may check your credit report for hiring purposes. Also, depending on the state, insurance companies may check your credit to determine whether to offer you coverage.

Some things FCRA all do:

1. The FCRA helps protect you by regulating how information in your consumer report can be used and accessed.

2. The FCRA gives you the right to be told if information in your credit file is used against you to deny your application for credit, employment, or insurance.

3. The FCRA also gives you the right to request and access all the information a consumer reporting agency has about you (this is called “file disclosure”).

4. The FCRA gives you the option to opt-out of the prescreened offers of credit you receive.

5. The FCRA gives you access to your credit report but restricts others’ access.

Fair Credit Reporting Act Example

Francisca needs an apartment on Regent Street and proceeds to get a loan. The homeowner is skeptical about renting the apartment to her, and she decided to use the FCRA to stop disclosing her account and financial status to any third party. As such, the FCRA is a sort of non-disclosure agreement.

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