The Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) ensures that consumer reporting agencies provide accurate and comprehensive information to businesses that evaluate consumers’ creditworthiness.

The FCRA states that consumers have the right to know the contents of their credit files and can challenge the accuracy of information contained therein. The statute also limits the time derogatory information can remain in a consumer’s credit file and who can access a consumer's credit information.

The FCRA protects consumers by requiring consumer reporting agencies to follow certain procedures regarding privacy and accuracy in the dissemination of consumer credit information. Under the FCRA, consumer reporting agencies can provide reports to businesses that have a “permissible purpose” for accessing a consumer's credit information. A "permissible purpose" means that a business must demonstrate an acceptable reason for ordering a consumer report and must use the report only for that reason. In all cases, the contents of a consumers report must be kept in strict confidence. Such businesses include banks, mortgage and consumer finance companies, insurance companies, automotive, boat, and RV dealers, and equipment leasing companies. Landlords and employers who are screening potential renters or job candidates may also access consumer reports.

Consumers also have certain rights to access information about their consumer reports under the FCRA. They have the right to know who has requested their report, and they have the right to review their report if they have been denied credit. Consumers can also dispute information in their consumer report, and, if the information is found to be incorrect, it must be removed by the consumer reporting agency. The FCRA also states that derogatory information can only be reported for a limited time. In most cases, derogatory information must be removed from a consumer’s credit report after seven years (10 years in the case of most bankruptcies).

According to section 619 of the FCRA, any person who knowingly and willfully obtains information on a consumer from a consumer reporting agency under false pretenses can be fined and/or imprisoned.

View the Full Text of the FCRA