Summary of The Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act (FCRA) is the federal law regulating credit bureaus or credit reporting agencies (CRA's) as they are now called.   The law is rather lengthy and will not be offered here in its entirety.  If you would like to read the entire law, you can do so by visiting the Federal Trade Commission website (ftc.gov) and searching for the "fair credit reporting act", which is available for download in PDF format.  The PDF file of the FCRA is 110 pages long.

The law was passed back in the 1970s because so many consumers' credit reports were riddled with errors and mistakes it was having a very negative effect on the American economy and peoples' ability to obtain mortgages, credit, etc.  The federal government thought it was very important that consumers not be saddled with a bad credit rating their entire lives, so certain laws were enacted that limited what could remain on a consumer's credit report forever and set forth rights consumers have to get incorrect information removed from credit reports.

The FCRA has been amended many times since the 1970s, most recently, in September 2018 when provisions to beef up anti-identity theft measures and strengthen the law were added.  In 2018, consumers were given the right to freeze and unfreeze their credit reports very quickly and at no cost.  Measures to protect active military were also added, and a section requiring furnishers of information to credit reports (such as your mortgage lender, credit card company) to investigate disputed information within a reasonable period of time.

Below is a summary of the Fair Credit Reporting Act and how it is used to improve one's credit rating.  The only sections of the FCRA discussed below are those that help consumers improve their credit ratings and are relevant to the credit kit offered at this website:

1.  In general, negative information can remain on a credit report for no more than seven years, with a few exceptions.  Examples of this would be late payment notations regarding your credit cards, mortgage and auto loans, etc.   A bankruptcy or judgment  notation can remain on your credit report for 10 years and an unpaid tax lien or judgment can sometimes remain on your credit report indefinitely or until seven years after you pay it.   If you defaulted on your credit card payments six and a half years ago and there is a notation on your credit report indicating that fact, then the negative notation is about to come off of your credit report by law (which will improve your credit score when it does).  The three major credit reporting agencies are very good about deleting this type of negative information and usually delete it two months before the statute of limitations  (SOL) - 7 years - is up.

2.  You have the right to dispute information that is incorrect and the credit reporting agency has 30-45 days to reinvestigate and inform you of the results of the investigation.  It doesn't matter if they got your birthday wrong, your address wrong, or there are accounts on your credit report that aren't stated fairly and accurately, you have the right to demand that the credit reporting agency (CRA) reinvestigate whatever it is you are disputing.   The catch here is that you have to offer some sort of proof that what you are claiming is true; otherwise, the CRA has the right under the FCRA to deem your dispute "frivilous" and ignore you completely. 

Examples of  valid disputes:

(a)  A credit card account is listed on your credit report as "closed by grantor" when it was actually closed by you, the cardholder.  This is important because "closed by grantor" has a much more negative effect on one's credit score.

(b)  The amount of an account is stated incorrectly, i.e., the credit report says you owe $5,000 to XYZ Company when you actually only owe $500 OR there is an account  on your credit report that actually belongs to your father, who is also named James Brown.

(c)  A credit card account states you were 90 days late paying the account when you have always paid on time and can prove it.  This would be a very important thing to fix since a 90-day pay late notation can lower your credit score by about 100 points.

(d)  A debt collector purchased a credit card account you defaulted on 15 years ago and it appears on your credit report in violation of the 7 year FCRA statute of limitation.  Since the debt is older than 7 years, it should not appear on your credit report.  Debt collectors are notorious for doing this in violation of the FCRA and you need to keep all of your paperwork so you can prove that you defaulted on the debt more than 7 years ago, so you can get it removed from your credit report.


3.  Furnishers of information to the credit reporting agency (credit bureau) are required to do an investigation when they are notified either by the credit reporting agency or one of their customers that something being reported to the credit bureau is in dispute.  They also have 30-45 days to inform the consumer of the results of their reinvestigation and to notify the credit bureau of any corrections or updates.  Most of this process is computerized, and unless you hire an attorney who writes them a nasty letter, they will just confirm whatever the credit bureau is reporting most of the time.  It is often better to try and resolve mistakes on your credit report with the furnisher of information rather than the credit bureau.  Instead of disputing negative information with the credit bureau, contact the company reporting the negative informatin and get it resolved that way, so that it is removed from your credit report permanently.   What follows are examples of this situation:

(a)  Suppose you made two late payments to your credit card company during the COVID pandemic, but otherwise, you always paid on time.  To get the negative information off of your credit report, contact your credit card company directly and ask them to remove the negative notations since you've always been a good customer who paid on time and the COVID pandemic caused a temporary problem.  Most of the time, they will remove the negative information and you don't even have to deal with the credit bureau at all.  Don't try this if you have routinely for years made late payments -- they won't remove them if you pay late regularly.   If your tactic was just to dispute the negative notations with the credit bureau, they will kick it back to the credit card company, who will just confirm it to be true, and you've wasted your time disputing it -- better to resolve it with the credit card company in the first place.

(b)  The credit report states that you work for Acme Industries, but you stopped working for them 7 years ago and now work for XYZ industries.  In this situation, it would be better to determine who is reporting this employer to the CRA (probably your credit card company or mortgage lender) and notify them of your new employer rather than have the CRA do a reinvestigation, since the CRA will keep reporting whatever the furnishers of information give them.  As long as your credit card company thinks you work for Acme Industries, they will keep reporting it to the credit bureau, who believes furnishers of information over consumers every time.   You might think it isn't a big deal that they have an incorrect employer, but it is important that you get this fixed because someday you're going to want to get a mortgage and all of the information on your credit report needs to be up-to-date and correct.


So how do credit repair companies get negative, but true information removed from credit reports that is less than seven years old?  Some credit repair companies, particularly those that are just scams designed to take your money and run, will dispute every single negative item on a credit report and charge you hundreds of dollars to do it. They are hoping that the furnisher of the information won't bother to respond and therefore, the information will be removed from the credit report.  This only works some of the time, and sometimes the negative information will reappear three months later after the credit repair company has cashed your check and won't be refunding your money.  The three credit bureaus often ignore reinvestigation requests from credit repair agencies as they are allowed to do under the Fair Credit Reporting Act, particularly if the reinvestigation requests come with absolutely no proof attached.
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