fair credit reporting actWhile you might have heard that there are laws to protect consumers’ credit, you may not be sure exactly what these laws are and how they protect you. The Fair Credit Reporting Act, or FCRA, is a federal law that “promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies,” according to the FTC. In other words, it ensures that the information on your credit reports is accurate and up-to-date and allows you to make changes if there is inaccurate information, among other things. To help you get a better understanding of the FCRA, we highlight the basic rights you have as a consumer under this law.

The right to access to your credit reports

As a U.S. citizen, you have the right to know what’s on all three of your credit reports and credit scores. The three major credit bureaus that credit lenders report to are Equifax, Experian and TransUnion, and you are legally entitled to one copy of these three reports every year through AnnualCreditReport.com. Although requesting copies of your credit reports is free once per year, you’ll have to pay a small fee if you’d like to see your credit scores — this may change in the near future. On a similar note, the government does not provide you with a way to check your credit reports more than once per year (unless you find yourself in certain situations), but those looking to keep tabs on their reports and scores more frequently can opt to enlist the help of credit monitoring services. These services offer monthly plans that give you updates on your credit reports and credit scores, as well as alert you if there are any changes to either. While you have to pay a fee to take advantage of credit monitoring services, a handful of services offer free trials, so you can test them out before making a financial commitment.

The right to protected access

Another right you have under the FCRA is protected access. This means that only those who have a need to access your credit reports (e.g., credit lenders, banks and insurance companies) or those you have granted permission to access your credit reports (e.g., a background check with an employer and landlords) are allowed to see the information on your reports. Additionally, you have the right to know who has requested your credit report within the last year or two years if it’s an employer request.

The right to have errors removed from your credit reports

Because you have the right to know what’s on your credit reports, you also have the right to dispute any errors or misinformation you find on your credit reports. If your reports have any negative marks that are inaccurate, you can contact the reporting agency (whether it’s a credit bureau or a credit lender) and they are required to fix or remove the errors. It’s important to note, however, that if the negative marks on your reports are valid, you cannot have them removed; only inaccurate information can be removed. If you’re overwhelmed with the idea of disputing inaccuracies yourself, you may want to get help from a credit repair service, which does the legwork for you. Not sure if a credit repair service can help your situation? Learn more about how these services work.

Another important thing to point out is that most negative marks fall off your credit reports after seven years, with the exception of bankruptcies, which can stay on your reports for up to 10 years. If there is outdated information on your credit reports, the FCRA allows you to have this information removed, unless it’s a lien, as these types of records could remain on your reports indefinitely. That said, any accurate negative marks on your credit reports that are older than seven to 10 years will not, or rather should not, be reflected on your credit reports.

The right to know if your credit file was used against you

Whenever you apply for a new line of credit, such as a credit card or loan, and you’re denied, you’re legally allowed to know why you were denied. Protected under the FCRA, these rights state “you must be told if information in your file has been used against you,” including denials for lines of credit, insurance or employment, as explained by the FTC. In addition, the Equal Credit Opportunity Act requires creditors and lenders to disclose an adverse action letter to you, detailing specifics for the reason(s) you didn’t qualify (e.g., limited credit history or outstanding debts). Whether it was information on your credit reports or some other type of consumer report, you’re legally entitled to know which agency the information came from, as well as that agency’s phone number and address.

The right to opt out of preapproved offers

Under the FCRA, you can control whether or not you’re selected for preapproved offers. This includes receiving things like a preapproved credit card offer from a bank or a preapproval notice for a personal loan. Although these offers have no effect on your credit scores (unless you accept the preapproval offer), you can still opt out of receiving them altogether, as the FCRA gives you the ability to have your name and address removed from receiving these offers. If you’d like more information, the FTC has an extensive guide on how to opt out of unsolicited credit and insurance offers.

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