What you need to know about the Fair Credit Reporting Act

In a perfect world we would all have enough cash on hand to pay for everything we need up front. Obviously this is not reality and in one-way or another we all need credit. Whether it comes to financing a new car, buying a home or even simply having the basic necessities like water and power in your home, businesses will want to pull your credit to evaluated and be sure that you would make for a reliable customer. In the past, a consumer had very little control over how businesses would perceive them based upon their credit scores. Thanks to the Fair Credit Reporting Act we now have the power to understand, monitor, correct and control our credit information.

What is the Fair Credit Reporting Act?
The Fair Credit Reporting Act was passed to even the playing field between creditors and consumers. When consumers accept credit from a business, that consumer is essentially giving the business the power to make or break their credit history and affect all financial avenues of their life. We all make mistakes, and the Fair Credit Reporting Act allows us to manage and contain these mistakes. There are several different aspects of the Act but most importantly it gives consumers the power to control their financial past and future.

How do I know what information is being reported about me?
As of 2005 you have the ability to pull your credit information once a year at no cost and at no penalty to your credit score. To do this simply visit annualcreditscore.com and answer a few questions to have all of your current credit information displayed. Additionally any time that you apply for new credit or have any company, landlord or anyone else pull your credit report, you have the right to receive a copy of that report at no charge. As of currently a credit history is required to be shared, not a credit score; this you will typically have to pay for.

Is there anything I can do to fix wrong information?
If you receive your credit report and discover inaccurate or fraudulent information, the Fair Credit Reporting Act gives you the right to dispute these items. The quickest and most effective way to go about this is to submit a dispute letter to the company reporting the item as well as a letter to each of the three credit bureaus. These days, Experian, Equifax and TransUnion are converting this process to an online system to speed up this process. According to these new laws, your concerns must be acknowledged and researched in a timely manner. Once the company in question acknowledges a mistake be sure to have an official letter on company letterhead sent to you for your records, and be sure to send copies to the three credit bureaus as well.

I made some credit mistakes in the past, will these stick with me forever?
Thankfully no! Every derogatory item has a maximum time it is allowed to appear on your credit report. The lifespan of a 30-day late payment is different from, say, a bankruptcy but they each do have a specific timeline they are able to affect your score. Be sure to check the laws in your state as the timelines differ depending upon where you live. As soon as these derogatory items expire, be sure to have them removed. It’s your right!

Can just anyone look up my information?
Absolutely not. Your information is yours and only you have the right to share it with others. Your credit report will tell you each and every inquiry made on your credit report as each inquiry has the capacity to hurt your score a few points at a time. If you see any suspicious items on there, be sure to inquire as well. The Fair Credit Reporting Act also has given you the right to “opt out” of those obnoxious “pre-approved” credit offers that clog your mailbox.


 Be sure to visit www.ftc.gov/credit for more information on how to protect your credit score and for more information about the timeline for derogatory items on your credit report. Call Praxis Credit Consulting for your free consult go over how this will effect you.

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Saturday, 15 June 2024

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