Fair Credit Reporting Act (FCRA) and Fair and Accurate Credit Transactions Act (FACTA)
The information contained in your credit report is compiled by credit reporting agencies that assemble, evaluate and maintain credit information based on the content of public records and reports from third parties. Decisions about your apparent creditworthiness, standing and capacity for debt are all based on the information contained in your credit report. The Fair Credit Reporting Act (FCRA) regulates the credit reporting agencies as well as the parties that provide information to them.
If your credit has been harmed due to violations of the FCRA or other credit reporting regulations, we can help. There are more details below about your rights regarding credit reports. However, if you would like a FREE CONSULTATION with one of our experienced fair credit reporting attorneys call us at 855-55-ROSEN or fill in our online form. Let the lawyers and staff of the Law Offices of Evan M. Rosen serve you!
About the Fair Credit Reporting Act
The FCRA has undergone three major revisions since it was enacted in 1970. First, the Consumer Credit Reporting Reform Act of 1996 made extensive amendments to the law. Congress made further important changes in 2003 when it passed the Fair and Accurate Credit Transactions Act (FACTA). The most recent changes came in July 2011 when the Dodd-Frank amendments took effect. The main effect of the Dodd-Frank amendments was to grant the Bureau of Consumer Financial Protection the ability to perform most rulemaking tasks and to give it some enforcement authority.
The main reasons behind Congress’s initial decision to pass the Fair Credit Reporting Act include:
- The banking system is dependent upon fair and accurate credit reporting. Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence, which is essential to the continued functioning of the banking system.
- An elaborate mechanism has been developed for investigating and evaluating the creditworthiness, credit standing, credit capacity, character and general reputation of consumers.
- Consumer reporting agencies have assumed a vital role in assembling and evaluating consumer credit and other information on consumers.
- There is a need to ensure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality and a respect for the consumer’s right to privacy.
Keeping those principles in mind, Congress enacted the FCRA. It directed reporting agencies to adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner that is fair and equitable to consumers, with regard to the confidentiality, accuracy, relevancy and proper utilization of the information in accordance with the requirements of the Act.
But how does all of this apply to you? The FCRA, FACTA and its amendments contain some crucial provisions that the Florida debt defense lawyers at the Law Offices of Evan M. Rosen can use to assist you with your debt collection action.
Also, credit records have become a very important factor in many key areas of Americans’ lives. They affect our ability to get hired for a job or secure loans for a variety of important purchases, such as a house, car or insurance. Even if negative credit doesn’t block you from making those critical life purchases, you will at the very least have to pay much more than someone who has a clean credit report.
You have rights designed to help you protect this valuable information relied upon by so many others when making key decisions, even if you are not currently being pursued for a debt. At the Law Offices of Evan M. Rosen, we have a deep understanding of every aspect of this vast body of consumer protection law, and we are prepared to fight for your rights against anyone who may have improperly damaged your credit.
When Reporting Is Legitimate
These are the ONLY circumstances when a credit reporting agency can provide a third party with a copy of your credit report:
- In response to the order of court or subpoena issued in connection to federal grand jury proceedings;
- In accordance with your written instructions;
- To a person, subject to various requirements, who intends to use the information to:
- Conduct a credit transaction with you, or review or attempt to collect on one of your accounts;
- Consider you for employment;
- Consider you for insurance coverage;
- Consider your eligibility for a license or other government benefit in which the law requires a review of your financial status;
- Use as a potential investor or servicer, or current insurer, regarding an existing credit obligation;
- Analyze the information for a legitimate business need in connection with a business transaction or to review an existing account to see if they meet the terms of the account; or
- Consider you for a government-sponsored, individually billed travel charge card.
- To a head of a state or local child support enforcement agency (or another governmental official authorized by such agencies), if the report is needed for the purpose of establishing your capacity to make, and the amount of, any child support payments. Various requirements must be met for this first.
- To an agency administering a state plan to set an initial or modified child support award.
- To the Federal Deposit Insurance Corporation or the National Credit Union Administration, if you are being considered for an appointment as a conservator, receiver, or liquidating agent in connection with the resolution or liquidation of a failed or failing insured depository institution or insured credit union, as applicable.
Medical Information Cannot Be Reported
In any reports that are used for any employment, credit or insurance purposes, credit bureaus cannot provide information that includes any of your medical information unless you consent or it pertains solely to a debt arising from medical treatment.
Limits on How Long Information Can Remain
Many people are interested in how long certain information can remain on their credit reports. The Fair Credit Reporting Act addresses this question. After 10 years, a bankruptcy must be removed from your credit report. The following must be removed after seven years:
- Civil suits, civil judgments and records of arrest, starting from the date of entry;
- Paid tax liens, starting from the date of payment;
- Accounts placed for collection or charged to profit and loss (contact us for more information on this as computing the start date for this can be complicated);
- Any other adverse information;
- The name, address and telephone number of any medical information unless that information is restricted or reported using codes that do not identify, or provide information sufficient to infer, the specific provider or the nature of such services, products or devices to a person other than the consumer or the report is being provided to an insurance company, which is not for property and casualty insurance.
But these time limitations DO NOT apply to:
- Any credit transactions that involve, or which may reasonably be expected to involve, a principal amount of $150,000 or more;
- Life insurance underwriting that involves, or which may reasonably be expected to involve, a face amount of $150,000 or more; or
- The employment of any individual at an annual salary which equals, or which may reasonably be expected to equal, $75,000, or more.
The rules are different for student loans that are guaranteed by the U.S. Government.
These types of student loans may be reported to the credit bureaus until you have completely paid them off. However, information received from the Secretary of Education or a guaranty agency, eligible lender, or subsequent holder regarding the status of your defaulted student loan may no longer be reported on your credit file after:
- Seven years from the date on which the Secretary or the agency paid a claim to the holder on the guaranty;
- Seven years from the date the Secretary, guaranty agency, eligible lender, or subsequent holder first reported the account to the consumer reporting agency; or
- If you reenter payment after defaulting on a loan and subsequently go back into default, seven years from the date the loan entered default the last time.
Types of Information That Must Appear on Your Report
For people who have filed for bankruptcy, the specific type of bankruptcy must be noted on the credit report. This includes the common types of bankruptcy: Chapter 7, Chapter 11 and Chapter 13. There must also be a notation if you withdrew your bankruptcy petition.
When dealing with your credit score, there must be a clear and conspicuous statement that a key factor in determining your score was the number of inquiries into your credit file, if that does actually adversely affect your score.
Your report must also note whether you closed your account voluntarily or disputed it.
Information regarding overdue child support obligations must appear on your credit report if the appropriate governmental authority provided or verified this information. These details must be removed from your report after seven years.
Protecting Card Numbers on Receipts
Merchants and other businesses that accept payment via credit cards and debit cards are also subject to the regulations. The rules specify that a printed credit card or debit card receipt can contain no more than the last five digits of the card number or the expiration date. The regulation does not apply to handwritten or manually imprinted receipts.
Identity Theft and Fraud Alerts
You have the right to ask credit bureaus to put a fraud alert on your credit file in situations where you have a good-faith suspicion that you have been a victim of fraud, including identity theft, or you have a good-faith suspicion that you are about to become a victim of fraud.
The alert tells potential credit issuers that someone might be attempting to use your identification in a fraudulent attempt to obtain credit. It will remain on your credit report for 90 days. During that time, potential creditors must first properly verify your identity before issuing credit to you. While your file is under an alert, you have the right to a free credit report and certain disclosures about your rights within three days of your request.
An “identity theft report” requires the credit bureaus to include a fraud alert on your report and your credit score for the next seven years. Also, during the following five years, you must be excluded from any lists that are provided to parties seeking to solicit your credit or insurance business.
It is a good idea to notify all of the credit bureaus if you think you have become a victim of fraud or identity theft. However, the Act also requires any agency that receives your report to forward it to the other bureaus. If any information ends up on your credit report as a result of identity theft, the Act requires that it must be removed from your credit report within four days of receipt of certain details that you are required to provide. Credit agencies are also required to tell the party that furnished the fraudulently obtained credit information that its newly opened and reported account may have been obtained by fraud. Creditors are also prohibited from selling a debt that they have been notified is a result of identity theft. They cannot put such a debt in collection either.
Military Active Duty Alerts
Individuals who serve in the military have the right to notify the credit bureaus when they go on active duty. The agencies are then required to put an alert on your credit file that will be included in any report and/or credit score generated during the next 12 months at the minimum.
An active duty notification also requires the credit bureaus to delete your name from any lists that are sold to third parties that want to send you credit and insurance offers for two years. Any credit bureau that receives an active duty report must forward it to the other agencies. Similar to fraud and identity theft alerts, an active duty notification prevents creditors from issuing new credit in your name without first properly verifying your identity.
Under the Act, you must receive notification for certain types of transactions. For example, if you are seeking a loan to purchase one to four units of residential property, you must be provided with the following Notice to the Home Loan Applicant.
When you make an application for a new home loan, the lender must tell you the score that a credit bureau provided for the lender to use in connection with your application. It must also tell you the key factors that impacted your score. A computer calculates your credit score based on information in your credit file at the time of the request. Your credit history and your payment track record are both included in the determination of your credit score.
The scores are crucial because the lenders use them in their decision process for approving or denying your loan. Your credit score frequently plays a role in setting the interest rate on your mortgage as well. Depending on your conduct, credit history, payment patterns and developments in credit scoring technology, your credit score can go up or down.
Since your credit score is calculated based on the details in your report, it is critical that you review the information in your file to ensure that it is accurate. It’s important to remember that different information might appear in your files at the different credit bureaus.
You should contact the consumer reporting agency or the lender if you have any questions about your score or the credit information that you receive. The credit bureau does not play any role in determining whether to approve or reject your loan application and cannot provide you with specific reasons for the lender’s decision. If you have questions about the loan, you need to contact the lender.
How to Dispute Inaccurate Information on Your Report
If you believe your credit report contains an inaccurate entry or account, you can contact the credit bureau and request that they conduct a reasonable investigation to determine whether the information is incorrect and record the current status of the disputed information, or remove the item from the file within 30 days. There is no charge for such a request. Certain circumstances may warrant a 15-day extension.
The credit bureau is supposed to start its investigation within five days after receiving your request. During the investigation, the credit bureau must notify the accountholder about your dispute. The credit agency may stop its investigation if it becomes apparent that your dispute is frivolous or irrelevant.
Deleted information can be put back on your report only if the accountholder certifies that the information was complete and accurate. You must be notified within five days if the entry is reinserted, and you must also be informed about your right to add a statement to your file in which you contest the accuracy or completeness of the disputed information.
Responsibilities Involving Reporting Information to Credit Agencies
It is illegal to provide information to a credit bureau if the reporting party knows or has reasonable cause to believe that the information is not accurate. They also cannot furnish information if you have notified them that it is inaccurate and it is in fact incorrect. Accounts that resulted from identity theft cannot be reported either.
Organizations that regularly and in the ordinary course of their business provide information to reporting agencies must tell the agency if they discover that any of the information they have provided is incomplete or inaccurate. They are also required to provide notice of any account that you have disputed and accounts that you have voluntarily closed. Also, if you are delinquent on an account, the credit bureaus must report the date you became delinquent within 90 days of your delinquency.
Finally, if you fall behind on your payments on an account with a financial institution that extends credit and regularly and in the ordinary course of business furnishes information to the reporting agencies, that party must give you at least one written notice that they are reporting any negative information to the credit agency or bureau.
Upon receipt of a dispute letter, the organization that furnished the information to the credit reporting agency is required to:
- Conduct an investigation;
- Review all relevant information you provide;
- Complete the investigation and report results within 30 days (45 if there was an extension); and
- If the investigation reveals the information is inaccurate, promptly notify the credit bureau with the correct information advising them to modify, delete or permanently block that information.
End User’s Duty
If an entity takes an “adverse action” against you based on what’s in your credit report, the organization is required to provide you with:
- Notice of the action;
- Your credit score;
- The name, address and phone number of the credit agency from which they received the information;
- A statement that the agency did not make the decision;
- Notice of your right to receive a free credit report; and
- Notice regarding your ability to dispute any inaccurate or incomplete information.
An “adverse action” is defined as:
- A denial or cancellation of, an increase in any charge for, or a reduction or other unfavorable change in the terms of coverage or amount of, any insurance, either existing or for which an application has been made;
- A denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee;
- A denial or cancellation of, an increase in any charge for, or any other adverse or unfavorable change in the terms of any government license or benefit; and
- An action taken or determination that is made in connection with an application that was made by you, or a transaction that was initiated by you, or in connection with a review of an account and adverse to your interests.
Conditions on Denial of Employment or Other Adverse Action Based on Consumer Report Used for Employment Purposes
If, in an employment context, a prospective employer wants to take an action adverse to you, including a decision not to hire you, based on information in your credit report, the employer must give you a copy of your credit report along with a description of your rights. Other conditions can apply to this provision of the Act, and the Patriot Act has also carved out other exceptions for national security investigations.
Your Annual Free Credit Report
Each national credit bureau must make a free credit report available to you at your request once during every 12-month period. You can obtain your free report at the official website: www.annualcreditreport.com. Other circumstances when you are entitled to receive a free credit report include when you:
- Receive an “adverse” notice;
- Are unemployed and intend to apply for employment within 60 days;
- Receive public welfare assistance; or
- Have reason to believe there is inaccurate information on your file resulting from fraud.
Removing Your Name from Solicitation Lists
You are able to remove your name and address from lists of consumers that credit bureaus provide to organizations for solicitation of credit and insurance business. You can make a written request or you can call (888) 567-8688. You can also make your request online at www.optoutprescreen.com. Your request will take effect in five days and it will last for five years. Making an “opt out” request can reduce the amount of junk mail that you receive.
Civil Liability for Negligent Noncompliance
Any entity that negligently fails to comply with any of the Act’s requirements is liable to you for any actual damages you sustain as a result or for damages between $100 to $1,000. An entity can be held liable for your damages up to $1,000 that result from a third party trying to obtain your credit report under false pretenses. You can also receive costs, attorney’s fees and punitive damages, which are meant to punish the wrongdoer.
Civil Liability for Knowing Noncompliance
If an entity knowingly fails to comply with the requirements of the Act, they would be liable to you for your actual damages, costs and attorney’s fees. HOWEVER, THERE IS NO LIMIT WHATSOEVER ON LIABILITY FOR A PERSON WHO KNOWINGLY FURNISHES FALSE INFORMATION TO THE CREDIT AGENCIES
Statute of Limitations
You have two years from the date you discovered a violation or five years from the date when the violation occurred to bring an action under the Act in the appropriate U.S. District Court or other court of competent jurisdiction.
If someone has violated your rights by improperly damaging your credit, and/or a debt collector or creditor is pursuing you, we can help. Contact one of our experienced debt fair credit reporting attorneys today for a FREE CONSULTATION by calling 855-55-ROSEN or by using our online form. Let the lawyers and staff at the Law Offices of Evan M. Rosen serve you.