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Little Known Credit Reporting Laws

October 4th, 2008

credit-report.jpgThis article by Kimberly Spann highlights some sections of the credit reporting laws that may not be known by the majority of the general public. Although I have never had an occasion to dispute a credit report, I actually found out some things that I didn’t know from this article that could be useful later if I should ever encounter such a situation. This could be the subject of a much longer article if we take the time to read through the whole FCRA document and translate most of its sections into simple English.


The Fair Credit Reporting Act (FCRA) is a legal document that regulates all aspects of credit reporting from the consumer and their creditors, to credit bureaus and credit reselling agencies. Most consumers these days understand the basic principles of credit reporting and understand that they are protected by federal laws and regulations. However, many consumers are simply unaware of some of the protections outlined within the FCRA. Guidelines for civil and criminal actions, reporting periods, permissible purpose, and more can be found in the document.

For example, it is commonly known that account information on a consumer report is only distributed by the bureaus when they are less than seven years old. This fact is outlined in the FCRA document, Section 605, which protect consumers from being declined for credit due to accounts that are no longer considered relevant credit history by most of the lending and credit industries. However, there are circumstances in which a third party may request account information beyond a seven year history. A third party may legally request an extended consumer history for credit transactions and life insurance policies exceeding a principal amount of $150,000 and employment when the annual salary will exceed $75,000.

Consumers who are declined credit due to FCRA non-compliance by furnishers of information and resellers (including outdated information and misrepresented data furnished by creditors) are permitted to file a civil suit for the amount of the loss or $1,000, whichever is the greater amount. Additionally, if the suit is won by the consumer, the defendant must also pay reasonable attorney’s fees. (See FCRA Sections 616 and 618).

Consumers who dispute information contained within their credit file should know that once the dispute process has been initiated, the agency reporting the inaccurate information may not provide the disputed information to any third party without a written note that the accuracy of the account has been disputed. Additionally, submitting an identity theft report to a creditor reporting information about an account that doesn’t belong to the consumer means that the creditor may no longer report that account to the credit bureaus until the matter is resolved.

There are many more laws of which most consumers aren’t aware. By knowing the details and provisions within the FCRA document, consumers are better prepared to deal with matters relating to their credit file and credit accounts. While not the most lay person’s termed document, the FTC has created a fairly easy-to-read version of the document as a public service. The Fair Credit Reporting Act is available at the Fair Trade Commission’s (FTC) website as a searchable PDF for consumers.



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