FCRA Compliance

A credit report is a clear statement of the details and the financial history of an individual and is useful in determining their ability and worthiness to borrow and repay money. It captures credit types taken, the amounts involved, the active credit accounts time-frame, and the degree of repayment compliance. The place of residence, any past and present lawsuits, or possible bankruptcy filing details are also included. The report also reveals any current attempts to acquire new credits and, therefore, paints for the lender a clear picture of a person’s credit history than any other data source like bank statements can do. Based on this report, the potential lender can decide to advance a loan to the applicant, delay the decision, or deny the opportunity altogether.

Credit Reporting

Three major credit bureaus are charged with the responsibility of collecting, collating, and releasing, under specified guidelines, such credit-related individual data in the US. They include TransUnion, Equifax, and Experian. Credit reporting is principally done by these three entities, otherwise referred to as agencies.

Each borrower’s database is kept by all the three bureaus detailing creditor names, specific credit account type, account opening and closing dates, account credit limit, late payments with dates, and account balance. Other personal details included in the report are marital status, date of birth, phone and social security numbers, breached child support agreements, and convictions just to mention a few.

The detailed credit report is further analyzed to obtain an individual’s credit score (FICO score). This score is what is used to determine the credit risk or the likelihood of the borrowed money being remitted back and whether it would be done in a timely manner. The prompter you are with your financial obligations, the higher the credit score and the easier it is to access credit.

Fair Credit Reporting

Since the information contained in the credit report is very important and private, it is only availed to those who have been permitted legally for a specified purpose. To correct any errors therein, which is a common practice, and to assess one’s status, credit bureaus are mandated by law to send to the owner (on request by the owner) a copy of the credit report every year.

It is advisable to consistently scrutinize your credit report to prevent incidences where a strange account could be opened in your name (identity theft) or data entered inaccurately, in which case it should be corrected promptly to avoid inconveniences. These agencies are compelled by law to carry out thorough investigations and provide a toll-free phone number with a human person at the other end.

Fair Credit Reporting Act (FCRA) was passed in 1970 for the purpose of ensuring fairness through regulation of collection, accuracy, confidentiality, and protection of individual information.