Credit reporting is regulated by the federal government
under the Fair Credit Protection Act (FCPA). The FCPA passed in 1970 and
regulates how credit information can be used and reported. The Federal Trade
Commission handles enforcement of the regulations. The FCPA ensures that the
information on a credit report is fair and accurate, with recourse for the
consumer if the information is inaccurate. The act also regulates how long
negative credit information is reported, annual credit reports and rules for reporting
disputes. The FCPA affects three main groups: consumer reporting agencies,
specialty consumer reporting agencies, and information furnishers.
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Print this articleConsumer Reporting Agencies
A consumer reporting agency is a business that prepares
credit reports for lenders checking on a borrower’s credit worthiness. The
three big consumer reporting agencies are Equifax, Experian, and TransUnion.
The FCPA requires the consumer reporting agencies to provide consumers with one
free credit report every year. The agencies are required to verify all
information on the reports. The agencies are not able to report negative
information previously removed on a report without letting the consumer know
five days ahead of time. The FCPA puts the following limits on reporting
negative information: Bankruptcies are reported for ten years. All other forms
of negative information are reported for seven years, then removed from the
report.
Speciality Consumer Reporting Agencies
Specialty consumer reporting agencies cover the many
different agencies that provide reports based on medical records, rental
history, check or banking history, employment and insurance history. Examples
of specialty CRAs include Lexis Nexis, Innovis, and Chex System. Like the main
CRAs, the specialty agencies are required to provide a yearly report upon
request.
Information Furnishers
Information furnishers are companies that provide credit
information to the CRAs. An information furnisher is a creditor, bank,
collection agency, court or employer. An information furnisher may report to
many different CRAs, only one or two, or report to a single specialty CRA. For
example, banks report unpaid bounced checks and closed accounts to Chex
Systems, which is referenced by other banks when opening a checking
account.Information furnishers have three responsibilities under the FCPA. Any
information a furnisher sends to the CRA must be accurate in all ways. It must
investigate all information disputes a consumer initiates to ensure the
information is correctly reported. Investigations are required to take place
within 30 days of a consumer dispute request. A furnisher reporting negative
information to a CRA must inform the consumer before and after the negative
information is reported. Sponsored Links Read more: Credit Reporting Regulations |
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