The federal Fair Credit Reporting Act (FCRA) protects you by regulating how your credit information may be gathered and shared by and with third parties. Your credit history is regularly accessed by lenders, employers, landlords, utility companies and retailers. The FCRA provides several important rights to you, including the following:
- The right to see your own credit report;
- The right to know when and by whom your credit report has been accessed;
- The right to dispute inaccurate information on your report; and
- The right to know when your credit report has been used negatively against you.
When are Disclosures Permitted Under the FCRA?
If a business or person, like your employer, has your express permission or is otherwise authorized for a legitimate purpose under the FCRA, a credit report may be generated and provided to the requesting party.
Common permissible purposes include information to satisfy an application for credit, in connection with a court order or child support evaluation, to help an employer determine whether to extend an offer of employment, or in response to a request by a state or federal agency.
Are there Penalties for Violating the FCRA?
If you have received a copy of a credit report for other than a legitimate business purpose or without the individual’s permission, you may be in violation of the FCRA.
The FCRA provides that the individual can sue for damages for the willful or negligent disclosure of their credit information. The aggrieved individual may be able to sue for actual damages up to $1,000, reasonable costs and attorney’s fees, and punitive damages if allowed by the court.
How Can an Employer Use Your Credit Information?
As part of an employee background check to determine whether to hire, promote or terminate you, an employer may request a copy of your credit history. The employer must get your express permission to run your credit report.
If the report is used negatively against you, the employer should provide you with a copy of the report, notify you of your right to dispute the report and share the contact information for the company that issued the report. Importantly, your credit report cannot be used by the employer to discriminate against you. An employer cannot use the credit report to deny employment on the bases of factors such as your race, sex, religion, ethnicity.
What Does the FCRA Require of Credit Reporting Companies?
The three most nationally recognized credit bureaus are Equifax, Experian, and TransUnion. These credit bureaus are required to:
- Provide a copy of your credit report to you upon request;
- Investigate on your behalf information that you dispute;
- Limit access to your file; and
- Allow you to opt-out of prescreened credit offers
In addition, there are companies that collect and provide credit history information to the credit bureaus. Among other responsibilities, these information collection companies are required to:
- Report accurate information to the credit bureaus;
- Update inaccurate information provided to any credit bureau;
- Disclose any negative information reported about you; and
- Have identity theft reporting and prevention procedures in place;
What is in Your Credit Report?
Your credit report provides information about your current and historical credit activities. All three of the nationwide credit bureaus will no doubt have information on your credit activities.
More specifically, these reports will contain personal information such as your social security number, names and nicknames, current and former addresses, birth date and phone numbers. It will show any current or past credit accounts.
For example, if you have a current car loan and a past mortgage, the report will show both the car loan and the mortgage. It will provide how much the loans were issued for, any account balances, payment history, name of any creditor, and whether the accounts are currently open or closed.
From this information, the credit bureaus will generate a credit score. This score may take into account how many credit inquiries were made and their resolution (i.e. credit card application granted or rejected), your payment history, any outstanding debt, the types of debt and the length of your credit history.
Your credit score can help a business determine whether you might be a good credit risk or not, or it may influence the interest rate on loans you receive. Also keep in mind that your credit score may vary from one credit bureau to another so you would need to request your credit score from each credit bureau to get a comprehensive credit history.
Should I Consult an Attorney If I Have Issues with My Credit Report?
The FCRA protects your rights as a consumer. An accurate credit report can impact whether you are extended credit, employment or other services or privileges.
If you believe someone has violated your rights under the FCRA or you are having trouble getting a credit bureau or credit information collection company to respond to you, a local finance attorney may be helpful.