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What Is the Fair Credit Reporting Act?

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) is the federal statute that regulates the credit reporting industry, including the national credit bureaus Equifax, Experian and Trans Union. The Fair Credit Reporting Act, or “FCRA”, was enacted to protect consumers from the damage that errors in their credit reports could cause. Having good credit is becoming more and more important, good credit is the key to buying a home or a car, getting a job, taking a vacation, or just about any consumer purchase.

Accuracy of Credit Reports

The FCRA requires credit bureaus to follow reasonable procedures to assure maximum possible accuracy of the credit reports they generate. 15 U.S.C. § 1681e(b). Despite this requirement, the credit bureaus often publish credit reports that contain errors and have a detrimental impact on consumers. Some common reporting errors include:

  • Accounts belonging to another consumer with the same or similar name as yours (this mixing of two consumers’ information in a single file is called a mixed file).

  • Errors made to your identity information (wrong name, phone number, address).

  • Closed accounts reported as open.

  • Accounts that are incorrectly reported as late or delinquent.

  • Reinsertion of incorrect information after it was corrected.

  • Accounts that appear multiple times with different creditors listed (especially in the case of delinquent accounts or accounts in collections).

  • Information appears that should no longer be on your credit report, such as a debt that is more than seven years old.

  • Accounts with an incorrect current balance.

Disputes

One of the most critical aspects of the FCRA to consumers is that it creates a mechanism to dispute inaccuracies appearing on consumer’s credit reports. Once an inaccuracy, such as having the wrong person’s information on your credit report, is disputed to the credit bureau which is reporting the inaccuracy, the credit bureau then has 30 days to perform a reasonable investigation of the disputed item. Further, the FCRA requires that the credit bureau relay the consumer’s dispute to the company that furnished the disputed information, the furnisher, who then must also reasonably investigate the dispute. Once the investigation is complete, the credit bureau must send an updated copy of the credit report to the consumer, showing the results of their investigation. Often times the credit bureau or the furnisher fail to conduct the required reasonable investigation pursuant to the FCRA, when this occurs consumer’s will have claim for violations of the FCRA and potentially be able to recover actual damages and reasonable attorney fees and costs.

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