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Know your rights under the Fair Credit Reporting Act

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While all consumers should be aware of their rights when it comes to credit reporting, individuals with bad credit need to be even more conscious of what is and isn't an acceptable practice.

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The Fair Credit Reporting Act is the federal law that says who can see your credit report and why, allows you to get a free copy of your reports, and dictates how credit report disputes can be resolved.

The most important part of the Fair Credit Reporting Act for consumers deals with permissible purpose, which refers to who can take a look at your credit reports and for what reason. In order to get a copy of your credit report, requests must fit certain criteria.

Primarily, credit reports can be pulled by a lender when they are evaluating whether to let you borrow money.  Lenders also have the right to periodically review your credit report while you have an account with them, as well as getting your report if you stop making payments in an effort to collect the debt.

Credit reports can also be provided to you at your request, often for free. Separately, credit reports can be subpoenaed by the courts or by an attorney, which frequently happens when you sue lenders for your bad credit resulting from their reporting of incorrect information.

Additionally, your credit reports can be viewed by a potential employer when you apply for a job. While the law does not allow you to be rejected for a job solely on the basis of a bad credit history, it can still influence hiring decisions.

Credit reports can be accessed by insurance companies when they are choosing whether to cover you and how much you will pay in premiums if they do.  Finally, child support agencies may use credit reports to determine if you are able to pay child support.

Under the Fair and Accurate Credit Transactions Act of 2003 (FACTA), which is part of the Fair Credit Reporting Act, U.S. consumers have the right to a free credit report from each of the credit bureaus once a year. FACTA in essence states that you may get a free copy every year of any report which another party uses to evaluate you.

If you have a problem with an item on your credit report, the Fair Credit Reporting Act states that you can dispute it. Consumers may challenge any item that they believe to be incomplete or incorrect.

The credit reporting agency then has 30 days from the time they were notified to verify whether that item is reported accurately. Should the agency be unable to do so, the item must be corrected or deleted.

Published: May 25, 2007


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