Research and Statistics

FTC aims to clarify disclosure of consumers’ credit reporting rights


When you get a copy of your credit report, it comes with a document that lists your rights. Now, the Federal Trade Commission is working to make those disclosures much easier to read.

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When you get a copy of your credit report, it comes with a document that lists your rights. Now, the Federal Trade Commission is working to make those disclosures much easier to read.

Want to tell the Federal Trade Commission what you think of these changes?

You can also read the full proposal online in the Federal Register. (PDF format)

The FTC is proposing changes to the documents that credit bureaus provide to consumers under the Fair Credit Reporting Act (FCRA). The FCRA requires that consumers be supplied with information about requesting a free credit report, as well as the right to dispute credit reporting errors. But in an effort to update those notices and make them more reader friendly, the FTC says it needs your help.

The FTC already has created a sample of how those changes may look. According to one consumer advocacy group, they represent an improvement. “Overall, I think the language and layout are cleaner and clearer,” says Linda Sherry, national priorities director for Consumer Action, a San Francisco-based consumer group. Still, Sherry says more needs to be done.

Signs of improvement?
A side-by-side review of the current and proposed documents show that the changes would make the Summary of Rights easier on the eyes. The proposed version includes larger text, shorter sentences and a cleaner layout. According to a readability study conducted by, the proposed changes would enable someone with who reads at a 12th grade level to understand the new document, while the existing document requires someone to read at a 13th grade level. The software used to analyze the changes, however, doesn’t take into account improvements in design and layout that are apparent in the proposed summary. (Click here for more on the methodology.)

Proposed changes to FCRA Summary of Rights document
Click agreement to see in full size.
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But the changes are more than just cosmetic.

Starting in July 2010, changes implemented by the Fair and Accurate Credit Transactions Act (FACT Act) allow consumers to take up disputes over credit report mistakes directly with the companies that provided that erroneous information to the credit bureaus. That language has been missing from the Summary of Rights provided to consumers when they get a copy of their credit reports.

The current Summary of Rights only notes that consumers can take up disputes over inaccurate information with the credit bureaus. “If you identify information in your file that is incomplete or inaccurate, and report it to the consumer reporting agency, the agency must investigate unless your dispute is frivolous,” it reads. The proposed document, however, makes clear that the consumer’s rights extend beyond simply contacting the credit bureau. The consumer can write “a letter to the company that provided the information about you (such as your credit card company), tell them about the mistake and ask them to correct it,” the proposed summary reads. “Inaccurate, incomplete, or unverifiable information must be corrected or deleted, usually within 30 days.”

Easier to understand, but asserting rights still difficult
But the changes need to go even further, Sherry says. As an example, she points to the following paragraph in the proposed Summary:

“You can get a free credit report if someone has taken action against you, such as denying credit, because of information in your credit report. You should get a notice that includes information about how to get your free report so you can make sure the information used to take action against you is accurate.”

She says the language indicating borrowers “should” get a notice is a problem. “I think it should say MUST, and also suggest, ‘If you don’t get a letter, call the company and demand one — It’s your right!'” Sherry says in an e-mail.

She also points to potential challenges in getting credit report errors corrected and the difficulty consumers may have when attempting to sue over FCRA violations. In other words, “you can simplify the rules, but it doesn’t make it any easier for consumers to assert their rights,” Sherry says.

FTC asks for comment
The FTC responds to those complaints by noting that it wants feedback on the proposed document. “We welcome and will consider any suggestions to improve the proposed Summary of Rights; the comment period is open through September 21, 2010, and comments may be submitted electronically or in paper,” says Rebecca Kuehn, assistant director with the FTC’s division of privacy and identity protection. She adds that the Federal Register notice contains instructions on how to submit comments.

Readability study methodology
The original document and the proposed document was evaluated by a readability program purchased from Micro Power & Light Co., a Dallas software development company. The program scored the text using the widely-used FOG (Frequency of Gobbledygook) index. We deleted any Spanish text and ran the readability formula on the remaining English content.

See related: Free credit reports: How to get the actual free one, Decade-old credit mistakes shouldn’t appear on your reportCredit report error? You can go direct to merchant5 key federal laws help protect credit cardholders

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