University of Illinois Extension

Fair Credit Reporting Act Update

1997 changes in the Fair Credit Reporting Act give consumers new rights.

When you apply for credit, the lender checks with a credit reporting agency to learn about your credit history. The credit reporting agency gives the lender your credit report that includes your bill payment history, current unpaid bills, available credit, property liens, lawsuits, and other related information. Credit reporting agencies try to give accurate information, but they can make mistakes. When you're having trouble getting credit, the first thing you should do is check the accuracy of your credit report. If you're turned down for credit, you should receive a letter with the name of the credit reporting agency that provided the negative credit report. You're entitled to a free report if you've been turned down for credit within the last 60 days. After you have accessed your free credit report option for the year, you will pay a small fee for the report.

Amendments to the Fair Credit Reporting Act give consumers more power to preserve, protect, and defend their credit records. The new law covers four key issues.

Information In Your Credit Report - Credit reporting agencies must consider information from you, not just from your creditors. If you have a canceled check or a letter from a creditor showing that a payment was settled, the credit reporting agency has to accept that as proof of payment. Until now, you had to convince the creditor to let the credit reporting agency know the debt had been paid.

Access To Your Credit Report - Until now, you were entitled to a free copy of your credit report whenever you were turned down for a credit card or a loan. Now you also have the right to see your credit report at no cost if information in it led to your being denied any benefit-renting an apartment, for example. Victims of identity theft, those on welfare, and the unemployed now have the right to one free report each year. With the passage of the Fair and Accurate Credit Transactions Act, all consumers have the right to a free copy of their credit reports from each of the three credit reporting agencies each year.

Correcting Errors in Your Credit Report - Creditors now have more responsibility for giving accurate information to credit reporting agencies. They must certify that information in your credit report is correct when contacted by a credit reporting agency. You can sue the credit reporting agency if it doesn't correct mistakes in your credit report after you've notified them. Until now, if you lodged a complaint about an error in your credit report, the reporting agency was only liable for "investigating" the problem. That could just mean a quick check of their records.

Credit reporting agencies are also now legally required to share corrections with each other. Once you correct your credit report with one credit reporting agency, it will be automatically corrected at the others. The credit reporting agencies also can't put disputed information back in your report without telling you. At least once a year, check your report to make sure the information is correct. To make it easier to correct mistakes, credit reporting agencies must staff toll-free telephone numbers. And, they must correct mistakes within 30 days.

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