What the FCRA Can Do For You

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Federal Certificate of Real Awesomeness? Five Clearly Ridiculous Awards? Fun Cleaning Random Ashtrays? What is the FCRA, anyway, and how does it affect you as an apartment resident? This article demystifies the acronym of the Fair Credit Reporting Act, explaining how it protects you as a tenant.

An Introduction

The FCRA was created in 1970 to allow consumers access to the credit reports that can sometimes motivate potential employers, landlords, or other figures to deny them jobs, housing, or other services. Until this act passed, consumers had less direct access to information about their credit histories and the people looking at them. Under the protection of the FCRA, consumers can not only discover the sources that provided information about their credit history but also—and perhaps more importantly—find out to whom that information has been provided. While you can’t necessarily prevent agencies from finding out your credit history, you can at least be aware of who knows about it, why they wanted to know, and who reported the information that makes you credit history look the way it does. Knowing how credit reporting agencies operate can help you take steps to prevent and correct these problems.

What CRAs Do

The acronym CRA can stand for either credit reporting agency or consumer reporting agency. Similar groups are sometimes called credit bureaus. The main purpose of all these groups is to gather information about a person’s credit history. If you’ve ever defaulted on a loan or been late with a credit card payment, rest assured (or be a little worried!) that these groups will find out about it. Landlords use CRAs to determine whether potential tenants have a credit history that demonstrates sufficient financial responsibility to handle paying rent.

The FCRA requires CRAs to follow “reasonable procedures” to protect the confidentiality, accuracy, and relevance of your credit information, and also guarantees you the right to find out which organization is providing what information about you. CRAs can only provide your credit information to potential employers, creditors, insurers, landlords, or investors, or to a government agency. You have the right to find out about information furnished to all of these parties—except for the government, in some situations. A credit report will generally incorporate all of your credit history from the past seven years. Filing for personal bankruptcy remains on your report for ten years.

Adverse Action

Information contained in your credit report might motivate a potential landlord to take “adverse action” against you as a potential tenant. The term can encompass actions such as requiring a co-signer on the lease or asking you to pay a larger deposit than other tenants. The FCRA mandates that your landlord provide you with certain information when asking you to perform actions not required of all tenants. This information includes the contact information for the CRA that provided the report, a statement clarifying that the landlord (not the CRA) was responsible for deciding to take the adverse action, and a notice of your right to dispute the accuracy of the information from the CRA. To aid you in doing so, you are entitled to obtain your own report from the CRA, free of charge, within 60 days of the adverse action notification. This report will illuminate the sources of specific elements of your credit history, allowing you to dispute certain assertions

Obtaining your free report

To obtain the report the FCRA entitles you to; simply contact the CRA using the information provided by your landlord. The report will disclose to you the sources of particular aspects of the credit information provided in the report on your history. If you feel that some information is incorrect or some sources are untrustworthy, you have the right to dispute the report.

Disputing information

Under the provisions of the FCRA, the CRA that created your report is required to reinvestigate any information that you dispute within 30 days of your complaint to the agency. This investigation will involve notifying the sources of the disputed information of the issue within 5 business days of you declaring your dispute.

Likewise, the CRA needs to notify you of the investigation results within 5 business days of the investigation’s end. You have the right to request a report detailing the nature and findings of the CRA’s reinvestigation. If, after investigation, the information in question is found to be incorrect or unverifiable, the CRA is required to remove that information from your report. Even if the CRA investigation verified the disputed information, you still have the right to add a note to your credit file indicating that you disagree with the findings.

FACTA’s Function

The Fair and Accurate Credit Transactions Act (FACTA) was added to the FCRA in December 2003. Among other provisions, FACTA allows consumers to block charges resulting from fraud or identity theft from their credit reports, as well as letting consumers dispute specific credit information directly with the party that furnished it (rather than through the CRA that produced the report). It also gives consumers the opportunity to receive one free credit report annually to stay up to date on their credit status. Note that the only government-approved website for a free annual credit report is http://www.annualcreditreport.com. Other sites may provide accurate information, but they’re not certified, and may charge hidden fees for the information they give you. FACTA also creates more stringent standards for the accuracy of information provided by those who disclose information about your credit history to CRAs, and requires the implementation of surveys to check the accuracy of CRA findings.

All Things Considered

The FCRA provides important protection for consumers. It shields you from being negatively affected by questionable information and provides for greater transparency and accuracy in the credit reporting process. This article only begins to describe the rights you possess under the act. Reading the full text of the Fair Credit Reporting Act will help you stay informed about your credit history and the way it can affect your ability to find the housing you want.

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