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Consumer credit reports are an essential part of most Americans’ lives. The report directly affects their ability to qualify for mortgages, car loans, credit cards, and more. Their creditworthiness also affects the terms of loans, such as interest rates.
The original law established requirements for credit reporting agencies (CRA) such as:
The amendments later broadened the coverage to include entities that use credit reports as well as those who provide information to the CRAs.
The general purpose of the law is to ensure accuracy and fairness in credit reporting and for those involved to follow reasonable procedures. The FCRA also helps to prevent the misuse of credit information by limiting access to consumer credit reports.
Congress passed the Fair Credit Reporting Act (FCRA) in 1970 to provide data protection and accuracy for consumer credit information. Since that time, two major amendments have been made.
Those authorized to receive a credit report include:
Consumers have the following rights related to their credit report:
Anyone annoyed by emails and letters from insurance companies and credit cards offering pre-approved plans can opt-out of receiving them. The FCRA allows consumers to choose a five-year or permanent opt-out.
Those opting out will no longer be included on lists CRAs provide to creditors and insurance companies.
Another recently added protection is the ability to ask CRAs for a credit freeze. This can be helpful for victims of identity theft or those who suspect their information may have gotten into the wrong hands.
The freeze prevents unauthorized credit checks so someone cannot fraudulently take out a loan or credit in another’s name. Consumers can also place a fraud alert on their credit report from one to seven years.
The fraud alert requires anyone receiving a credit application to verify the applicant’s identity before processing the application. Placing a fraud alert on one CRA will automatically place the alert with the other two CRAs.
The Credit CARD Act and the Dodd-Frank Act also protect consumers.
CARD prohibits credit card companies from increasing the interest rates on existing balances. Credit card companies are also required to provide a 45-day notice before increasing the rate on new balances.
The DFA was a reaction to the major recession that began in 2007. The law protects consumers by making large financial institutions more transparent and eliminating speculative behaviors.
Most negative information must be removed from a credit report after seven years, but there are some exceptions. Bankruptcy remains on the report for 10 years. Most criminal convictions remain indefinitely.
Some states have laws that require convictions to be removed after seven years, but Oregon is not one of them. Criminal charges (not convictions) are removed after seven years.
If you experience violations of your FCRA rights, you do have recourse. Our experienced attorney at Oakes Law Office, P.C. is unafraid to stand up to large financial institutions and credit bureaus. We have helped many clients get their financial life back on track.
If any entity covered by FCRA does not uphold its requirements, you may have grounds for a lawsuit. Potential damages include any actual damages (lost wages and other harm) or statutory damages between $100 and $1,000.
Attorney fees and court costs may also be granted. Courts also have the discretion to award punitive damages, which have no limit. Lawsuits for FCRA violations may be filed up to two years after the date it was discovered.
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