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An Introduction To The Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is a federal law that regulates the collection, dissemination, and use of consumer information, including consumer credit information. The FCRA requires consumer credit agencies to ensure that the information they collect and distribute is a fair and accurate summary of a consumer’s credit history.

Equifax, Experian, and Transunion, the three primary consumer credit reporting companies, are the agencies primarily subject to the FCRA. Credit reporting agencies (CRA) collect, process, and archive 200 million Americans' credit information. This information is sold primarily to assist the decision-making of those business entities that extend credit.

Many consumer advocacy groups have questioned the accuracy of the information credit reporting agencies collect, as well as the ability of consumers to dispute this information and have it expeditiously removed from their credit report. Various sources report that 20-80% of credit reports contain errors, which may affect an individual's ability to obtain new credit and even retain current employment.

The FCRA protects consumers from the use of incorrect information against them to deny them credit. It provides specific guidelines regarding the methods credit reporting agencies use to collect and verify information. Further, it provides the circumstances when a consumer's personal information may be released to creditors.

Congress enacted the FCRA in 1970 and has amended it on two occasions. Not only does the FCRA apply to the three major credit reporting agencies, it also applies to banks, credit unions and agencies that sell medical records and check writing or rental history records, as well as any business that uses information on credit reports for hiring purposes.

This information is provided by “information suppliers,” which is any business that extends credit to consumers. The CRAs also gather Information from public records including civil and bankruptcy court dockets. In the 21st Century, with the ability to transmit information electronically on a continuous basis, credit reports may change regularly, even daily, based on the level of activity. Such a vast amount of information helps CRAs determine a consumer's credit score and predict his or her worthiness to receive credit, based on many factors including payment habits. While the ultimate decision to extend credit is for the banks, credit unions, mortgage companies, and card companies, the information provided by the CRA may help determine a loan's the interest rate and conditions.

At Loan Lawyers, our South Florida consumer rights and debt defense attorneys can help consumers repair their credit. For a no-risk, no-cost consultation, contact one of our South Florida consumer defense attorneys today by calling (888) FIGHT-13 (344-4813).