Consumer credit reports affect us in many and varied ways. While most know that consumer credit reports determine in large part your ability to get financing such as a mortgage home loan, car loan, student loan, credit cards, department store charge cards and the like, consumer credit reports are also used for life insurance, disability insurance, security checks, and other matters to include employment background investigations. Having not only good credit, but accurate consumer credit reports is essential to getting the credit or job that you have earned.
In the United States, Federal law imposes rules on the credit reporting industry designed to ensure your consumer credit reports are accurate and otherwise confirm to the law. The Fair Credit Reporting Act is the Federal law that governs the consumer credit reporting agencies such as Experian, Trans Union and Equifax. It requires consumer credit reporting agencies to ensure the maximum possible accuracy of your consumer credit reports. Furnishers of information that end up on your consumer credit reports are also subject to the rules of the Fair Credit Reporting Act. Furnishers are entities with whom you have financial or credit dealings such as banks, credit card companies, mortgage companies, employers, department stores and even the courts. Furnishers are not required to report information, but if they do, they must provide accurate information about your credit to the consumer credit reporting agencies.
The Fair Credit Reporting Act also requires users of consumer reports, such as a bank that obtains or uses your consumer credit report when deciding whether you qualify for a loan, to notify you about whether it used a consumer credit report and to identify from which consumer credit reporting agency the report came. This enables you to request a copy of a report for free if you are denied credit so that you can review the consumer credit report for any inaccurate or stale information that should not be on the report. You can then dispute the inaccurate account information or other entry with the consumer credit reporting agencies and return to your lender with an updated and correct report.
There are also special rules in place for when an employer or potential employer uses a consumer credit report in a background investigation on an employee or applicant. The employer must disclose in writing its intent to obtain or use the consumer credit report to you, get your written permission before getting it and then, if it takes any adverse employment action such as termination, not hiring you or withdrawing an offer of employment, it must give you advance notice of using the report, a copy of the report and notice of your rights under the Fair Credit Reporting Act. This is designed for the purpose of permitting you to explain any issues in the consumer credit report and to dispute inaccuracies in the report before the employer takes the adverse employment action.
The Fair Credit Reporting Act also has special “Red Flag Rules” in place to help victims of Identity Theft.