Financial Literacy 101: Your Rights
Your credit report is one of the most important details about your life, in a numerical sense. It is how organizations, businesses, and renters determine your financial stability and is often used to represent your trustworthiness in a numerical world. Your credit score determines if you can get a loan, and the interest rate on that loan. It determines if you can rent a house or a car, mortgage rates, and mortgage approval. It can even be used by employers when deciding if you are the right person for a job.
Credit scores matter. Fortunately, your credit score isn’t a mystery and if someone files a fraudulent report, you are protected by the Fair Credit Reporting Act. This defends both your right to know about your credit score (not just an invisible number used to judge you) and ensures that you can defend yourself from false filings, debt collectors, mistakes, and identity theft.
Here's what you need to know.
What is the Fair Credit Reporting Act ?
The Fair Credit Reporting Act (FCRA) is a set of laws that relate to your credit report. It determines quite a few important details about how your credit report is handled in an effort to make sure no one is disadvantaged by companies manipulating credit reports or using them against you.
The FCRA Determines:
- Who can see your credit report
- How long debts and demerits can stay on your credit report
- Your right to correct and protect your credit report
The Purpose of the FCRA & How it Affects Consumers
The purpose of the FCRA is easy to see if you picture a world without it. Your credit report is a score built by reports send in by lenders and your creditors. Anyone can register a debt in your name, and this number is used to determine where you can live, where you can work, how much you can make, whether you can get loans, and how much you are charged for loans.
Without the FCRA, debts could be registered in your name to lower your credit score without your control – and even more entities could request your credit report to use against you. With the FCRA, not only is use and detail of requested reports restricted, but you also have protected rights to see, correct, and temporarily freeze your credit report in order to make sure this essential report about you is accurate.
“An investment in knowledge pays the best interest.”
– Benjamin Franklin
Here's what you need to know.
Your Rights Under the FCRA
The FRCA outlines an important number of rights that every person has in the face of both creditors and credit bureaus. Your rights include the ability to know your credit report, have some control over who can request your credit report, and to keep inaccurate information off your credit report.
It also protects you from people who would list false debts in your name as a form of fraud, identity theft, or personal attack.
You have the right to:
- Know your credit score at all times
- Request access to your complete credit report once a year, from each of 3 credit bureaus
- Know when your credit is being used in a decision about you
- Request a copy of credit report pulled by landlords/leasers - in some circumstances
- Dispute inaccurate details on your credit report
- Remove outdated negative information (usually 3, 7, or 10 years)
- Opt out of loan prequalification and pre-approved credit cards/insurance offers
- Security-freeze checks on your credit report
- Request fraud-risk protections
Protects you from:
- Your credit report being viewed by entities without a permissible purpose
- False negative details on your credit report
- Debt collectors "resurrecting" old debt on your credit report
- Unauthorized people, orgs, or businesses checking your credit report
Here's what you need to know.
Reasons Your Credit Report Can Be Viewed
It’s also important to know who can view your credit report and why. For example, landlords can pull a limited credit report, but you also have the right to see their copy. Employers and renting agencies may see a different version of your credit report, and you can opt-out of credit/insurance pre-approval views if you choose to.
- Lenders you have applied with
- Landlords you have applied with (restricted report)
- Employers you have applied with
- Insurance companies to underwrite your policy
- Rental companies you with to rent from
- Phone and utility companies
- Creditors you have a relationship with
- Debt collectors seeking payment
- Lenders pursuing loan prequalification
- Certain government agencies
Exercise Your Rights Under the FCRA
The FCRA is there to make sure the credit report system is fair. It is your right – and your obligation to yourself – to make use of it. Every year, be sure to request your credit report from all three credit bureaus (you never know which one will be used for a loan, lease, or job).
Make sure that there are no false debt reports, and that your demerits are removed at the right time. Protect yourself from debt collector abuses, and secure the highest possible credit score based on your accurate credit history. Contact us for more financial literacy tips and debt resolution resources.