Your Credit Score – Know Your Rights About Knowing Your Score

The Fair Credit Reporting Act (FCRA) was legislation passed in 1970 in order to provide oversight for the collection of consumers’ private credit information and to establish rules for accessing credit report data.

The law allows all consumers to have free access to their credit reports from each of the three major credit reporting agencies every 12 months.

WHO ARE THE MAJOR PROVIDERS OF CREDIT INFORMATION?

The major credit reporting agencies include Experian, Equifax, and Transunion.  The information that they maintain has a significant impact when it comes to an individuals’ ability to access loans when applying for a credit card, automobile loan, or mortgage.

HOW AM I PROTECTED UNDER THE FAIR CREDIT REPORTING ACT (FCRA)?

The Fair Credit Reporting Act helps to protect consumers as credit reports include private information related to their spending habits, which are provided to insurance agencies, credit card companies, mortgage lender, and other vendors who request access to this information when you apply for credit.

By being able to access their reports annually at no cost, consumers are able to review their personal information, with the opportunity to identify any discrepancies or inaccuracies, which may artificially lower their score and prevent credit applications from being approved or receiving the best terms for loans.

Potential lenders use the information included in your credit report along with other factors to help to determine your creditworthiness and decide whether you present too great a risk to provide lending.

If you do find errors or discrepancies on your credit report, it is important to understand that getting these items corrected can take some time (often weeks or months).  It is crucial to review your reports often so that corrections can be made as early as possible.

The Fair Credit Reporting Act covers the right of individuals to dispute inaccuracies on their credit reports and once corrected, increase the credit scores to the appropriate levels.  Changes in interest rates due to incorrectly lower credit scores can result in spending thousands of dollars in interest unnecessarily over the life of the loan.

HOW CAN I GET A COPY OF MY REPORT?

You can order a free copy of your credit report online, over the phone, or by completing a form that allows you to receive the free copy of your report by mail.  You can access your free credit report from the three major reporting agencies directly by going to the Annual Credit Report website.

WHAT HAPPENS IF MY LOAN APPLICATION IS DENIED?

In addition, it is important to note that you are also allowed to receive a free copy of your credit report if your application for a loan, credit card, or other application was denied.

The company denied your credit application is required to provide you a letter with the basis for the denial, along with information on how to receive a free copy of the report used in making the final decision.

While the Fair Credit Reporting Act provides rules for governing the access of data, not just any company may have access to it.  Lenders, insurers, employers, landlords, and others who want to gain access to your credit reports in order to determine eligibility for credit cards, loans, employment, etc., must have your permission to do so.

Your credit reports and scores can have a major impact on your financial life.  Knowing what’s in your reports and protecting their accuracy should be a priority, especially if you have plans to make a major purchase using credit in the near future.