Know Your Rights: Credit Law

Under the Fair Credit Reporting Act and similar legislation (including the Fair and Accurate Credit Transactions Act -- FACT Act), you possess specific rights. These laws ensure privacy, accuracy and accountability in regard to your credit information. Here are some of your specific rights:

Who has access to your credit files?

You do! Under the laws, you are entitled to see your credit report anytime you wish. The laws specifically grant you the opportunity to obtain one free credit report per year from each of the three credit reporting agencies, Experian, www.experian.com, Equifax, www.equifax.com, and TransUnion, www.transunion.com. You may also receive a free copy of your report under the following conditions:

You are denied credit, insurance or, in some cases, employment;
You've had an "adverse action" on your report in the last 60 days that lowered your score;
You are a victim of identity theft or other credit fraud (you actually get two free reports during the first year after fraud);
You are unemployed or expect to apply for a job within 60 days;
Your are on public assistance;
Your report is revised based on an investigation you initiated;
You live in a state with a free credit report law;

In addition to you, the laws state that others may see your credit report, but only under the following circumstances:

By court order;
For a credit transaction, extension of credit, account review or collection;
For employment purposes;
For insurance underwriting;
For government licensing;
For assessment of credit risk;
For a business transaction initiated by you;
By the government in pursuit of child support or other lawful investigation, including anti-terrorism efforts;

Finally, your medical information may be distributed in conjunction with medical services, employment purposes or credit and insurance transactions; however, your medical data my not be used by creditors in determining credit eligibility.

What information are you entitled to see from your credit report?

When you request a copy of your credit report, the credit bureau must disclose:

All information in your file (except your credit score, which they offer for a fee);
The source of the information;
Information used to base any adverse actions;
A record of all inquiries made within the last 12 months for credit or insurance transactions (2 years for employment procurement);
A summary of your legal rights under this law;

Note: The laws dictate that overdue child support that is less than 7 years old, and which is reported to the credit bureau, can be shown on your credit report.

What information must a credit bureau provide when you ask for your credit score?

The credit bureaus are required to include with your credit score:

The range of possible credit scores;
Key factors adversely affecting your score;
The date on which your score was created;
The name of the entity providing the score;

Remember, getting your credit score is not free; the credit bureaus are allowed to charge a "reasonable fee" for providing your credit score.

How long does information remain on your credit report?

Items remain on your credit as follows:

Bankruptcy: 10 years;
Civil judgments, suits, arrests: 7 years (or until the statute of limitations is up);
Paid tax liens: 7 years;
Collection or charge-off: 7 years from the last adverse action;

Exemptions to this timeline include: a credit or underwriting transaction of $150,000 or more; employment at an annual salary of $75,000 or more.

What responsibilities do the credit reporting bureaus have involving identity theft?

After you (or your representative) notify the credit bureau of fraud, they must:

Include a fraud alert in your file and provide that report to any file requestor for at least 90 days;
Notify the other credit bureaus of the fraud;
Continue the fraud alert for 7 years, if you request it;
Omit you from any consumer credit-offer lists for 5 years;
Provide you with a summary of your rights as an ID theft victim;
Provide you with contact information for government agencies (such as the FTC) and all credit reporting bureaus;
Provide you with all information regarding your case, free of charge;

Additionally, even if there is no evidence of fraud, deploying military have the right to ask that fraud alerts be placed on their accounts. The laws also provide severe civil penalties if the credit bureaus fail to take proper action regarding your identity theft case.

What responsibilities do creditors have involving identity theft?

Creditors also have specific duties where ID theft is involved:

While your file is under fraud alert status, businesses may not extend credit or increase your credit limit unless they properly verify your identity;
Creditors are blocked from reporting any file information to the credit bureau that has resulted from identity theft;
Creditors are prohibited from collecting or selling a debt that is part of an ID theft case;
When any of your accounts are inactive for 2 years or more, and suddenly become active, the bureaus must closely monitor the activity for ID theft;
If a creditor receives notification of a your change of address, and if, within thirty days, receives a request for a replacement card, the company may not issue the replacement card unless it first notifies you of the request at the former address, or verifies the validity of the change of address;
Creditors must also implement ID Theft Prevention Programs for all accounts;

Again, the laws mandate strong civil penalties for violators.

What responsibilities do creditors have regarding your credit information?

Credit providers are given certain responsibilities when it comes to handling your credit information. Specifically, they must:

Report only accurate information to the credit bureaus;
Correct any inaccurate account information;
Tell the credit bureau if you dispute your account information;
Tell the credit bureau if you voluntarily close your account;
Report collections/charge-offs original delinquency dates within 90 days of furnishing account information;
Respond to Notices of Address Discrepancies they receive;
Have reasonable procedures to respond to credit bureau ID theft notifications, and must not report any fraudulent information to the bureau;
Notify you within 30 days of furnishing negative information to the credit bureaus;
Not use your report information for marketing purposes unless they disclose such intent to you and offer you the chance to opt out of such solicitations;
Allow you to opt out of all marketing solicitations for 5 years; then they must allow you to extend the period at the end of the five years. (Note: This does not apply to consumers with a pre-existing business relationship with a marketer; or if the information is for a benefits plan; or if the marketer is a corporate relative of a business with which you have an established relationship; or if you initiated the communication; or if you expressly authorize the sharing of information; or, finally, if any state anti-discrimination laws would be violated.)

Stay vigilant! Because of the volume of information processed every day by creditors, your account may not accurately reflect your status. Check your credit report often to monitor creditor reporting activity.

What responsibilities do credit bureaus have if you dispute an item in your credit report?

When you dispute an item on your credit report, the credit bureaus are required to do the following:

Conduct a reasonable investigation within 30 days (45 days if you provide them with additional information);
Provide you with information of investigation status within 15 days;
Contact the person who provided the disputed information;
Consider all information you provide with respect to the dispute;
Delete any information found to be inaccurate or unverifiable;
Prevent any deleted information from reappearing on your report, unless it is accurate;
Notify you within 5 days of the final results of the investigation, and provide you with an updated credit report;
Notify you that you have the right to add dispute statements to your file;

If the credit bureaus fail to follow these procedures, they are subject to severe civil fines and penalties.

What responsibilities do creditors have when you dispute an item in your credit report?

As with the credit bureaus, when you dispute account information with the bureau, a creditor must:

Conduct an investigation, reviewing the accuracy of the information they filed with the credit bureau;
Review all relevant information, including items you may present as evidence supporting your cause;
Report results to the credit bureau(s) to which they report your account data;
Correct inaccurate information;
Delete inaccurate information;
Block any further reporting of that inaccurate information;
Adhere to the same deadlines as the credit bureau investigations;

The laws dictate that your creditors may be held civilly and criminally accountable for not following these procedures.

What responsibilities do creditors have when they use your credit report?

Creditors who access your credit files have certain requirements placed on them:

If taking an adverse action because of your credit report, the creditor must tell you, and include which credit bureau (or other source) gave them the report; they must also provide you with a notice of your right to dispute the information;
Only share your report with legally authorized parties;
If making written credit or insurance solicitations based on your credit report, and not initiated by you, they must include the following statements:
- That your credit report was used in connection with the transaction;
- That you received the offer because of your credit-worthiness or insurability;
- That credit or insurance may not be extended if you do not meet certain criteria;
- That you have the right to prohibit use of your file for any credit or insurance transaction not initiated by you;
- The address and toll-free number of the appropriate credit bureau;
Keep all credit-extension criteria used to judge your credit-worthiness on file for 3 years;

Illegal use of your credit information can result in serious criminal and civil liability for offenders.

Two other points about the law: When you make a credit purchase, the law allows merchants to print only the last five digits of your credit/debit card number on the point-of-sale receipt; and, in the case of mortgage transactions, the laws demand lenders provide you with a Credit Disclosure Notice that includes your credit score, range of scores, credit bureaus from which they obtained information, scoring models, and any factors affecting your score.

Hopefully, this summary of your rights under the Fair Credit Reporting Act (and FACTA) will aid you in becoming a better-informed, more empowered credit consumer. If you need clarification on any of its specific elements, contact the Federal Trade Commission at www.ftc.gov.