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Credit Report Problems - What Are Your Rights Under
Federal Law?
INTRODUCTION:
One of your most valuable assets is your credit
record. Our economy and much of our personal lives depend on being able
to borrow sums at reasonable rates and loss of that asset can not only be
expensive for you and your business…but can eliminate many of the
economic opportunities that otherwise would be available.
Consider: personally, credit is not only
“convenient” for the purposes of having credit cards, but
vital if you wish to own a home or even lease one. Credit is essential
for most of the basics of life and business: from owning an automobile to
renting a vehicle, from borrowing money for starting a business or buying
a computer to allow you to communicate with customers.
Yet many people do not understand that
protection of this critical asset requires not only prompt payment of
bills on time but guarding oneself against the often erroneous and at
times vindictive misreporting of one’s credit history. It takes
seven to ten years to eliminate the effect of most bad credit reports.
Sometimes longer. The intelligent
business person will know his or her rights to protect his or her credit
and guard them jealously.
This article shall discuss the basic rights one
has under United States Federal Law.
THE FAIR CREDIT REPORTING ACT
(FCRA)
The Fair Credit Reporting Act (FCRA), a federal
law, was created to help protect the privacy of information in the files
and reports that are created by each "consumer reporting
agency" (CRA). This information shows whether or not you pay your
bills on time, what credit accounts you have open or closed, and your
long term payment history. In addition the report provides personal
information including social security number, address, phone number and
place of employment.
If you apply
for a credit card, bank or other loan, or seek housing through rental,
those you apply to will need to see your report. If you seek bank
financing to start your business or through the SBA, you can expect a CRA
to be consulted. Indeed, such
information is easily obtained by attorneys and any and all law
enforcement agencies which, in turn,often make such information available
to other agencies or to their clients. The CRAs, in effect, are your
written “financial reputation” resource and that information
is a permanent record consulted by those with whom you may wish to
establish a business or financial relationship in any manner.
The FCRA gives you specific rights, the vital
ones which are outlined below. You may have additional rights under state
law depending upon which state you reside in or your business operates in
but assuming the credit information relates to interstate commerce in any
way (and almost all does) the federal law described here will certainly
apply.
Questions
and Answers:
1. Can I get a copy of my credit report to see what
information is in there?
Yes.
You can order a copy of your
credit report, either via phone or online, from the three main Credit
Reporting Agencies (CRA’s), Equifax, Experian or
Transunion. These “big
3” supply of most of the information to companies or individuals
looking to grant you credit. There will be a minimal charge of eight to
ten dollars (US) for this report. Note that you are entitled a free copy
of your report if;
a. You have been denied credit and request a copy
within 60 days of the denial.
b. You are unemployed and will be applying for a job
within the next 60 days.
2. What information cannot be reported in
my credit report? How long can any information stay on my report?
There are certain pieces of
personal information that the law prohibits from being included in your
credit report:
a. Medical information (unless you give your
consent).
b. Notice of bankruptcy that is more than 10 years old.
c. Outdated information may not be reported. In most
cases, a CRA may not report negative
information that is more
than seven years old.
d. Age, marital status, or race (if the request is
from a current or prospective employer).
Certain kinds of information may remain on your report
indefinitely. If, for example, you are applying for credit, insurance or
employment above the dollar limits
noted below, information can be reported beyond the usual seven to
ten year deadlines.
a. A credit
transaction involving, or which may be expected to involve, an amount of
$150,000 or
more.
b. Information about a job with a salary of more than
$75,000.
c. An application for credit or life insurance for
more than $150,000.
d. Tax liens that are not paid.
3. Who is
allowed to see a copy of my credit report?
Access to your file is limited. A CRA may provide
information about you only to people with a need recognized by the FCRA
-- usually to consider an application with a creditor, insurer, employer,
landlord, or other business. Your consent is required for reports that
are provided to employers, or reports that contain medical information. A
CRA may not give out information about you to your employer, or
prospective employer, without your written consent. A CRA may not report
medical information about you to creditors, insurers, or employers
without your permission.
4. What can I do if I find
information in my report that is wrong or doesn’t belong to me?
You have the right to dispute this information with
both the CRA and the source, or creditor who reporting it. It must show
on your credit report that an item is being disputed and is under
investigation until the claim can be proven true or false. A CRA must
remove, or correct, inaccurate or unverified information from its files,
usually within 30 days after you dispute it.
5. What can I do if the information is not corrected?
If a CRA, a user, or in certain cases, a provider of
CRA data, violates the FCRA, you may sue them in state or federal court.
Most law firms will only consider taking cases that have significant
financial or emotional injury as a result of negligent and reckless
credit reporting practices.
If you can demonstrate that the credit information was
intentionally incorrect and you are a business, you also may have causes
of action for
Intentional
Interference With a Business Relationship discussed elsewhere on this website.
CONCLUSION:
Especially for our clients who may not be used to the
all pervasive computerization and information technology of the American
economy, the power of incorrect information to distort one’s
business life can be a shock. One African business man once commented
that in his small city his reputation was known by all and if anyone had
any questions concerning his past performance of his obligations, they would
come to him to discuss it. He shook his head and commented, “Here,
unknown people click a mouse and my reputation is sullied for millions of
people to see.”
An economy as massive and moving as fast as the United States cannot rely on word of mouth
and one can expect that the computerization and impersonalization of
credit reporting must spread to the entire world. And that means that
each of us and every business has a vital interest in both checking and
correcting any misinformation on the world wide credit information
reports that are becoming the norm in every economy. It makes sense for
every business person, at least annually, to check their credit report
and determine its accuracy…for be sure that others will be doing
that and you should make sure that there are no unpleasant surprises for
them…or you…when they do.
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