CREDIT REPORTING AGENCIES ACT

The Credit Reporting Agencies Act provides guidelines to credit reporting agencies on the type of information provided on a consumer credit report. Information contained on a consumer credit report are frequently used by lenders to determine the creditworthiness of an individual before credit is extended. Information on these reports may also be used by employers, insurance companies, and many other companies where a legitimate business transaction is involved. Companies that provide such consumer information, such as Transunion, Experian, and Equifax, must adhere to the guidelines set forth by the Credit Reporting Agencies Act. This Act sets forth the allowable purposes of consumer credit reports and the requirements on the specific type of information that may be contained in a credit report. Additionally, according to this Act, all information must be accurate, complete, and verifiable.

Transunion, Experian, and Equifax

Transunion, Experian, and Equifax are the largest nationwide credit reporting agencies that may provide a consumer credit report to companies for legitimate business purposes. According to the Credit Reporting Agencies Act, there are guidelines that these credit reporting agencies must follow on the collection and use of each consumer credit report, including the specific information that may be contained in such a report. This Act and others emphasize fair and accurate reporting of consumer information, including information that is also available on public records. A lot of information about an individual may be provided by these companies, including:

Home address
Employment information
Amount of credit
Credit use
Payment history
Debt collection information
Bankruptcy
Arrests
Liens
Judgments

Accurate, Complete, and Verifiable

Because the Credit Reporting Agencies Act requires that all information provided by credit reporting agencies on a consumer credit report must be accurate, complete, and verifiable, a consumer should obtain copies of their credit report on a regular basis to make sure that the information does indeed meet these requirements. Although Credit Reporting Agencies may charge a fee for a consumer credit report, individuals are allowed to obtain copies of their credit report from all three major credit bureaus for free once every twelve months without such a request negatively affecting their credit. An individual may also obtain a free copy of the report if negative action has been taken against that individual based on information found in such a report. It is important to note that contacting each of the three major nationwide credit bureaus individually in order to obtain such a report may result in automatic enrollment in each of these agency’s credit rating monitoring or tracking service unless the consumer follows the provided instructions to cancel such a membership within the allotted time frame.

What to Do about Inaccurate Information

If an individual finds that their credit report contains inaccurate information, that individual has a right to dispute the information in writing with the reporting credit bureau according to the Fair Credit Reporting Act. This Act provides that the reporting agency must investigate the matter and remove any information that does not adhere to the accurate, complete, and verifiable guidelines as set forth in the Credit Reporting Agencies Act. The consumer should also file a dispute in writing with the company that provided the inaccurate, incomplete, or unverifiable information with the credit bureaus.

Statute of Limitations

If information on a consumer’s credit reports is accurate, there is not much that can be done to change any negative information except for allowing enough time to pass or making an effort to pay off the debt. A statute of limitation exists that provides for negative events to be removed from an individual’s report after a certain period of time. This time limit is typically 7 years for most creditors, 10 years for bankruptcies, and 15 years for tax liens. Lawsuits and other unpaid judgments may remain on an individual credit history for 7 years or until the specific statute of limitations expires, whichever of the two is longer. Criminal convictions will remain a permanent part of record unless a full pardon is issued. While the statute of limitations for some negative credit events may begin the date the event occurred, it is different for many types of debt. The 7 year statute of limitations typically does not begin until 6 months after the last payment has ever been made on a debt. If any payment is made on a debt, whether to the original creditor or to a debt collection agency, the 6 month time period starts all over again, and the debt will remain on an individual’s consumer report for 7 years after that time. Because this negative information remains so long on an individual’s report, it is often beneficial to the total credit score to make payment arrangements in order to eliminate the debt, especially if there is still a lot of time left before the statute of limitation allows for the removal of the record of debt.