Pierre Money Mart Blog

The Fair Credit Reporting Act (FCRA) is an American federal law (codified at 15 U.S.C. § 1681 et seq.) that regulates the collection, dissemination, and use of consumer credit information. Along with the Fair Debt Collection Practices Act (FDCPA), it forms the base of consumer credit rights in the United States.

Consumer reporting agencies (CRAs) are entities that collect and disseminate information about consumers to be used for credit evaluation and certain other purposes. They hold the databases which are the origins of a consumer’s credit report. CRAs have a number of responsibilities under FCRA, including the following:

1. Provide a consumer with information about him or her in the agency’s files and to take steps to verify the accuracy of information disputed by a consumer. Under the Fair and Accurate Credit Transactions Act (FACTA), an amendment to the FCRA passed in 2003, consumers are now able to receive one free credit report a year. The free report can be requested by telephone, mail or through the government authorized website, annualcreditreport.com.
2. If negative information is removed as a result of a consumer’s dispute, it may not be reinserted without notifying the consumer within 5 days, in writing.
3. CRAs may not retain negative information for an excessive period of time. The FCRA spells out how long negative information, such as late payments, bankruptcies, tax liens or judgments may stay on a consumer’s credit report – typically 7 years from the date of the delinquency. The exceptions: bankruptcies (10 years) and tax liens (7 years from the time they are paid).

The 3 big CRAs Experian, Trans Union and Equifax, do not interact with information furnishers directly as a result of consumer disputes. They use a system called E-Oscar.

An information furnisher, as defined by the FCRA, is a company that provides information to consumer reporting agencies. Typically, these are creditors, with which a consumer has some sort of credit agreement (credit card companies, auto finance companies and mortgage banking institutions, to name a few). However, other examples of information furnishers are collection agencies (third-party collectors), state or municipal courts reporting a judgment of some kind, past and present employers and bonders.

When you buy a car, furniture or appliances on an installment plan, the dealer or store usually takes a “security interest” in the item you are buying. This means that while you are paying for it, the creditor (person or business to which you owe money) can take back or “repossess” your purchase if you break your promises under the contract. If you buy a car, for example, the dealer or bank from which you borrow money to pay for the car usually takes a security interest in the car. Then, if you don’t make the monthly payment or if you don’t keep the car insured, the creditor can repossess the car. Not all purchases can be repossessed. For example, credit card purchases usually can’t be repossessed. To find out whether the creditor has a security interest and can take back your purchase, check your contract. If the paper you signed when you bought the item includes a security interest, there may also be a “grace period”. A grace period is an additional amount of time for making a payment after it is due. However, if you don’t pay during this grace period, the item you bought can be taken back (repossessed). On the other hand, when you make a credit card purchase, there is usually no security interest in what you bought and it cannot be taken back if you are late making a payment. The law says that the creditor cannot come into your house without your permission to repossess personal property such as furniture or appliances. If someone tries to break into your house or garage, call the police. If someone claims to have legal papers, call a lawyer. If you leave your car parked in front of your house or in your driveway where the creditor can find it, the car can be repossessed easily. If a creditor threatens to repossess personal property, it is probably a good idea to talk to a lawyer. It is easier to prevent a repossession than to get your property back after it has been repossessed.