This year, Wayne Westland Federal Credit Union is proud to be celebrating 70 years of serving our community and building relationships with each of our members. Without you, we could not have made it to this incredible milestone. Over the past 70 years, our industry has undoubtedly seen many improvements made and regulations put into place. One of the most notable regulations took effect on April 25, 1971, encompassing all financial and consumer credit institutions: The Fair Credit Reporting Act (FCRA). The Financial Gurus are here to break down exactly what the FCRA is, and how it applies to you. Read on to find out more!
What Is the Fair Credit Reporting Act?
The FCRA is legislation originally developed and passed by Congress back in the 1970’s. Today, the Federal Trade Commission and the Consumer Financial Protection Bureau oversee and enforce the Act. The purpose of the Act is to promote the accuracy, fairness, and privacy of personal information in the following ways:
- Regulate how consumers’ credit information is collected, shared, and used.
- Gives consumers certain rights, such as the right to view and dispute information on their credit report.
- Protect information collected by Consumer Reporting Agencies (Experian, Equifax, TransUnion, etc.)
So, what exactly does this mean for you? Anytime you are applying for a loan, credit card, mortgage, or even an apartment, these companies are pulling your credit and reviewing all the information provided to determine your creditworthiness. In some states, insurance companies and prospective employers can also review your credit to decide whether to offer you coverage or a position. The information on these reports includes the following:
- Personal information – Name, date of birth, Social Security number, known address(es) & phone numbers, known employer(s)
- Current account status on tradelines – paid, open, closed, delinquent, collection, etc.
- Payment history on each tradeline
- Tradeline limits and balances
- Public records – bankruptcies, tax liens
- Recent inquiries
The FCRA aims to ensure that this information is accurate, which is one reason why consumers are entitled to one free credit report per year through each of the major credit bureaus. Don’t forget, WWFCU offers FREE credit reports on the last Friday of every month! This is an essential step in making sure that the information contained in your credit report is correct. Confirming all reported information could mean the difference between an approval, or a denial of a loan application.
The FCRA also limits who can access your credit report and under what circumstances they can. Think credit unions, banks, landlords, insurance companies, government agencies, and debt collection companies. If you are applying for something, it is more than likely a report is being pulled.
What Your Rights Are Under the FCRA
The FCRA was created with the consumer in mind, so there are many rights you have under the Act. Some of these rights include, but are not limited to, the following:
- You must be told if information listed on the report has been used against you – If your application for a loan, insurance policy, apartment, etc. was denied, they must disclose to you what reason(s) they had for doing so. They must also provide the name, address, and phone number of the agency that provided the information. For example, when the credit union unfortunately must deny a loan application, we will verbally tell the member as well as provide an “adverse action” form that has those same reasons listed, as well as their credit score, and what agency(s) to contact if you have any questions.
- You have a right to know what is on your report – If a credit report was pulled on you, you have the right to know what information was listed and have a copy provided to you that is typically offered free of charge. WWFCU will always provide a copy of your credit report when requested, even if you are approved!
- You have the right to know your credit score – A credit score is an indication of your creditworthiness and typically ranges from 300– 900. The higher the score, the higher your creditworthiness. Check out our earlier blogs about credit scores & tips on how to improve your credit!
- You have the right to dispute information on your report – When reviewing your credit report, if you see any errors or tradelines you don’t recognize, you need to act quickly and dispute them with the credit bureaus.
For a full list of your rights, please click the link directly from the Fair Trade Commision:
https://www.consumer.ftc.gov/sites/default/files/articles/pdf/pdf-0096-fair-credit-reporting-act.pdf
Examples of Violations to the Act
WWFCU is committed to our members and complies with all regulations. However, we cannot speak for other businesses that collect and report this data. While violations are a rarity, they still can happen. Here are some examples of violations and what you can do if you have fallen victim.
- Failing to Update/Reporting Old Information – Information on credit reports must be kept current, and it is the reporting agency’s responsibility to make sure they are consistently providing this information. Examples of this violation include the following:
- Showing tradeline as “Active’ when it was closed out by the consumer
- Reporting certain information that is more than 7 – 10 years old
- Not discharging an account/debt that was included in a bankruptcy
- Supplying/Reporting Inaccurate Information – Reporting agencies are expected to report only accurate information to the credit bureaus. Violations of this can include:
- Reporting payment(s) as late when you paid on time
- Reporting an inaccurate balance
- Listing you as the “Primary Account Holder” when you are an “Authorized User”
- Mixing Up Files – Do you share the same name as someone in your family? We all seem to know a “John” Jr. and “John” Sr. This is an example of when similar identification backgrounds get mixed up, and information is reported inaccurately. The son may have his father’s info showing on his credit report or vice versa. Other examples include:
- Social Security numbers are similar to each other
- Same last names with similar first names
- Similar names with same city/zip code
More Information & Resources
The Financial Gurus hope you can now better understand what The Fair Credit Reporting Act is and how it affects you as a consumer. For additional information and resources about the Fair Credit Reporting Act, please visit the NCUA (National Credit Union Administration) website using the link provided below.
Sincerely,
Your Financial Gurus
