The Fair Credit Reporting Act

The Fair Credit Reporting Act is a federal law that regulates the collection, dissemination, and use of consumer credit information. In addition with the Fair Debt Collection Practices Act, it forms the base of consumer credit rights in the United States. The Act was originally passed in 1970 and is enforced by the United States Federal Trade Commission.

Consumer reporting agencies (CRAs) are entities that are responsible for collecting and distributing information about consumers to be used for evaluating a person's credit worthiness and certain other purposes. They hold consumers’ credit reports in their databases. These entities have a number of responsibilities under the Fair Credit Reporting Act, including:

• A responsibility to provide a consumer with information about his or her credit report and to take steps to verify the accuracy of information disputed by a consumer.
• A responsibility to notify a consumer if a formerly inaccurate item is being reinserted into a credit report in writing within five days
• A responsibility not to retain negative information for an excessive period

There are three big credit reporting agencies: Experian, TransUnion, and Equifax. These three organizations do not interact with information furnishers directly as a result of consumer disputes. These three use a system called E-Oscar.

In some parts of the country, there is a fourth credit reporting agency, CDC Credit Services, which is responsible for all information found within Equifax. In Texas, for example, if a consumer tries to dispute information with Equifax directly, the credit report will not be changed. To change the credit report, the Texas consumer must go through CSC.

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