Government Help for Credit Report Repair

If you use credit, that credit information is often reported to the credit bureaus and will appear on your credit report. Credit reports can contain both positive and negative data. They can also contain errors and inaccuracies that can lower your credit score. As a consumer, however, federal laws give you rights when it comes to repairing your credit.

Applicable Law

• Consumer credit reports are governed by the Fair Credit Reporting Act. Congress passed the act in 1970 to provide consumers rights regarding their credit reports. Some of the rights consumers have under the FCRA include unfettered access to a credit report upon request, the right to limit who can view the report, and the right to dispute inaccurate information included on a credit report with the credit bureau.

Significance

• Prior to the passage of the FCRA, consumer credit reporting agencies disseminated reports to lenders that might have contained inaccurate data. The reports also included information that was not relevant to the lending process, such as marital status, race and sexual orientation. Consumers had no recourse to challenge this information or to have any of it corrected or removed. Today, under the FCRA, bureaus are prohibited from including erroneous details on a report and must delete that information if unable to verify its accuracy. Also, a credit report cannot include information such as race, marital status or sexual orientation.

Effects

• Under the FCRA, bureaus must respond to consumer disputes to remove or correct credit report errors. They cannot ignore such a request unless they deem it frivolous, such as from a consumer who repeatedly disputes the same data without providing any corroborating evidence to support the claim. Once a dispute is filed, the bureau has up to 30 days to contact the reporter of that information, verify the data and make corrections. The FCRA then requires the bureau to provide the consumer with written results of the investigation and an updated copy of the credit report.

Considerations

• Congress passed an addendum to FCRA that impacts additional consumer credit rights: the Fair and Accurate Credit Transaction Act. FACTA gives all consumers the right to receive one free report every year from each of the three major credit bureaus: Experian, Equifax and TransUnion. To comply with this mandate, the three bureaus established the site annualcreditreport.com, which allows consumers to order all three reports in once place.

Warning

• According to the Federal Trade Commission, you do not need to pay a company to repair your credit report. The claims made by credit repair companies could be a scam. The FCRA gives you the right to dispute errors and have them corrected for free. Avoid websites that offer a free credit report but ask for credit card information during sign-up, as they require you to enter a free trial of credit monitoring. If you don't cancel in time, your credit card will be charged monthly until you do. In 2005, the FTC sued Experian, owner of the site freecreditreport.com, for such deceptive advertising. Experian settled the suit and agreed to compensate the consumers who were charged for credit monitoring.