How It Works

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In 1970, Congress established the Fair Credit Reporting Act (FCRA) to safeguard consumers when interacting with credit bureaus. The FCRA places restrictions on who can access a consumer’s credit report, sets limits on how long bad material must stay on a report, and includes a number of identity fraud safeguards. According to the FCRA, the credit bureaus—known as “consumer reporting agencies”—must adhere to “reasonable procedures” to guarantee the “maximum possible accuracy” of credit records. The consumer’s right to challenge inaccuracies in their credit record is one of the most important FCRA safeguards. Both the information source and the credit agencies are required by the FCRA to look into complaints and update any incorrect or incomplete information. The term “furnisher” is frequently used to describe the information source. Banks, credit card companies, vehicle loans, collection firms, and other businesses are examples of furnishers. A credit agency must look into the things in issue after receiving a dispute from the customer, typically within 30 days. If the bureau finds the disagreement to be unfounded or unrelated, it may refuse it. The FCRA uses the word “reinvestigation,” which is what the credit bureau must do in order to perform a “reasonable” investigation that includes reviewing and taking into account all pertinent information provided by the customer. The agency must also tell the furnisher of the dispute within five days of getting it, and the notification must include “all relevant information” supplied by the customer regarding the dispute. The furnisher has obligations under the FCRA after receiving notification of a dispute from the credit agency. The furnisher is required to carry out an inquiry, examine all pertinent data supplied by the credit agency, and submit a report with the findings to the bureau. The three national agencies must be notified if the furnisher discovers the contested information to be incorrect so that it can be changed in the consumer’s credit report file. The credit bureau is required to provide the customer with a written summary of the investigation’s findings and a free copy of their credit report if the disagreement leads to a change. The credit agency cannot reinstate disputed information in the consumer’s credit report after it has been rectified or deleted unless the furnisher certifies that it is true and full. The consumer must also receive a written notification from the credit agency that contains the furnisher’s name, location, and contact information.