Home Home Buyer Home Seller Per Diem Interest Credit report Search
Real Estate Tax first-time Programs Title Insurance Transfer Tax Calculators Interest Rates
FHA Loan VA Loan USDA Loan Conventional Loan Jumbo Loan Reverse Mortgage

Please Share






The purpose of the Fair Credit Reporting Act is to

law-book-and-gavelThe purpose of the Fair Credit Reporting Act requires credit-reporting companies to use reasonable procedures for collecting, maintaining, and distributing consumer information. The law also establishes accuracy criteria for creditors that provide information to the credit reporting agencies. New regulations under the Fair Credit Reporting Act to require anyone providing information to consumer reporting agencies (including debt collectors and original creditors) to maintain reasonable guidelines and procedures and be confident of the accuracy of the information they report. The regulations became effective on July 1, 2010.

The Fair Credit Reporting Act also regulates access to credit reports. Many states have passed laws that provide even greater protection for consumers than the federal law. The Fair Credit Reporting Act gives you the right to challenge both the accuracy and the completeness of any item in your credit file, not only incorrect information. The difference between accuracy and completeness can be important. For example, your credit report might state that a creditor sued you, but the information might be incomplete if you paid the debt or are not liable for it. You are permitted to dispute the information about the lawsuit since it is incomplete.

The Fair Credit Reporting Act (FCRA) also gives you the right to correct any inaccuracies related to medical records, check-writing history, employment background, and tenancy records.


How long can items can stay in a credit report?

The Fair Credit Reporting Act limits the time period, a credit reporting agency can report negative items on your credit report.

  • Bankruptcies - Bankruptcy can stay on your credit report for 7 to 10 years, depending on the type of bankruptcy. Chapter 7, 11 and 12 bankruptcies can stay on your credit report for 10 years from the date filed. Completed Chapter 13 bankruptcies are usually removed after seven years from the filing date.
  • Closed accounts - Credit accounts that are paid as agreed can stay on your credit report for up to 10 years'
  • Collection or charged-off accounts - Seven years from the date of your first missed payment that led to the collection or charge-off status
  • Late payments - remain on a credit report for up to seven years from the original delinquency date (the date of the missed payment).
  • Repossessions - Can also stay on your report for up to seven years from the date of the first missed payment that led to the negative status.
  • Foreclosures, short sales, or a deed in lieu of a foreclosure - If reported in a negative status - seven years.
  • Hard Inquires - Two years. A hard inquiry is when you are actively seeking credit. The lender pulls your credit report to determine whether your credit profile meets the lender's lending guidelines.
  • Soft Inquiry - A soft inquiry is a casual review of a person's credit report. Did you ever wonder about those pre-approved credit card offers? Chances are the credit card company took a look at your credit report and determined that you're a good credit risk. Soft inquires can also occur with employers. Employers or prospective employers are permitted to check your credit report with your permission.

A lawsuit or judgment can be reported on your credit report for up to seven years from the date a lawsuit was filed and seven years from the date a judgment was entered against you, or until the governing statute of limitations has expired, whichever is longer. Most statutes of limitation are usually less than seven years, consequently seven years is the likely maximum time judgments or lawsuits will appear on your credit report. Paid judgments may be reported in no more than seven years after the judgment date.

Paid tax liens may be reported from the date of payment for up to seven years.

Most criminal record background, including information about indictments or arrests, can be reported for seven years, or until the statute of limitations has expired, whichever is longer. Criminal records convictions may be reported indefinitely.

Delinquent accounts may be reported for seven years following the date of the last scheduled payment prior to the account becoming delinquent. Paid off delinquent amounts can show that you were previously delinquent.

For example, if your loan payments for April and June 2015 were each one-month late, the credit report may show for seven years, from the date after each payment was due, that you were 30 days late twice in 2015, even though the payment for that account shows your payments for the rest of 2015 were made on time. Charged off accounts (accounts that the creditor gave up on) or sent to a collection agency or some other similar action (including a repossession) may be reported for up to seven years plus 180 days from the delinquency.

Creditors that report an account as charged off or placed for collection must inform the reporting agency the month and year the delinquency occurred and the due date of the first payment missed. The creditor is also required to provide this information within 90 days of its reporting of the charge-off. The seven-year reporting period begins 180 days after the delinquency of the first missed payment that led to the collection or charge-off. The credit clock does not start ticking again if the account is sold to a different collection agency, you make a payment on it, or you file a dispute with the credit reporting agency.

Overdue child support may be reported for seven years.

Some negative information concerning student loans that are made, guaranteed, or insured by the U.S. government, or national Direct Loans for students, can be reported for much longer than seven years.

Any other adverse information may be reported for seven years from when the event occurred.

Inquiries from creditors are not specifically limited, but the normal time limit is seven years.

Most credit reporting agencies do not report inquiries after two years and as a practical matter, credit reporting agencies often delete all items after seven or ten years.

Rotating question markFrequently Asked Questions About the Fair Credit Reporting Act

Q. How does the Fair Credit Reporting Act protect consumer rights?
A. See Wikipedia

Q. What is a summary of your rights under the Fair Credit Reporting Act?

  • Access to your file is limited.
  • Consumer reporting agencies may not report outdated negative information.
  • Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information.
  • You have a right to place a “security freeze” on your credit report, which will prohibit a consumer reporting agency from releasing information in your credit report without your express authorization.
  • You have the right to dispute incomplete or inaccurate information.
  • You have the right to know what is in your file.
  • You have the right to ask for a credit score.
  • You may limit “pre-screened” offers of credit and insurance you get based on information in your credit report.
  • You must be told if information in your file has been used against you.
  • You must give your consent for reports to be provided to employers.
    SOURCE: A Summary of Your Rights Under the Fair Credit Reporting Act

Q. When was the Fair Credit Reporting Act passed?
A.
October 26, 1970

Q. Who enforces the Fair Credit Reporting Act?
A.
The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) oversee and enforce the provisions of the act.