The Fair Credit Reporting Act

A study by the U.S. Public Interest Research Group found that 70 percent of all credit reports contained errors. These black marks in your credit history can have devastating consequences:

The most valuable thing we have is our good name. As consumers, the most common reflection of our reputation as someone who pays bills on time, is trustworthy and financially sound is our credit report. Unfortunately, the information contained in our credit reports, which are bought and sold daily to nearly anyone who requests and pays for them, does not always tell a true story.

Credit bureaus collect and compile information about consumer creditworthiness from banks and other creditors and from public record sources such as lawsuits, tax liens and legal judgements. The three major credit bureaus -- Experian (formerly TRW), Equifax, and Trans Union -- maintain files on nearly 90 percent of all American adults. Those files are routinely sold to credit grantors, landlords, employers, insurance companies, and many others interested in the credit record of a consumer, often (legally) without the consumer's knowledge or permission. Conversely, consumers rarely check their credit record until after they've been denied or otherwise encountered a problem. Throughout the 1990s, credit report errors have been a serious problem that several states and Congress have addressed.

This is the PIRGs' sixth study on credit report accuracy and privacy issues since 1991. The PIRGs have also participated in state and federal legislative battles to improve credit reporting laws. This report is our first investigation of credit report accuracy since 1996 Congressional changes to the federal Fair Credit Reporting Act (FCRA), designed to improve the accuracy and ease of access to reports, took effect in September 1997. The findings of Mistakes Can Happen are troubling. An alarming number of credit reports contain serious errors that could cause the denial of credit, a loan, or even a job. Further, some consumers never even received their reports, even after repeated calls.

Among the major credit report accuracy findings of the survey:

• Twenty-nine percent (29%) of the credit reports contained serious errors - false delinquencies or accounts that did not belong to the consumer - that could result in the denial of credit;
• Forty-one percent (41%) of the credit reports contained personal demographic identifying information that was misspelled, long-outdated, belonged to a stranger, or was otherwise incorrect;
• Twenty percent (20%) of the credit reports were missing major credit, loan, mortgage, or other consumer accounts that demonstrate the creditworthiness of the consumer;
• Twenty-six percent (26%) of the credit reports contained credit accounts that had been closed by the consumer but incorrectly remained listed as open;
  
• Altogether, 70% of the credit reports contained either serious errors or other mistakes of some kind.
  Among the survey's major access to credit report findings:
  
• Of the consumers that did obtain their credit reports, at least 14% of them were forced to call back 3 or more times after receiving busy signals or had to write a letter in order to receive their report;
• And 12% of the consumers waited two weeks or longer to receive their report once they finished requesting it. It took more than a month for one California man to receive his report.
• Overall, 15% of consumers who attempted to participate in the survey either made at least 3 phone calls and never got through or requested their reports but never received them.

To read the full report, click here http://uspirg.org/uspirg.asp?id2=5970&id3=USPIRG

The Fair Credit Reporting Act

As a public service, the staff of the Federal Trade Commission (FTC) has prepared the following complete text of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq. Although staff generally followed the format of the U.S. Code as published by the Government Printing Office, the format of this text does differ in minor ways from the Code (and from West's U.S. Code Annotated). For example, this version uses FCRA section numbers (§§ 601-625) in the headings. (The relevant U.S. Code citation is included with each section heading and each reference to the FCRA in the text.)

This version of the FCRA is complete as of July 1999.  It includes the amendments to the FCRA set forth in the Consumer Credit Reporting Reform Act of 1996 (Public Law 104-208, the Omnibus Consolidated Appropriations Act for Fiscal Year 1997, Title II, Subtitle D, Chapter 1), Section 311 of the Intelligence Authorization for Fiscal Year 1998 (Public Law 105-107), and the Consumer Reporting Employment Clarification Act of 1998 (Public Law 105-347).