In 2003, the passed the Fair and Accurate Credit Transactions Act, also known as the FACT. FACT substantially amended the provisions of the 1970 Fair Credit Reporting Act. The FCRA had been amended once before – in 1996, when many of the original provisions that protect consumers were tightened and a number of ‘preemptions’ to state laws were enacted. Two of the more important changes made by the FACT to the FCRA were discussed in Part 1 of this report. Those were the provisions that gives every consumer the right to obtain his credit report from each of the three Credit Reporting Agencies (CRAs) once every twelve months, and the responsibility of the CRA’s and credit issuers to honor and follow credit fraud alerts.
There are, however, may other changes to the FCRA that were cemented by the FACT. They include changes that give consumers more rights with regard to their credit reports, ensure more accuracy in reports and increase the accountability of both CRAs and the companies that use their reports and make reports about consumers to the credit reporting agencies. The changes break down into changes to various areas in which the credit reporting agencies have influence, or in which issuers of credit engage in sale or use of credit reports.
FACT changes that affect accuracy of reports and access to credit reports
The 1996 changes placed duties on issuers of credit and those that report to credit reporting agencies. Those changes specifically include things like the responsibility to ensure the accuracy of their reports, and to correct errors when notified of them. Further changes in the 2003 FACT include more protections for consumers.
Free annual credit reports for all consumers, with a timeline for implementation of a delivery method. The reports are to be available through a centralized one-call service established by the Federal Trade Commission. (You can receive your free credit report from www.experian.com)
New timeline for reinvestigation If you find a discrepancy a discrepancy in a credit report furnished through the free credit report provision, the credit reporting agency has 45 days to reinvestigate your dispute.
Education of Consumers The FTC is charged with creating a summary of all the rights consumers have with regard to credit reporting, including their right to dispute items on their credit reports, the availability of free credit reports and how to request their credit score. That summary must be included with any ‘adverse action notice’ – a notice that credit issuers must send out with any denial of credit, and posted on the FTC web site.
Written notification of adverse credit information A financial institution must notify a consumer that it has or will send negative information to a credit reporting agency. The notification must only be sent once.
If you are offered credit on terms that are less favorable than ‘a substantial portion of consumers’ because of information in your credit report, the credit card company must inform you of your right to request a free credit report.
Further regulations hold those companies that furnish information to credit reporting agencies to higher standards of reporting and correction than before. The next part of this report focuses on the responsibility of credit card companies, banks and other financial institutions to ensure that the reports they make are accurate.
