Under the Fair and Accurate Credit Transactions Act, credit card companies and other financial institutions and lenders will be held to higher standards of accuracy in reporting than they ever have before. In other words, creditors are required to make every effort to ensure that any report they make to a credit reporting agency is accurate.
Before this change, those who make reports to credit reporting agencies – i.e. the people you pay your money to, also known as ‘furnishers of information’ – could not report inaccurate information if they knew or consciously avoided knowing that it was wrong. The FACT raises the bar – the new standard says that furnishers may not report information that they know or have reasonable cause to believe is wrong.
What does this mean to the consumer? Essentially, if you dispute a charge on your credit card statement to your credit card company, they have ‘reasonable cause to believe’ that the charge is inaccurate, and may not report a non-payment to a credit reporting agency based on that charge.
If a credit reporting agency reinvestigates an inaccuracy on a credit report, and based on the investigation the credit report is changed, the credit reporting agency is now required to inform furnishers of information of the result of their investigation.
If a furnisher is informed of a credit reporting error by a credit reporting agency, they must now change their records and permanently block reporting the error to creditors and lenders.
In other words, if you find a mistake on your credit report and report it to the credit agency, they must investigate it. If their investigation finds that the report is in error, the credit reporting agency now must take steps beyond simply amending your credit report. They must contact the company that provided the inaccurate report and tell them the result of their investigation. When the company that made the report is informed of the error, they have to change their records, remove the error and ensure that it is not reported to any other credit reporting agencies.
Another change allows consumers to directly contact a furnisher of information that is in error on their credit report. Until the FACT, a credit card company reporting a late payment that was in error was only required to reinvestigate that late payment if a credit reporting agency informed them that it was in dispute. Now they must reinvestigate complaints that come directly from the consumer – pending regulations on procedure to be created by the FTC.
Finally, one FACT provision is specifically aimed at helping prevent the issuance of credit to identity thieves. Under the new rules, a credit reporting agency must notify the requester if the address of the consumer on the request differs substantially from the address on the consumer’s credit file. If a credit card company requests a credit report on you, and the address given in the application for credit is significantly different from the address that the credit agency has on file for you, the CRA is required to alert the credit card company of that fact. By pinpointing discrepancies between applications for credit and existing reports, the new law will help to reduce losses due to identity theft.
