FAQs about the Fair Credit Reporting Act

Consumer credits scores profoundly impact a landlord’s decision in screening tenant applicants. Based on the information in the rental application, landlords may run a credit report or credit screening to examine payment history as well as other prior renter information. The Fair Credit Report Act outlines the requirements for credit reporting agencies and the rights that consumers have in accessing and verifying their credit reports. The importance of an accurate credit score cannot be understated; there are a number of common questions about the FCRA and what protections it affords.

What is the purpose of the Fair Credit Reporting Act?

Congress approved the Fair Credit Reporting Act in 1970 because of the growing power of credit reporting agencies and the importance of accurate reporting for the banking system. It requires reporting agencies to follow reasonable procedures in keeping consumer credit reports private and accurate. Furthermore credit reporting agencies are required by law to disclose the information collected to that individual. It sets an important tone for the private companies that collect personal data, and outlines the responsibilities they have for maintaining and sharing that sensitive information.

How accessible is my credit report?

Under the permissible purpose doctrine, a credit report can only be accessed by those with a valid reason for doing so. Additionally, individuals are entitled to a free copy of their credit report once a year from the private companies that collect and compile those reports. A report can be requested online from www.annualcreditreport.com; however it is important to note that there are additional companies that track renter and financial history. Any company that tracks such information is required to disclose a free report once a year. The landlord can assist in confirming what reports they utilize in tenant screening.

Can I change the information in my credit report?

The Fair Credit Reporting Act requires landlords to notify prospective tenants if their application is denied on the basis of their credit report. The law guarantees that people are not denied based on what may be a deceptive report. If the information is correct regarding prior evictions, damages, or late payments, then better habits can be implemented to improve the report over time. Credit reporting agencies are obligated to expunge any negative information from an individual’s report after seven years. The seven year requirement creates more reasonable expectations of a renter’s ability to make payments. Furthermore, individuals have the right to challenge inaccurate information; credit reporting agencies are in turn required to verify and provide the basis for any negative information in their reports. Regularly accessing your credit report reduces errors associated with outdated information, inaccurate data, and poor ratings stemming from identity theft.

The best place to begin is by accessing your most recent credit score online. First, make sure that the information in the reports is correct. Viewing the report helps clarify what information is collected on you and how it appears to landlords. Understanding the basis for a good credit score is fundamental in creating good habits moving forward. It is just as important to check your reports annually to verify that the information remains correct.

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