5 Most Common FCRA Violations (And Their Solutions)

How important is your credit score? Your credit score determines your ability to get access to credit, get a job, and a home.

Unfortunately, errors and misreporting can get in the way of those things. About 20% of all Americans have mistakes on their credit reports.

Your credit score is so important that there are laws that govern how your credit is reported. The primary law is FCRA, and as you can see, there are plenty of FCRA violations and errors.

How can you protect yourself? You need to know what FCRA is and what the common violations are. Keep reading to learn these things and what you can do if you are the victim of a FCRA violation.

What Is FCRA?

FCRA is called the Fair Credit and Reporting Act. It was a law that was enacted in 1970 to protect consumers from mistakes on their credit reports.

You have to keep in mind that the credit industry was fairly new at the time. Credit cards with revolving credit didn’t occur until the late 1950s.

The industry was trying to grow and legislation was necessary to protect consumers and banks from scams and other banking issues.

How Your Credit Is Reported

To better understand FCRA and your credit score, you need to learn how credit is reported. There are your credit issuing agencies, credit reporting agencies (CRAs), and credit scoring systems.

Credit issuing agencies are institutions where you have credit. This can be the Department of Education for your student loans. Retail stores where you have credit cards, banks, and any other place where you have a loan or credit card fall into this category.

The credit issuing agencies report any activity to the credit reporting agencies. The main credit reporting agencies are Equifax, Experian, and TransUnion.

Anytime you apply for a new card or loan, make a purchase with the credit card, or submit a late payment is reported to the agency. Opening or closing new accounts are reported, too.

The credit scoring systems like FICO and VantagePoint then take that information from the CRAs and create a credit score from them. They look at things like your credit utilization rate, percentage of on-time payments, and the number of open accounts to create a score.

With so many agencies handling the credit reports for millions of Americans, it’s easy to see why there are mistakes on many credit reports.

Most Common FCRA Violations

The FCRA applies most to the credit reporting agencies since they’re the ones responsible for gathering your information. How do they violate the Fair Credit and Reporting Act?

These are the most common FCRA violations you need to be aware of.

1. Reporting Old or Inaccurate Information

Did you have a bankruptcy that is still on your report over 10 years after it was discharged? Maybe there’s a credit card that you paid off and closed that still shows up as open on your report.

There could be inaccurate late payments or other issues with your credit report. These things do happen, and it’s a violation of your rights under FCRA.

2. File Mix-Ups

One of the scariest things that credit reporting agencies do is mix up your data with someone else’s data. It’s particularly alarming in the age of ID theft.

Credit reporting agencies have to be held responsible for providing accurate information. Someone else’s accounts or information can drag your credit score down.

3. Privacy Violations

There are two terms you need to be aware of in FCRA: permissible parties and valid need. That determines who can see your credit report.

Permissible parties are landlords, loan companies and banks, insurance companies, and utility companies. The valid need clause requires them to show that there is a legitimate reason to obtain your credit report.

Anything that falls outside of these clauses is a violation of FCRA.

4. Failure to Investigate Your Report within 30 Days

You do have some recourse if there’s an error on your credit report. The credit reporting agency has to provide an address and instructions to dispute your report.

They have to report to the other credit reporting agencies that you dispute the item on your credit report. They then have to investigate the item within 30 days.

The credit reporting agency then has to report their findings within 5 days and remove the incorrect information.

If this procedure doesn’t work for you or if you are having issues, it’s a clear violation of FCRA. Financial Justice Now litigation lawyers work with consumers in these cases.

5. Employers Obtain Your Report Without Authorization

You have every right to decide whether your employer or prospective employer sees your credit report.

Some employers use it to make hiring decisions, particularly with financial positions. They believe that if you have credit problems, you can’t be responsible with their finances.

You have to give consent before an employer can pull your credit report. Failure to obtain your consent is a violation of the Fair Credit Reporting Act.

Take Charge of Your Credit Report

You know that your credit score is a sign of financial health. It’s also a doorway to get a personal loan, credit card, buy a home, or rent an apartment.

FCRA violations like privacy violations and file mix-ups are very common. They can also get in the way between you and getting the credit you need to live a better life.

You can correct your report by writing to the credit reporting agencies. Having legal assistance always helps, too.

Do you want to know more about your legal rights? Check out the Law section of this site for more helpful articles.