Credit Reporting

Things You Should Know About the Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) helps ensure that consumer reporting agencies collect the information fairly and accurately while maintaining privacy. This act is crucial for assisting many people since consumer reports majorly affect most people’s lives. For example, your consumer report can affect your ability to obtain housing, a loan, or even a job. Because of this impact, the FCRA helps protect you in many ways. Here are a few ways it helps:

Your Consumer Report Cannot Be Obtained Without Your Consent

Suppose a person or business wants to obtain a consumer report about you, such as a background check from a consumer reporting agency. In that case, they must have a legitimate reason and get your permission to obtain the report. This requirement means that not just anyone can receive a background check or credit report on you. Even if you have applied for a loan, housing, or a job, you still have to give your permission before the creditor or lender can acquire the consumer report.

Employers and Landlords Must Provide Adverse Action Notice

If an employer or landlord decides to take action based on a background check, they must provide you with a preliminary and final adverse action notice. They must give the first notice before taking adverse action. They must also inform you about their intentions to take adverse action based on the background check. It must also contain a copy of the background check and a summary of your rights under the FCRA.

The final notice must inform the employee or applicant that they based the adverse action on the background check they received. As such, the notification must also contain a copy of the individual’s rights under the FCRA. Both notices often prove crucial when learning why someone is taking adverse action. It also allows you the opportunity to dispute any incorrect information.

The FCRA Gives You the Right to Obtain a Free Credit Report Once a Year

The FCRA ensures that everyone has the right to obtain a free credit report from the three major consumer reporting agencies once a year. This report contains important information about you and can seriously impact your life. Therefore, it is crucial to take advantage of this right and check your credit report from each of the three major credit reporting agencies. If you check your report, you can check for any errors and have them corrected. Making corrections like this could improve your credit score.

Consumer Reporting Agencies Must Address Disputes

The FCRA requires consumer reporting agencies to investigate and respond to disputes within a reasonable time. A “reasonable time” generally means thirty days. So, suppose you find any mistakes in a consumer report. In that case, it is necessary to notify the agency that provided the information, whether it is a background check or a credit report. In addition, they are required to correct errors, and having any mistakes corrected could benefit you in the future.

Negative Information Is Not Kept On Your Report Permanently

Consumer reporting agencies must remove negative information from consumer reports after a certain period. However, the amount of time depends on the data involved. Regardless, you can expect the removal of this negative information in due time.

Final Thoughts

The FCRA provides consumers with many advantages. First, you should know what it offers to best take advantage of what it offers. This article has discussed several ways the FCRA benefits you, but it could be worth your while to learn more.

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