In a consumer world, which is completely dependant on credit, the Fair Credit Reporting Act or FCRA is a law that protects credit rights in USA.

What is the Fair Credit Reporting Act (FCRA)

The Fair Credit Report Act or FCRA for short is codified, American Federal law that has been enacted for the regulation of the collection, dissemination, and use of all information regarding consumer credit. Couple with the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA) forms the foundation of all consumer credit rights in the United States of America.

FCRA and Consumer Reporting Agencies

So, who actually collects and disseminates information for the purposes of credit evaluation and other purposes? It is the Consumer Reporting Agencies or CRAs that do so and they do so under the ambit of Fair Credit Reporting Act. The Credit Rating Agencies provide consumers with information that has been kept on the agency files and also helps verify the accuracy of information if a consumer disputes the information kept by them. An amendment was made in the FCRA in 2003 that enabled consumers to get a free copy of their credit report annually. The Fair Credit Reporting Act also designates a certain amount of time that negative information about consumer credit can be retained by the CRAs, after which they have to remove them from their files.

FCRA and Information Furnishers

The Fair Credit Reporting Act also defines an information furnisher. According to the FCRA, it is a company whose purpose is the provision of information to consumer reporting agencies. Typically, such information furnishers are those creditors who have worked out an agreement with regards to credit, with the consumers. These could be credit card companies, banking institutions, auto finance companies, amongst various others. There are also other types of information furnishers as recognized by the FCRA, like municipal courts, employers both past and present, collection agencies etc.

At the end of the day the Fair Credit Reporting Act is a tool through which due regulation of the credit information takes places. It has enabled the fair reporting of credit information and in case of willful violations of the FCRA, consumers can seek statutory damages. This essentially means that the consumer and his credit rights are duly protected under this law. More importantly, under the aegis of this law consumers are duly notified when there is an adverse action that has been taken, based on the credit agency reports. Also users who have used the consumer credit information must also provided due identification of the company that has provided those reports. Consumers can contest such information if it is found to be erroneous.