5 Things You Should Know About the Fair Credit Reporting Act

Know what rights you have as a consumer.

Key points

• Your credit report and history could play a big role in your finances.
• The Fair Credit Reporting Act is designed to help protect consumers in multiple ways.
• The FCRA gives you free access to your credit report and allows you to dispute errors on it, among other things.

Your credit report may be one of those things you just don’t think about often. But actually, that’s a pretty important collection of information.

Lenders commonly rely on credit reports to determine whether they’ll loan money to a given candidate, and at what borrowing rate. And so it’s important to know what your credit report looks like — and what rights you have for managing it.

That’s where the Fair Credit Reporting Act comes in. The FCRA is designed to help protect consumers and give them suitable control over their credit reports. Here are just a few of the protections you ought to know about.

1. You’re entitled to check your credit report for free

As a consumer, you’re usually entitled to one free credit report every 12 months from each of the three major credit bureaus — Experian, Equifax, and TransUnion. You should also know that checking your own credit report won’t hurt your credit score in any way. Through the end of 2023, you can even access free weekly reports.

2. Your credit report can’t be pulled without a legitimate reason — and without consent

If you’re applying for a mortgage, auto loan, or credit card, the lender or credit card company in question will need to check your credit report to make sure you’re a trustworthy borrower. But while it’s okay for these entities to check your credit report, that doesn’t mean any old business can pull your credit report and have a look around. In fact, even if you’re in the process of applying for a loan or credit card, you’ll still need to give the lender or company you’re applying with permission to access your credit report.

Keep in mind that if your credit report is pulled for borrowing purposes, it counts as a hard inquiry. A single hard inquiry could result in a modest hit to your credit score, so you don’t want too many of these inquiries in short order.

3. Credit bureaus have to take disputes seriously

In the course of checking your credit report, you may find information that doesn’t look correct. It pays to report any mistake you come across to the bureau that issued your report. And that bureau has to investigate and respond to your dispute within a reasonable time frame — usually 30 days.

4. Negative information can’t stay on your credit report indefinitely

Not everyone has a perfect credit history. But yours should only have to hold you back for so long. Under the Fair Credit Reporting Act, credit bureaus must remove negative information from your credit report after a period of time (the exact amount of which depends on what’s being reported). A foreclosure, for example, must be removed from your credit report after seven years.

5. You have the right to freeze your credit report

Freezing your credit report could prevent a criminal from opening a new loan or credit card account in your name. If you have reason to believe your personal information has recently been compromised, then it could pay to put a freeze on your credit. That freeze won’t be permanent — you can unlock it when the time comes to apply for a loan or credit card of your own.

Reading up on the Fair Credit Reporting Act may not sound like the most fun weekend activity. But as a consumer, it’s important to know your rights, so you may want to spend at least a little time learning more about the credit protections you’re entitled to.