Given the myriad rules and regulations governing credit reports and scores, many consumers do not fully understand these important sources of financial information. Therefore, in order to facilitate greater financial literacy and promote sound fiscal decision making, we closely examined the relevant laws and compiled this Credit Report & Score Bill of Rights.
This document is a summary of your rights and as a result does not include the full details of the pertinent laws. If you want to see the laws in their entirety, check out the Fair and Accurate Credit Transactions Act of 2003, The Fair Credit Reporting Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the Credit Repair Organizations Act.
This Bill of Rights is divided into three sections: Credit Reports, Credit Scores, and Credit Repair Organizations.
- Free Credit Reports
- Legal Credit Report Usage
- Credit Reports and Employment
- Information That Can’t Be included in Consumer Credit Reports
- Information That MUST Be Included in Consumer Credit Reports
-You are entitled to a free copy of each of your three major credit reports every 12 months
- This includes your Experian, TransUnion and Equifax reports
- You can request these reports at www.annualcreditreport.com
-You are entitled to a free copy of any credit report used to make an adverse action against you as long as you request it within 60 days of being notified of this right by the credit reporting agency, a debt collection agency, or the organization taking the adverse action
- An adverse action is defined as “an action or determination that is adverse to the interests of the consumer.” This includes the denial of an application, an increase in charges or rates of an existing agreement and/or an offer for less-than-optimal terms.
-Credit Reporting Agencies are required to provide a summary of your rights in each written disclosure they make to you
-Consumer reporting agencies can provide credit reports to any person(s) intending to use the information:
- in connection with a credit transaction (i.e. evaluating a credit card or loan application)
- for employment purposes
- for insurance underwriting
- in deciding whether to grant a government license
- to evaluate the risk of your credit obligations
- in connection with a business transaction that you initiate
- for firm offers of credit or insurance (e.g. credit card direct mail offers) without you initiating the process or giving your consent. These offers are also often referred to as pre-screen offers. At any time, you may opt-out from receiving pre-screen offers. Opt-out requests that are made online will be in effect for five years whereas those that are made via traditional mail are permanent. After opting out, you can obviously opt-in at any time.
- to determine whether you meet the terms of an existing account
- for the determination of child support
- in connection with government-sponsored travel charge cards
- for official Federal Deposit Insurance Corporation (FDIC) or National Credit Union Association (NCUA) purposes
-An employer must get your consent to use your credit report during the evaluation process
• Keep in mind that a disclosure about usage of a credit report might be included on an application, and by singing the application, you are providing your consent
-If an adverse decision is made as a result of your credit report, the employer must provide you with a copy of the report used to make this decision and a written summary regarding your rights concerning it
-A credit reporting agency must notify you when public records that are likely to adversely affect employment decisions are included within reports and provide you with the name and address of the person receiving the report
-Negative information (e.g. credit card charge-offs, bankruptcy, liens, civil suits, arrest records, etc.) after certain periods of time
- The exact time period depends on the type of information
-Information relating to medical payments that reveals the specific provider or nature of the services rendered, unless the report is being provided to an insurance company for a purpose other than property and casualty insurance
-These rules do not apply if the reports are being generated in connection with:
- a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more
- the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more
- decisions regarding employment with an annual salary of at least $75,000
-notice that you voluntarily closed an account
-identification of the specific chapter under which you filed Title 11 bankruptcy
-recognition of the cessation of Title 11 bankruptcy proceedings
-indication of disputed information
-notice of any discrepancy that exists between the address provided for a consumer who is the subject of a requested report and the address provided in this report
-notice that you reported yourself as being a victim of fraud, identity theft or another similar crime
- this documentation must be included with any credit report or credit score generated for at least 90 days following your request to be reported as such
- reporting agencies must disclose your entitlement to free copies of reports containing fraud notices
There are many different types of credit scores (FICO, Vantage, PLUS, just to name a few) and not all of them are created equal. As a result, it’s important that you do not view any one score as being representative of your credit standing. Similarly, different creditors, lenders, etc., use different credit scores to assess applicants, so one particular score will not help to explain the actions of every organization that may use credit in evaluating you. Learn about the different ways you can get access to your credit scores below.
- Organizations (credit card companies, mortgage brokers, employers, etc.) that use credit scores in evaluating applicants are required (starting July 21, 2011) to give you access to a score if it leads to an adverse action being taken against you. More specifically, they’re required to tell you your score at the time of application, the number of recent inquiries on it, and the specific reasons for the action against you.
-You can request a credit score from a credit reporting agency. However, remember that not all credit scores are created equal, so make sure you check the one that’s used by lenders (FICO is the most widely used credit score).
-A credit reporting agency is required to inform you upon providing you with a credit score that the information and credit scoring model used might differ from those of lenders and other credit scoring agencies
-The score the agency provides must be your current score or the last score calculated for you and must list:
- the date it was created
- the factors that adversely affected it
- contact information for the agency that created the score or provided the information that led to its creation
-The cost of this service must be “fair and reasonable” as defined by the Bureau of Consumer Financial Protection
Credit Repair Organizations
A credit repair organization is defined as anyone who sells services to improve your credit record, credit history or credit rating. Since factual information contained within your credit reports cannot be changed or removed before certain time periods set forth in the law have passed, many of the organizations offering these services are illegitimate and/or predatory. As a result, the Credit Repair Organizations Act was passed to regulate the operations of these groups. Learn what credit repair organizations can and cannot do under this law:
- provide misleading information about your credit standing to credit reporting agencies or creditors
- make a statement or cause you to make a statement that will alter your identification and thereby prevent the display of your credit record
- commit any act that will result in anyone being defrauded or deceived in connection with the credit repair services rendered
- mislead you about services rendered
- require payment in advance
- provide you with a written disclosure stating your rights before you enter into a contract
- allow you to cancel your agreement without penalty anytime within three business days of signing your contract
- You have the right to sue any credit repair organization not in compliance with the Credit Repair Organizations Act
- You have the right to sue for actual as well as punitive damages and attorney’s fees
- The statute of limitations is the later of the five-year period following the violation or the five-year period beginning at the time you become aware of any violation