Limitations of the Fair Credit Reporting Act Most Consumers Do Not Know About

The Fair Credit Reporting Act stipulates that consumers have the right to dispute any item listed in their credit profiles. To accomplish this, consumers are urged to request a copy of their credit profile at least once a year. This is usually free of charge. When a consumer is denied credit, they have the opportunity to request a copy of their credit profile from the agency that was contacted to provide the credit information. Upon reviewing the information contained in the credit profile, the consumer has 30 days to notify the credit bureau of any incorrect notations contained in the credit file.

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Once the credit reporting agency receives the dispute, it is required to check out the information, verify it with the creditor, and then either notify the consumer of the fact that the notation is valid as it stands, or take it off the report completely if it cannot be proven for accuracy. Unfortunately, there are some inherent weaknesses in the Fair credit Reporting Act that put the consumer at the forefront of being the watchdog over their credit profiles, and may require a lot of time and effort to ensure that all of the information is correct.

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For example, credit bureaus rely on creditors to provide them with accurate information. Frequently there are disputes between creditors and debtors with respect to an amount owed, a payment made, and also other questions that influence the veracity and accuracy of a credit file notation. When a consumer works with a creditor to resolve this issue, the adverse notation is still contained within the consumer’s credit profile. Therefore, while the problem is being addressed, the debtor’s credit rating is harmed and may actually prevent the consumer from applying for new credit or even cause existing creditors to raise the cost of the credit they are offering to the debtor.

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Moreover, even after a consumer disputes an item on the credit profile and the credit reporting agency cannot validate the debt – and subsequently takes it off the profile – it may still reappear at a later date. You see, the problem is that once the creditor finds all the documentation needed, even if it goes way past the 30 day time limit the credit bureau faces for validating debts, it can reinstate the listing. The consumer may be caught unawares and notices only when credit is once again denied that something might have changed on the credit record.

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While it is true that credit reporting agencies are prohibited from reposting items that were previously taken off, they are not enjoined from doing so if a creditor reports the information to them about any one debtor. This leaves consumers at the mercy of creditors and only those who are sufficiently savvy to know that the Fair Credit Reporting Act gives them the right to check their credits, dispute items they believe to be erroneous, and also post summaries about ongoing disputes, will actually find that they can somewhat circumvent the shortfalls of this piece of legislation.