Knowing your rights as a credit card holder is important because you don't want to risk making a mistake and hurting your credit score in the process. There are many types of laws that outline your rights. One such piece of legislation is the Fair Credit Reporting Act.
Enacted in 1970, the FCRA was created to help ensure the fairness, accuracy and privacy of personal information for credit card holders. The rules of the FCRA are enforced by the Federal Trade Commission to make sure you are well-protected if anything happens to your credit. The more you know about this act, the better you can protect your score. Here is a quick primer about the rules of the FCRA:
Explanation is required if you were passed over for something
Banks, credit card companies and, in some instances, employers must let you know if you were denied a loan or a job because of information on your credit report. This is done to make sure everything is correct, help you realize that there may be problems with your credit and give you an opportunity to repair your credit.
Only you can permit people to see your report
You don't have to worry about just anyone checking your information, because only sanctioned parties can inspect your report. For instance, if a court needs your credit report for evidence in a trial, it is allowed to access your information. But most of the time, other parties need your written consent to see it.
Agencies cannot withhold information from you
This part of the act requires credit reporting agencies to allow you to see what is on the document for free once every 12 months. Getting your report is a great way to understand where your credit is at and guide you to fixing it. You are allowed one from each of the three major credit bureaus – TransUnion, Equifax and Experian. A good rule of thumb is to space these reports out every few months to track your finances over the course of a year.
Negative marks can only be on your report for a designated time frame
Bad marks, such as collections and defaulted loans, are only allowed to stay on your credit report for a certain amount of time. The general length is seven years, but one exception to that rule is bankruptcy, which can be on there for 10 years.
You can dispute errors as long as you have evidence
If you see that there is an unfamiliar account on your report or that you were unjustly sent to collections, you can do something about it. This is why it is important to regularly view your report. Once you've let the reporting agencies know about the error, credit bureaus have 30 days to investigate the claim based on the information you give them. If a mistake is found, the credit bureau must inform the party that made the fault, such as the bank or credit card company, that it needs to fix it.