The Fair Credit Reporting Act (FCRA)

In 1970, Congress passed the Fair Credit Reporting Act, which regulates the collection, dissemination, and use of consumer information, including consumer credit information. This was the first time individuals had the potential to access a full list of information lenders used to make decisions about loan products and credit options. 

When ACORN started offering their First Time Homebuyer Program classes, they found that helping individuals access, review, and file corrections to their credit reports led to a faster, accurate, and more successful loan application process. In the 1990's, it cost at minimum $10 to get a copy of your credit report from a consumer reporting agency (CRA), and it had to be done through a limited-access system. Lenders might offer to pull a copy, but would usually charge a fee on top of the CRA fee to do so. 

ACORN began offering the service at cost. 

It wasn't until 2003 that Congress finally passed an update to the Fair Credit Reporting Act, called the Fair and Accurate Credit Transactions Act (FACTA), requiring that the major nationwide CRAs  provide (upon request) one free copy per year of an individual's complete credit report. 

An individual can now request a free copy of their credit report once per year from each of the three main nationwide CRAs (Equifax, Experian, and TransUnion) via the government website annualcreditreport.com.   Reports can also be requested from each agency by phone or mail. (Be wary of other, fee-based credit report request sites. They may tout themselves as "free", but often have hidden charges or may sell your email address or other contact information.)

In 2015, a study released by the Federal Trade Commission showed that approximately 23% of consumers found inaccurate information when reviewing their credit reports.

For example, it's not unusual the first time you check to find multiple entries for one credit account, say a store credit account, especially if they changed financial institutions at some point. The original account will still be on there, with outstanding debt and a note as to your payment record at the time of the change, along with the account at the new financial institution with the current account and payment record. Credit cards issued by banks that later merged with another bank can also show up this way.  These types of errors may make a lender think you have more debt than you actually do. 

Another provision of FACTA involved CRAs being required to streamline the dispute resolution process to make it easier for individuals to request corrections to their accounts. 

In this day and age of identity theft, it is a good idea to check your credit report periodically. One plan would be to request a credit report from a different CRA every four months or so. That would be three checks per year, one per agency, all free. This is a good way to make sure the information each agency has about you is correct. 

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