The Credit Reporting Act Gets Cleaned Up, Finally
It was 1989 and I was working at Bankcard Holders of America (BHA), an advocacy group for credit card holders. Complaints about credit bureau abuses began trickling into our office. Some were more horrificthan others, but one fact stood out. Inaccurate credit reports were being sent out, and the bureaus were unresponsive to those consumers whose financial lives were being injured.As more and more people recounted their unpleasant credit bureauexperiences, BHA began working with other consumer protectionorganizations and legislators to fix the seriously out of date FairCredit Reporting Act.Finally, after years of effort and political wrangling, Congress passedthe "Consumer Credit Reporting Reform Act of 1996" (CCRRA).Championing consumer rights in the effort were Congressmen Joe Kennedy, Esteban Torres, and Charles Schumer; Senator Richard Bryan, and severalconsumer groups including Consumers Union, U.S. Public Interest Research Group, and BHA. President Clinton signed the bill on October 1, 1996.While most of the new law's provisions won't officially go into effectuntil October 1, 1997, some of the credit reporting agencies are alreadymeeting many of its requirements. And the new law's added teeth shouldforce those bureaus that haven't yet changed their tunes, to "getwith the program," and ensure the accuracy of consumer credit reports.Here's How the CCRRA Can Help You:Fixing Mistakes: If you report a mistake on your credit report, thebureau will generally have 30 days to investigate and resolve the matter.Any relevant documentation or proof you provide will be supplied by thebureau to the company that originally reported the disputed information.Within five days of when the bureau finishes its investigation, you'llget a written response, along with a corrected copy of your credit report(if applicable), and information about your rights under the credit law.If a correction is made, it will be shared with the other major reportingagencies as well.Keeping Mistakes Out: For the first time, it will be against the law foranyone to provide information to credit bureaus that they "know orconsciously avoid knowing" is inaccurate. If mistakes are brought totheir attention, creditors and other furnishers must promptlyinvestigate, then send corrections to all of the major creditbureaus to which they originally reported the inaccurate information.Once deleted, credit bureaus won't be able to put misinformation backon your credit report -- unless the creditor who originally suppliedthe information certifies that it is indeed correct. If that happens,the credit bureau will send you the name, address, and phone numberof that company -- as well as instructions for adding an explanatorystatement to your file.Employers Must Ask First: Employers will no longer be permittedto review prospective or current employees' credit files -- withouttheir written permission. Should an employer decide to demote or nothire you because of credit information, they'll have to provide youwith a copy of the report first -- and spell out your credit rights.No Break on the Fee: Since the credit bureaus profit from sellingour personal information without our permission or compensation, consumer groups argued that we should get to see what they're selling.Unfortunately, the bureaus prevailed, and the new law allows them to sellour reports to us for $8 (adjusted annually for inflation). The onlybureau that currently offers free reports ... one per year ... if yourequest it, is Experian (formerly known as TRW). Call 800-682-7654 tofind out how to get yours.Every other bureau charges for them, except in states where free reportsare mandated. But you'll be entitled to a free report if you've beendenied credit or insurance in the past 60 days (it used to be 30 days)based on information in your credit report -- or if you're unemployed,on public assistance, or a fraud victim.Closed Accounts: When you close an account, creditors will have to notifythe bureaus, which in turn must report that the account was closed atyour request.Inquiries: Credit reports will include (in plain English ... not someconfusing code) the full trade name of anyone who's requested your credit report in the past year (two years for inquiries by employers). Andyou'll be able to get the addresses and telephone numbers of any of these companies from the credit bureau.Obsolete Information: Currently, charge-offs can be listed forseven years after they've been reported to the credit bureaus. If theyaren't reported promptly, they can affect your credit for many more thanseven years.After January 1, 1998, these accounts can only show on credit reportsfor seven and a half years after the payment should have been made.Chalk Up a Big One for the Credit Bureaus: Credit or insurancecompanies that pre-screen customers still have to make a "firm"offer to anyone who qualified under the initial criteria. But lendersnow have a big loophole. They can review credit reports and applicationsto make sure nothing has changed, and that additional pre-determinedcriteria -- which don't have to be spelled out, like your currentsalary -- are met.Preventing Pre-Screening: You'll soon have the option of blockingyour files from pre-screening (at all three major bureaus). Callinga single toll-free number will get you a two-year block, and you'llbe able to get an indefinite block by requesting it in writing. (Marcand Nancy will publish the address and phone number when they'reavailable.)Scores Still Secret: While I'm sorry to conclude with bad news, under thenew law, credit bureaus still won't have to reveal the risk or creditscores they compile, and then sell to lenders, who in turn use thosesecret scores to evaluate our applications.