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Fair Credit Reporting

The Fair Credit Reporting Act form the basis of consumer credit rights in the United States.  It covers the collection, dissemination, and use of consumer information, along with consumer credit information.

While credit reporting is an essential part of modern business, it sometimes clashes with the individual right of privacy and can result in serious abuses and injustices.  Therefore it is not surprising that Congress recognized the need for legislation in this field and enacted the Fair Credit Reporting Act regulating the vast network of credit bureaus by means of specific provisions.

15 USCS § 1681 provides the Congressional findings and statement of purpose of the Fair Credit Reporting Act:

“(a) Accuracy and fairness of credit reporting. The Congress makes the following findings:
(1) The banking system is dependent upon fair and accurate credit reporting. Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system.

(2) An elaborate mechanism has been developed for investigating and evaluating the credit worthiness [creditworthiness], credit standing, credit capacity, character, and general reputation of consumers.

(3) Consumer reporting agencies have assumed a vital role in assembling and evaluating consumer credit and other information on consumers.

(4) There is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy.

(b) Reasonable procedures. It is the purpose of this title [15 USCS §§ 1681 et seq.] to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with the requirements of this title [15 USCS §§ 1681 et seq.]”

Thus, the main purpose of the Fair Credit Reporting Act is to ensure accuracy and fairness in credit reporting and to require that such reporting be confidential, accurate, relevant, and proper.

Inside Fair Credit Reporting