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Federal Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) was enacted in 1970 to promote the accuracy, fairness, and privacy of personal information assembled by Credit Reporting Agencies (CRAs).  The FCRA was passed to address a growing credit reporting industry in the United States that compiled “consumer credit reports” and “investigative consumer reports” on individuals. The FCRA was the first federal law to regulate the use of personal information by private businesses.

There are many types of consumer reporting agencies, including credit bureaus and specialty agencies (such as agencies that sell information about check writing records, medical records, and rental history records).  CRAs assemble reports on individuals for businesses, including credit card companies, banks, employers, landlords, and others.

The FCRA limits the use of the credit report to certain purposes. They are:

  • Applications for credit, insurance, and rentals for personal, family or household purposes.
  • Employment, which includes hiring, promotion, reassignment or retention. A CRA may not release a credit report for employment decisions without consent.
  • Court orders, including grand jury subpoenas.
  • “Legitimate” business needs in transactions initiated by the consumer for personal, family, or household purposes.
  • Account review. Periodically, banks and other companies review credit files to determine whether they wish to retain the individual as a customer.
  • Licensing (professional).
  • Child support payment determinations.
  • Law enforcement access: Government agencies with authority to investigate terrorism and counterintelligence have secret access to credit reports.

The FCRA affords individuals a private right of action that can be pursued in federal or state court against CRAs, users of credit reports, and furnishers.  In certain circumstances, individuals can obtain attorney’s fees, court costs, and punitive damages.  Additionally, the FTC can enforce provisions of the act.  Criminal penalties can be brought against those who knowingly and willfully obtain a consumer report under false pretenses.


Inside Federal Fair Credit Reporting Act