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The FCRA, or fair credit reporting act was established to maintain transparency over the working of the credit card companies and credit reporting bureaus. Many people do not care to study the intricacies of the laws and regulations by which they are protected, and hence end up in a lurch at times.

A lot of people are not aware that many banks add penalties and other fees which are not allowed according to law. The methods used by banks to gauge a person's financial responsibility are unreliable and ineffective. Numerous times, the system is subjective and the customer is not aware of this. Banks are generally attracted to people who have larger bank accounts, this is because it gives them better business. This is not fair to people who are undergoing financial crisis situations or are trying to establish themselves in society. People who do not have large bank accounts are conveniently given negative credit rankings, and banks can penalize them to earn more revenue. It's the same old story of the rich getting richer, and the poor being penalized for being poor. This sort of unfair credit rating system is largely responsible for the regular seizure of homes of the poor.

The FCRA was devised in order to safeguard the interests of the poor and the middle class. The banks and financial institutions which do not abide by these laws are regularly penalized and bought to line by the FCRA. This law asks banks to follow a universal standard when rating people on their credit worthiness. This ensures everyone is treated in the same manner, irrespective of financial clout. The law requires banks to check the financial history of a person to understand whether or not he or she can pay the loan. This should not be gauged by the amount of money in the bank account, but by the paying habits that can be established by looking at the credit record. This way, people who are diligent about paying off their loans are rewarded, and people who do not, are penalized with a higher interest rate. Even the penalties so imposed must take into account the earning potential of the consumer, rather than blindly imposing one without assessing the situation.

The FCRA also asks the banks to submit the evaluations that they have conducted on the financial situation of a customer. This ensures that transparency is maintained in all the decisions and operations of a bank. These records are to be presented to a government agency in order to verify the laws are being abided. Besides being a source of verification, it is also a repository of evidence that can be accessed in case a consumer files a complaint with the agency saying that a bank has violated certain norms.