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Whenever we take a loan or a credit, companies do check on our payment history. There are credit rating companies who make an assessment of your credit history including number and frequency of loans applied for and loans taken, record of repayments and loan closures, late payments and overdue loans etc. These agencies give us a credit score, which is an indicator of our creditworthiness and repayment ability.

Fair Credit Reporting Act

Since a person`s credit rating is important, the federal government has implemented a law called the Fair Credit Reporting Act which allows an individual to ask credit rating agencies what their credit rating is, and also find out whether their credit score has been used by any third parties, and finally it allows the individual to verify the report and see if the information mentioned is valid and holds true.

Who can see my credit report?

The FCRA has clearly laid down guidelines, according to which certain agencies are given the right to see an individual`s reports, but certain other agencies are completely barred from this. For instance, while the institutions from whom you wish to borrow money would most obviously be allowed access to your records, not many of us know that even prospective employers can request to see the same if required. Similarly, utility companies and landlords are allowed to check your credit history before giving you a new connection or an apartment on rent.

Can I get my credit report?

Earlier the credit rating agencies would share our credit information with the interested agencies but would not keep us informed. Now the consumer is given full legal authority to see the report that is being provided to a certain agency. Pulling out one`s own report will not have any points deducted from the credit rating score.

What happens if I notice an error?

The right to an accurate report is also guaranteed by the Fair Credit Reporting Act. In case you find a discrepancy in the report, you can report it to the credit bureaus and get the information rectified. The FCRA gives us the legal right to report inaccuracies, and makes it legally binding on the agency to have the error corrected within the stipulated time after the request is lodged. Although specific requests for reports can be charged by the agencies, the law also has provisions for one free report to be provided to the customer once a year.

Since the time of its enactment in 1970, the FCRA has made the assessment of credit more systematic for lenders and other concerned parties, and given more powers to consumers who seek credit.