What are the Requirements on Users of Credit Reports?

A credit report is a collection of a consumers credit history. It includes such information as: past payment history, current credit accountings, late payments, credit limits, any debt or bill collection activity, liens, judgments, bankruptcies, etc. A user of a credit report is anyone who employs a report in the decision of whether to extend any form of credit. Extending credit may include financing a sale, establishing a recurring account, hiring, or loaning money. The FCRA places the following requirements on businesses that use credit reports to make decisions affecting the consumer:

What is Notice of Rejection Under the FCRA? 

The FCRA allows a user of a credit report to request the report for a permissible reason. It requires that businesses inform consumers who seek credit for personal, family, or household purposes if their request is denied because of an adverse credit report. The notice must include the source of the credit report and notification of the right to make a request within 60 days to the reporting agency regarding the nature of the information received.

Note: The purpose of this provision is to allow the individual to receive the report and challenge its accuracy.

What are Investigative Consumer Reports under the FCRA? 

Investigative consumer reports are investigations carried out through personal interviews in the consumers community to uncover personal details, such as her character, lifestyle, community reputation, etc. A business seeking to acquire such information may only seek such a report after giving 3-days notice to the consumer. The consumer may request information on the scope and nature of the investigation.

Note: The purpose of this provision is to protect consumers from the negative consequences of personal inquiries.

What are Employer Background Checks under the FCRA? 

Employers using consumer reports to screen job applicants or perspective employees must follow specific procedures, including:

• obtaining written permission;
• explaining how the credit report will be used;
• avoiding any inappropriate or non-disclosed uses of the report;
• providing a copy of the credit report (if the employee is not hired); and
• allowing the applicant to dispute any information contained in the report before making a final decision.

The above-referenced list of common users of a credit report is not exhaustive. There may be any number of situations in which an individual uses a credit report in decisions affecting an individual.

Note: A major limitation is that the FCRA does not limit the use or consideration of prior history or experiences between the consumer and the user of the credit report. Also, the bank falls under an exception if it gives its opinion of the credit worthiness of the consumer within the report.

Related Topics

• Consumer Protection Law (Intro)
• What is consumer protection law?
• Cooling Off Rule
• What major federal laws protect consumers?
• What is the Federal Trade Commission
• Enforcement procedures of the FTC?
• Penalties for violating FTC regulations?
• Commercial Practices Prohibited by FTC?
• Unfair Trade Practices 
  
• Predatory Pricing
• Bait & Switch
• Lemon Laws
• Consumer Financial Protection Bureau
• What is the Fair Credit Reporting Act?
• Users of Information?
• Credit Reporting Agency Consumers
• Reporting Agencies?
• Consumer Reporting Agency
• Furnishers of Information?
• Enforcement?
• Truth in Lending Act
• Fair Debt Collection Practices Act
• Fair Credit Billing Act
• Electronic Funds Transfer Act
• Electronic Funds Transfers (EFT)
• Equal Credit Opportunity Act
• Regulation B
• Consumer Credit Protection Act
• Consumer Advisory Council
• Consumer Financial Protection Act
  
• Consumer Product Safety Act
• Consumer Product Labeling Laws
• Credit Repair Organization Act
• Federal Food, Drug, and Cosmetic Act
• Magnuson-Moss Warranty Act
• Privacy Act of 1974 (Privacy Act)
• Personally Identifiable Information
• Right to Financial Privacy Act of 1978 (RFPA)
• Electronic Communication Privacy Act of 1986 (ECPA)
• Childrens Online Privacy Protection Act of 1986 (COPPA)
• Privacy Policy
• CAN SPAM Act
• What role do states play in Consumer Protection?