Once again, we got a great response to our mini-series of articles identifying and defining important credit related terms. So as long as we keep getting positive feedback, I’ll keep writing. This week our terms focus on the laws that help protect consumers.
FCRA – The Fair Credit Reporting Act. The FCRA defines how a credit bureau must protect your credit information. It also defines when they can disclose your credit information and under what circumstances. You can find a complete text of the FCRA at the Federal Trade Commission’s website.
FACTA – Also referred to as the FACT Act. FACTA is the Fair and Accurate Credit Transactions Act of 2003. FACTA amended the Fair Credit Reporting Act and, among other things, gave each of us the right to a free credit report each year from any company that sells credit reports to companies as a method of evaluating applicants or existing clients. It also provides the broader right allowing each of us to obtain a free copy of any “consumer” report that a company may compile and resell on each of us, even if it’s not a credit report. A great example is your CLUE insurance claim reports that are housed and maintained by ChoicePoint, who is now owned by LexisNexis.
FTC – The Federal Trade Commission. The FTC is the enforcement arm of the FCRA. The FTC can bring action against credit bureaus, lenders, and collection agencies if they believe there is a violation of the FCRA.
CROA – The Credit Repair Organizations Act. CROA defines how credit repair organizations have to operate. It is a myth that credit repair organizations are illegal. That is only true in Georgia where operating a credit repair organization is a misdemeanor. In every other state, it is perfectly legal to be a credit repair company AS LONG as it complies with the rules of CROA. For example, a credit repair organization cannot bill you in advance for services that have not yet been rendered. They also have to disclose to you that you can challenge information on your credit reports for free. The FTC is also the enforcement arm for this law. In fact, the FTC closed down 34 credit repair organizations in 2008 for violations of CROA in what they referred to as “Project Clean Sweep.”
So that’s it for this week. An acronym-filled edition of my weekly article. We’ll be back next week with some more credit-related terms.
John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.
John Ulzheimer Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on Credit.com News & Advice.
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