Building and maintaining great credit is a fundamental part of a healthy financial life. You probably know that having no or poor credit means that you typically can’t get approved for credit accounts. And you can even be charged more for certain products, such as insurance, utilities, and cell phones, when you have subpar credit.
But you may not be fully aware of your credit rights. Everything, from who can access your credit information to how to deal with errors on your credit reports, is included in the Fair Credit Reporting Act (FCRA).
In this post, I’ll summarize what you should know about this federal law with a quick guide. You’ll learn nine credit rights that can help you build credit, qualify for the best financial offers, and save money for decades to come.
9 Credit Rights You Should Know
- Access your credit reports for free.
- Request your credit scores.
- Restrictions on who can access your credit reports.
- Dispute information in your credit reports.
- Have inaccurate information removed or corrected.
- Exclude negative information after certain time limits.
- Consent for an employer to access your credit data.
- Notification about adverse credit actions.
- Opt out of prescreened product offers.
Here’s more detail about each of these consumer credit protections.
1. Access your credit reports for free.
An important, but often under-utilized, right you’re given by the FCRA is the ability to review your credit reports and know what’s being reported about you. The three nationwide agencies, Equifax, Experian, and TransUnion, must provide you with your credit report for free every 12 months, if you request it.
You can get it directly from the agencies or from the official credit reporting site, annualcreditreport.com. However, there are many places where you can get your credit reports for free as often as you like, including:
- Fintech companies, such as Credit Karma and Credit Sesame
- Financial institutions, such as LendingTree
- Credit card issuers, such as Discover
To get a report, you must verify your identity by providing your Social Security number, current or previous address, and answer random questions about your accounts, such as the range of your monthly payment or the year you took out a loan.
You’re also entitled to a free credit report if:
- You’ve been turned down for new credit or adversely affected due to data in your credit file
- You believe you’re the victim of identity theft
- You’re receiving public assistance
- You’re unemployed, but looking for employment
2. Request your credit scores.
When you view your credit reports, you’ll notice that they don’t include credit scores. There are many different scores used by lenders and merchants that evaluate you based on the information in your credit reports.
Each of the nationwide credit agencies sells at least one credit score, which uses a proprietary calculation method. You have the right to request your credit score from the major credit bureaus. However, unlike the free credit report rule, the credit agencies can and usually do charge you for scores.
Instead of being forced to pay for them, I recommend signing up at Credit Karma or Credit Sesame, where you can get both your credit reports and scores for free. They may offer one or two different types of scores, show how they’re trending over time, and offer guidance for improving your credit.
3. Restrictions on who can access your credit reports.
Credit bureaus must limit who can see your credit information. The only people or companies allowed to access your credit reports are those with “permissible purpose.” For instance, companies where you’ve applied for a loan, credit card, or to lease an apartment. Here are more examples of companies and organizations that the law deems as having a valid need to access your credit information:
- Existing creditors you have a relationship with
- Debt collection companies
- Insurance companies, to underwrite various types of insurance
- Employers or prospective employers (with your permission)
- Phone and utility companies
- Certain government agencies or in response to a court order or subpoena
You also have the right to know who has requested your credit report in the last year or, for employment-related requests, two years.
4. Dispute information in your credit reports.
If you believe your credit report contains inaccurate or incomplete information, you can file a dispute with the credit agency. By law, the agency has 30 days to complete an investigation and resolve your dispute.
Don’t tolerate any errors in your credit files. The sooner you get them corrected, the sooner your credit scores may improve.
5. Have inaccurate information removed or corrected.
If a credit investigation finds that your disputed information is inaccurate, or if the information can’t be verified, the credit agency must correct or delete it from your credit report. However, if they find that the information is accurate, they must keep it as is.
If an investigation doesn’t clear up the matter to your satisfaction, you can ask to have a statement added to your credit file explaining the situation. Just be sure to keep it brief, such as 100 words or less, since only a portion may be visible to potential creditors and merchants.
6. Exclude negative information after certain time limits.
Be sure to check the age of your credit accounts when reviewing your credit reports to make sure that any with black marks are removed on time.
The FCRA specifies how long credit bureaus can keep certain types of information on your credit reports. Negative information, such as accounts with late payments or accounts in collections, generally must be removed seven years after you first became delinquent. However, some types of bankruptcies and unpaid tax liens may stay in your credit file for 10 years or longer.
Be sure to check the age of your credit accounts when reviewing your credit reports to make sure that any with black marks are removed on time. The upside is that accounts with only positive information stay on your reports longer, for 10 years.
7. Consent for an employer to access your credit data.
Even though an employer or potential employer can request your credit report and review it, in most cases, they can only do so legally if you give your written consent. Also, employers receive an abbreviated version of your report compared to what potential lenders see.
Having a history of negative public records or high debt could be red flags for employers, especially when you apply for or have a high-level position. Also, certain industries—such as finance, medicine, and government—may scrutinize credit more carefully.
8. Notification about adverse credit actions.
If a potential creditor or merchant uses information in your credit report to deny your application for credit, insurance, or employment, or takes any other adverse action against you, they must tell you. This could include an unfavorable change with a current employer or merchant, such as getting fired or being charged a higher insurance premium.
The company that reviewed your credit file must also provide the name, address and phone number of the nationwide credit bureau where they got the information, known as a “notice of adverse action.” If you get a notice that you weren’t expecting, be sure to review your credit report and check for errors.
9. Opt out of prescreened product offers.
You may not realize that many of the offers you receive for products—such as credit cards and insurance—are due to your credit.
The credit bureaus sell your information to companies that want to prescreen you. But the bureaus must remove your name and address from marketing lists that they sell, if you ask them to quit sharing your data for those purposes.
The official website to “opt out” of prescreen lists is optoutprescreen.com. You can opt out of offers for five years or permanently, or reverse the action by opting back in.
In addition to these credit rights, the state where you live may have their own consumer credit laws. If a credit agency, or a company that furnishes your information to one, violates the law, you can seek legal damages in state or federal court.
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