Credit Score Laws

Laws regarding credit scores in the United States are governed by the Fair Credit Reporting Act, originally passed in 1970. This act regulates the manner in which credit information can be obtained, reported, disseminated and used. Every consumer should be aware of the laws contained in the act, as they form the basis of consumer rights in the U.S.

Consumer Reporting Agencies

Consumer reporting agencies collect your credit information to create and disseminate your credit report. The three major CRAs are Equifax, Experian and TransUnion. These agencies have legal responsibilities under the FCRA including providing one free credit report per year, to the consumer; taking appropriate steps to verify credit information disputed by the consumer; notifying the consumer within five days by writing if information previously removed from the report as a result of consumer disputation is reinstated; and removing most negative information from the report within 7 years of its initial appearance, removing tax liens within 7 years of payment, and removing bankruptcy information within 10 years of filing.

Information Furnishers

Information furnishers are the creditors or other firms that report your credit information to the CRAs. Information furnishers have their own set of legal responsibilities, such as reporting only complete and accurate information and informing the consumer of all negative information reported to the CRAs within 30 days of the information being reported. The furnishers are also obligated to investigate information disputed by the consumer and, within 30 days of receiving notice of a dispute, either correct the disputed information or provide documented evidence that the disputed information is correct.

Information Users

Many entities, including employers, landlords and banks, reserve the right to check your credit report as part of their decision-making process. These entities must also conform to a set of regulations. They must notify the consumer when information obtained from the credit report has a detrimental effect on a decision regarding the consumer's application. In addition, the entities must identify the specific CRA or service that delivered the report, to facilitate the consumer's right of disputation.

Liability for Violation of the FCRA

Violations of the FCRA by any of the three groups described above can carry significant civil liabilities. In the event of a negligent, or accidental, violation of the FCRA, the consumer is entitled to collect actual damages plus reasonable attorney's fees. In the event of a willful, intentional violation, the consumer is entitled to collect between $100 and $1,000 plus punitive damages in addition to actual damages and attorney's fees.