Federal Fair Trade Act Credit Terms

The Federal Trade Commission has a Fair Credit Reporting Act in place that specifies the type of data that can be reported on a credit report, the way in which it is reported and the amount of time that a specific account type can report.

Credit Bureau Responsibilities

Credit bureaus, also known as credit reporting agencies, have a number of responsibilities under the Fair Credit Reporting Act. These responsibilities are different depending on if the credit bureau is one of the "big three" consumer credit reporting agencies, or if it is a smaller, specialty agency.

The big three, TransUnion, Experian and Equifax, must always have the consumer's credit report available so the consumer can view his personal credit information. In addition, the credit report must be provided for free once per year, through annualcreditreport.com. Another responsibility for the credit reporting bureaus concerns the reporting of inaccurate or negative information. If a consumer files a dispute about inaccurate information on an account, this information cannot be put back into the report prior to the credit bureaus notifying the consumer. Negative information can only be reported for a specific time period, typically seven to ten years.

Smaller credit reporting agencies do not have to adhere to the central website responsibility, but they do have to make your report available once per year.

Creditor Responsibilities

Creditors, known as information furnishers in the Fair Credit Reporting Act, are the companies that you have a business relationship with. A creditor can be the company that issued some form of credit, whether it's in the form of a credit card or if the creditor is a collector trying to collect on a debt. The creditors are legally required by the Act to give the most accurate information possible to the credit reporting agencies. The creditors also have to investigate a consumer dispute and provide updated information within 30 days. If a creditor is intending to place negative information on an account or adding a negative account such as a collection, the information furnisher has to let the consumer know within 30 days.

Penalities

Any credit reporting bureau or information furnisher who does not follow the Fair Credit Reporting Act is subject to legal penalties. A consumer can file a lawsuit against a credit reporting agency or creditor for each act that does not follow the guidelines in the FCRA. The maximum penalty is $1,000 per occurrence.