Credit Bureau Reporting Rules

Credit bureau reporting can be a major source of contention for both policymakers in Washington and the average American. With the vast amount of information updated each day at credit bureaus, some mistakes are inevitable. Errors on such a vitally important financial document can wreak havoc on your ability to borrow money and even get hired, so stringent rules have been created to monitor and manage those who report information about your finances to credit bureaus.

FACT Act

The FACT Act (updated in 2003 with stronger identity theft protections) is a piece of legislation that controls what others can see in your credit report. Generally, those who can view and analyze your credit report are lenders, insurance agents, employers and landlords. The FACT Act is the best protection you have against negative or inaccurate credit reporting.

DCA Due Process

The DCA Due Process law requires all reporting agencies to inform borrowers if a delinquent notice will be placed on their credit report. It passed to protect you against negative history--whether or not it was legitimate--and offer a chance for borrowers to make their debts right or file a notice of fraud to their bureaus.

Free Credit Reports

The updated FACT Act allows you to view reports from all three of the credit bureaus, for free, once a year (see resources, below). This part of the act is designed to help you manage your financial health without having to go through lending channels and put unnecessary inquiries on your credit reports.

Protections for Those Other Than Consumers

The updated FACT Act now stipulates that employers can investigate their employees' credit reports if they think an employee has been engaged in fraud, embezzlement or theft. Employers were granted this privilege so as not to tip off possible criminals. Employers use this part of the law to monitor what is being reported to the employee's credit report--for example, if an employee is using a corporate account for personal purposes.

Consumer Opt-Outs

Before the updated FACT Act, lenders could share your information with their affiliate companies and competing lenders for a price. The FACT Act lets customers opt out of this arrangement. This was added to the FACT Act to prevent unethical lenders from posting inaccurate or misleading information on a credit report so as to encourage financing.