Credit for Homeowners: Fair Credit Reporting Act - What's it Mean to You?

The Fair Credit Reporting Act, or FCRA, was passed into law by Congress to make sure that the information on your credit report is legitimate. This Act gives you, as the consumer, many rights that you may not be cognizant of. This is important as a homeowner or as a potential home buyer because your credit report will establish whether or not you qualify for a loan. If you are eligible, the information on your credit report will serve as the basis for what interest rate the mortgage lender offers you. If there are mistakes on your credit report, you could be denied for a loan or offered a higher interest rate than you deserve. Mistakes on your credit report can be costly.

Unfortunate Mistakes Frequently Happen on Credit Reports

It is a lamentable truth that mistakes occur quite often on credit reports. Each of the three credit reporting bureaus report nearly one billion entries per month. With all of this data passing through, it is easy to see that the situation is rife for trouble. Some of the reasons that mistakes are made include clerical errors. Perhaps that nice girl at the department store entered your application incorrectly. Or, maybe the loan officer's executive secretary misread your social on your loan forms. Sometimes, we use different versions of our names to apply for various things.

Learn How to Approach and Correct a Mistake on Your Credit Report

The number of mistakes on credit reports led to the formation of FCRA, but unfortunately many home owners do not understand how to address the mistakes that are on their reports. Once you discover an error, it is important to be educated about what the next steps in correcting your credit are.

These are the rights that FCRA gives you:

- If you are denied a loan, that financial institution has to tell you if you are refused because of your credit report.
- You have the right to know at any given time what the contents of your credit report are.
- You have the right to dispute misinformation on your credit report with the credit reporting agencies.
- Information on your credit report that is incorrect must be removed or corrected.
- You have the right to dispute wrong information with the source.
- Your credit report can not have old information.
- Lenders and other institutions must have your permission to access your credit report.

It is important to realize that credit reporting agencies report and are not accountable for whether the information on your report is right or wrong. That responsibility remains on the consumer's shoulders. When you initiate a dispute with one of the agencies, keep meticulous records and always make sure you have a copy of the evidence that you submit to them to dispute the item. Also, check all three agencies for inaccurate information and start a dispute with all three agencies for each item that is incorrect.

Persistence is the Secret to Protecting Your Credit

Unfortunately, it is very true that if you do discover a mistake on your report you may have to dispute it quite a few times before it is expunged from your credit report. During this time, it is very important that you keep detailed records of the dispute and be sure to keep copies of any evidence you use to sustain your claim. Also, consider making the dispute with all three national credit agencies at once, since a mistake on one agency's report that is corrected will not be fixed on the other reports unless you make the dispute with those agencies also. Learn the details about how long information can stay on your credit report and you will gain the reward of a better credit score.

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