Your credit rating is one of the most important things you will ever earn. Whether you are just starting out in life or have crossed the threshold into middle age, here are some tips to help you understand your credit rights and responsibilities.
First, let’s start off by looking at the responsibilities that come with having credit because when everything is said and done, credit is all about taking responsibility for your own personal financial health.
Your Credit Responsibilities:
- Every time you take out a loan or pull out your credit card, you are making a promise that you are responsible enough to repay that money.
- Never buy anything on credit that you don’t absolutely need, or that you simply can’t afford. Remember, “I want” is not a good reason to buy anything. Responsible people only use credit or take out a loan is if they can say “I need” before they sign on the dotted line.
- It is your responsibility to keep your accounts up to date. Your records of debts, payments, and outstanding balances should always be accurate, and the only way to ensure that is if you make the effort to keep accurate records.
- You are entitled to make mistakes along the way as you build your credit, but it is always your responsibility to fix them.
It’s your responsibility to dispute any inaccurate information in your credit record and to check your credit report at least once every year.
Now that the responsibilities are out of the way, it is time to discuss your rights. Let’s be honest, you are not the only person who has stumbled in their credit responsibilities or slipped along the way. In fact, the recent economic situation in the United States has made even the most responsible borrowers suffer and you are far from alone. So, take a deep breath and collect your thoughts because there are many protections in place to help you get back on the right credit track again. It won’t be easy, but it will be well worth it in the long-run.
In 1970, the Fair Credit Reporting Act became federal law. Over the years, it has been amended by both Congress and the Federal Trade Commission to outline the rules and regulations within the credit reporting industry. These rules and regulations provide protections to consumers to ensure that companies treat their customers fairly. Below are some of the most important things you need to know.
Your Rights Under The Fair Credit Reporting Act (FCRA):
- Each year, you are entitled to one free copy of your credit report from each of the major credit reporting bureaus. In order to obtain your free copy you should visit AnnualCreditReport.com. It is important for you to understand that not all creditors report information to each credit agency, therefore you must check with each credit bureau (Transunion, Equifax, and Experian) to ensure that you don’t miss anything.
- If you are a victim of fraud, identity theft, or have been denied credit, employment, or insurance, then you can request additional copies of your credit report at any time, and at no cost to you.
- Unfortunately, while you have the right to request a free copy of your credit report, you do not have the right to request a free credit score. In order to obtain your score, you will need to pay a small fee. The only exception to this rule is if you are applying for a mortgage, in which case the mortgage lender is required by the FCRA to disclose your score to you.
- You have the right to dispute incomplete or inaccurate information on your credit report. You can do this at any time you discover negative or false information on your credit report. Once you file a dispute, credit reporting agencies are required to complete their investigations within 30 days.
- Finally, your credit blemishes are not permanent and you have the right to have old information removed from your credit report. In most cases, 7 years is the longest anything can remain on your report. The exception to this regards Chapters 7, 11, and 12 bankruptcies which can remain on your report for a maximum of 10 years.