Developing and maintaining a good credit report is essential to your financial well-being. Most lenders will base the rate of interest you will pay on a loan according to your credit score. Now, an ever-increasing number of people want to take a look at your credit history to judge whether you are a good credit risk or even to make judgments about your ethical standards. Car dealerships, landlords, credit card companies, and even some employers are people who might be asking to see your credit report.

Any past problems that you have in your credit history can cause real issues when you go to apply for a loan or finance a purchase, especially a home mortgage. To give consumers more rights and an avenue to repair their credit, Congress passed the Fair Credit Reporting Act (FCRA).

FCRA Regulates How Your Credit Score is Accessed and Used

One facet of the FCRA legislation is that a creditor must have your expressed permission before accessing your credit report. The laws governing credit also control what information on your credit history can be used against you. If you are denied credit because of something on your report, you must be informed. For example, if you are not selected by a prospective employer because of your credit report, that company must communicate this to you. Additionally, they must tell you from which credit bureau they obtained their information.

FCRA Legislation Gives Home Buyers Rights to Protect Their Credit Histories

If you are denied a home loan on the basis of poor credit, the mortgage company that denied you the loan is required to disclose which credit agency gave them the information they based their decision upon. A copy of this specific report must be made available to you according to the FCRA legislation. This gives you an opportunity to examine the report for errors and to begin the process of repairing your credit early in the home buying process.

FCRA Allows you to Fix Mistakes on Your Credit History

Sometimes you will not know that there is wrong or outdated information on your credit report until you try to get credit. Once you are aware of the mistake, you need to make corrections with the credit reporting agencies and with original creditors. This can be a time-consuming process, so it is important that you address the problem right away.

When you file a complaint, the credit reporting agency will start an investigation. If the agencies conclude that a mistake was indeed made, your follow-up is vital to ensure that the item in question is actually removed from your report. Legally, the company must remove the information, but the same laws of chance that allowed the mistake to be reported in the first place may still be at work. It is up to you to make sure that the information stays off your report.

Keep documentation of all your records including any changes made to your credit report. Maintain a proactive stance by checking your report periodically to guarantee that only correct information is on your record The FCRA legislation requires that information can only remain on your credit report for a maximum of seven years. This is only a general time frame as some items can stay for shorter or longer amounts of time depending on the type of item or creditor. Positive information usually stays on your credit report for ten years, although some companies will continue to report good information for even longer periods.