The Fair Credit Reporting Act

When you apply for credit, the lender may ask a credit reporting agency for a summary of your financial history before deciding whether to grant the loan. This is standard procedure, particularly when substantial sums are involved, and every day, thousands of such credit reports are issued to lenders throughout the country. The majority of them deal solely with your bill-paying record in connection with the credit transactions in which you have been involved over the last several years.

On the other hand, if you apply for a job that carries considerable financial responsibility or a large amount of life insurance, you may be examined much more thoroughly. In a so-called investigative credit report, the agency may also get in touch with your friends, neighbors and business associates to discover as much as possible about the way you live. But if such a report about you is contemplated, you are entitled to be notified of this fact within three days of the time the request for the report is made — unless the investigation is in connection with a job for which you have not specifically applied. And you are also entitled to obtain a complete and accurate description of the nature and scope of the investigation request.

If you are rejected for a loan or credit, you have the right to invoke the protections offered by the Fair Credit Reporting Act. This law requires lenders to inform rejected applicants of the reason for the rejection, and if that reason is a negative credit bureau report, the law gives those applicants a number of important rights.

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