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How to Use the Law to Get Your Credit Record Clean and Keep It That Way

Nowadays, you have expanded rights regarding access to your credit report, granting you more empowerment than any other time in the modern history of credit. The Fair and Accurate Credit Transactions Act helps you get the facts about yourself straight and provides new tools to fight the growing crime of identity theft. Additionally, the Dodd-Frank Wall Street Reform and the Consumer Protection Act offer new safeguards to consumers.

In addition to requiring lenders and credit bureaus to play a greater role in protecting you, these laws promote consumer rights by enabling you to

  • Receive your credit report for little or nothing. You’re entitled to a free copy of each of your credit reports once a year. You can get additional free reports if you believe that your identity has been stolen or if you’ve been on the receiving end of bad news caused by information in your credit file. The credit business refers to this as an adverse action.

    Some actions by lenders and some state laws entitle you to multiple free reports each year. Check with your state’s attorney general’s office to find out the laws in your state. You can also check out this credit bureau site for free or discounted reports.

  • Limit access to your credit report. Only people and institutions with a need recognized by the FACT Act — usually generated by an application with a creditor, insurer, employer, landlord, or other business — may access your credit report.

  • Require your consent before anyone is provided with your credit reports or specialty reports that contain medical information. Your employer, prospective employer, creditors, insurers — anyone — needs your permission or an existing business relationship with you before being able to access your private information.

  • Have access to all the information in your file. Ask and you shall receive. You must be given the information in your file, as well as a list of everyone who has recently requested access to it. Creditors are required to give you an early-warning notice and a free credit report or score if they place any negative information on your credit report.

  • Be informed if your report has been used against you. People who use information in your credit file as a basis for taking action against you — such as denying you credit or a job or making an unfavorable rate decision for insurance — must reveal that they used the information in your credit report to make the decision. They must also reveal

    • The name, date, and numerical credit score used in the adverse decision

    • The range of possible scores under the model used

    • All key factors that adversely affected the credit score

  • Dispute and have removed any inaccurate or outdated information. After you file a dispute saying that your report contains inaccurate information, the credit bureau must remove the information and investigate the items — usually within 30 days — and give you a written report of the investigation and a free copy of your credit report with the revisions made if the investigation results in any changes.

    If the reported information is later found to be valid, it can be reinserted into your report, in which case you must be given written notice of the reinsertion. The notice must include the name, address, and phone number of the information source.

    As for outdated info, information that is more than seven years old — ten years for some bankruptcies — should be deleted from your credit report. If it isn’t, you may demand that it be dropped.

  • Place a statement on your report. You may include a 100-word statement to explain extenuating circumstances or to note your disagreement with items on your report.

  • Exclude your name from lists for unsolicited credit and insurance offers. Although creditors and insurers may use credit report information as the basis for sending you unsolicited offers of credit or insurance, they must include a toll-free phone number for you to call if you want your name and address removed from those lists.

    The opt-out toll-free number for all the national credit-reporting agencies is 888-567-8688.

  • Initiate a fraud alert by calling one of the three major credit bureaus. If you believe that your identity may have been stolen, you just have to make one phone call or visit one credit bureau website to initiate an alert. A fraud alert requires the creditor to exercise enhanced levels of protection, such as taking additional steps to verify that you are who you claim to be.

  • Freeze access to your credit report. Freezing your credit report enables you to stop any review or use of your credit information unless you authorize it. The only exception is if Uncle Sam wants to see your credit record. Generally, you can freeze, and then unfreeze or thaw, your information as your needs warrant, for any reason. You may be charged a small fee, but the process is effective.

  • Receive damages from violators. If anyone violates the law, you can sue that person in state or federal court. Some people have, and they’ve collected millions of dollars!

  • Place an active-duty alert to protect your credit as a member of the military. A business that sees an active-duty alert on your credit report must verify your identity before issuing credit in your name. The business may try to contact you directly, but if you’re deployed, doing so may be impossible.

    Therefore, the law allows you to use a personal representative to place or remove an alert. Active-duty alerts are effective for one year and may be renewed. The alert also cuts down on your junk mail. Your name is removed from the nationwide consumer-reporting companies’ marketing lists for prescreened offers of credit and insurance for two years. Sweet!

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