How Does FCRA Protect the Home Buyer

FCRA is an acronym for Federal Credit Reporting Act. The act was formulated in the year 1970 by the Federal Trade Commission of the government. The objective of the act is to encourage the usage of true and accurate consumer credit reports prepared by the three credit reporting agencies in the United States. The act makes the three credit rating agencies responsible for ensuring the correctness of the elements contained in the consumer credit reports. In accordance of the provisions of the act, the contents of the report should only be shared with the prospective lenders and the privacy of the report should be maintained by the credit bureaus. The credit rating agencies are allowed to submit the reports to various lending agencies like lending institutes, banks and even the departmental stores who wish to take a credit exposure on the consumer.

FCRA plays a vital and a key role in protecting the interest of the home buyer. The last step in realizing your dream of buying a home is to get a favorable response from the home loan institute. The single most important document that the lending community refers to for assessing the risk profile of a consumer is his credit score report. The FCRA ensures that the process of finalizing credit rating reports is fair and transparent. It also makes it mandatory for the credit rating agencies to act on any errors or discrepancies pointed out by consumer. Credit score reports containing inaccurate information and errors may lead to a harsh outcome for the consumer. While in some cases, the request for a housing loan may be turned down by the lending institute, in certain other cases it pushes the interest cost for the consumer since he does not qualify for the best interest rate. The FCRA act allows the consumer right to challenge and dispute the information contained in his credit report. In the event of an adverse action of a lending institute, it is mandatory for the institute to notify the consumer of their action and the credit rating agency based on whose score, the application has been assessed negatively. The FTC has also made important provisions in the FCRA act for the landlords who reject any tenancy request based on the credit score reports. As per FCRA, a landlord has to give the tenant an adverse action notice informing him of the rejection and furnishing the credit reporting agency based on whose report he has taken this adverse action.

FCRA has also played an important role in allowing free and easy access to the credit score reports. The consumers today have a wide choice to ask for their free credit score copy by either giving an application online, requesting for the same on a toll free line or writing to the credit rating agencies on their postal address. FCRA ensures the growth of a healthy consumer credit market and has a responsibility to the lending community one hand and to the consumers on the other.

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