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FTC Seeks Comment on Amending Free Credit Reporting Rules

By Faye Mergel
Published: Friday, October 9th, 2009

The Federal Trade Commission announced its plan to amend Free Annual File Disclosures Rule, more popularly known as Free Credit Reporting Act (FCRA). FTC says that proposed amendments are in line with the Credit Card Act 0f 2009, which seeks to clear out distinctions between commercially indorsed free credit report and those that are sponsored by Federal Government. Comments are due less than two months from now, and they are expected to significantly influence decisions by FTC.

FTC Seeks Comment on Amending Free Credit Reporting RulesThe Federal Trade Commission says that there is a need in drawing bolder lines between commercial and state sponsored advertisements on credit reports. FTC says that consumers must be made aware whether a free credit reporting service is a commercially endorsed or if it is part of federal mandate. Comments are due on November 30 which the Commission will use as references during their amendment proceedings. Meanwhile, experts lay out significant rules on the FCRA which they believe every consumer must know.

Specialists say that under the present provisions of FCRA, consumer reporting agencies (CRAs) are required to collect information about consumers and disseminate it whenever there is a need for a person’s credit evaluation. Such information could be used in determining eligibility for loan or credit and qualifications for employment. Credit bureaus, another type of CRA, are required to store information about every consumer in their databases. Federal law mandates these bureaus to provide a consumer with information regarding his credit profile so he can verify its accuracy.
Experts say that a consumer’s right to dispute his files, which guaranteed by FCRA, is significant since 79 percent of reports contain errors. Public Interest Research Group adds that 25 percent of these errors are serious enough to hurt a person’s score. According specialists, the right to dispute is important since errors can decrease a consumer’s score by one hundred points or more.

If a consumer wins dispute, bureaus are mandated to remove erroneous items immediately. FCRA likewise orders information provider such as credit card companies, mortgage banking institutions, and auto finance companies to verify information before providing bureaus with them to avoid inaccuracies. Current provisions also prohibit CRAs from keeping negative information about a person for too long. Bankruptcy, for instance, must be removed within 7 or 10 years, depending on a specific case.

Fair Credit Reporting Act was last mandated May 22 this year and experts believe that proceedings this November will provide more protection for consumers who are often misled by corporate advertisements.

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