Explanation of the Fair Credit Reporting Act (FCRA)
Welcome to the section of our website where we will attempt to explain sections of the FCRA. Please keep in mind that this is work in progress where we will address a section of the law each week. Also, please be advised that we are not lawyers or attorneys, and the explanations we provide are not intended to be legal advice.
The Fair Credit Reporting Act was originally enacted in 1970 and has been extensively amended since then, up to and including the Fair and Accurate Credit Transactions Act of 2003 (the FACT Act). In our explanation the actual text of the law, supplied in the this case from the Federal Trade Commission (the FTC), will be presented in red. The explanation will be presented in black text.
Introduction to the law:
THE FAIR CREDIT REPORTING ACT
As a public service, the staff of the Federal Trade Commission (FTC) has prepared the
following complete text of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq.
Although staff generally followed the format of the U.S. Code as published by the Government
Printing Office, the format of this text does differ in minor ways from the Code (and from West’s
U.S. Code Annotated). For example, this version uses FCRA section numbers (§§ 601-625) in
the headings. (The relevant U.S. Code citation is included with each section heading and each
reference to the FCRA in the text.) Although the staff has made every effort to transcribe the
statutory material accurately, this compendium is intended only as a convenience for the public
and not a subtitute for the text in the U. S. Code. This document was posted on July 30, 2004.
This version of the FCRA includes the amendments to the FCRA set forth in the Consumer
Credit Reporting Reform Act of 1996 (Public Law 104-208, the Omnibus Consolidated Appro-
priations Act for Fiscal Year 1997, Title II, Subtitle D, Chapter 1), Section 311 of the
Intelligence Authorization for Fiscal Year 1998 (Public Law 105-107), the Consumer Reporting
Employment Clarification Act of 1998 (Public Law 105-347), Section 506 of the Gramm-Leach-
Bliley Act (Public Law 106-102), Sections 358(g) and 505(c) of the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (USA PATRIOT Act) (Public Law 107-56), and the Fair and Accurate Credit Transactions
Act of 2003 (FACT Act) (Public Law 108-159).
The provisions added to the FCRA by the FACT Act will become effective at different times.
In some cases, the provision includes its own effective date. In other cases, the FACT Act provides
that the effective dates be prescribed by the FTC and Federal Reserve Board. See 16 CFR Part 602.
(69 Fed. Reg. 6526; February 11, 2004) (69 Fed. Reg. 29061; May 20, 2004).
The first sections of the law:
Section 601 of the FCRA creates the common name for the law.
Section 602 explains in limited detail why the law was needed.
§ 601. Short title
This title may be cited as the “Fair Credit Reporting Act”.
§ 602. Congressional findings and statement of purpose [15 U.S.C. § 1681]
(a) Accuracy and fairness of credit reporting. The Congress makes the following findings:
(1) The banking system is dependent upon fair and accurate credit reporting.
Inaccurate credit reports directly impair the efficiency of the banking system, and
unfair credit reporting methods undermine the public confidence which is
essential to the continued functioning of the banking system.
(2) An elaborate mechanism has been developed for investigating and evaluating the
credit worthiness, credit standing, credit capacity, character, and general
reputation of consumers.
(3) Consumer reporting agencies have assumed a vital role in assembling and
evaluating consumer credit and other information on consumers.
(4) There is a need to insure that consumer reporting agencies exercise their grave
responsibilities with fairness, impartiality, and a respect for the consumer's right
to privacy.
(b) Reasonable procedures. It is the purpose of this title to require that consumer
reporting agencies adopt reasonable procedures for meeting the needs of commerce
for consumer credit, personnel, insurance, and other information in a manner which is
fair and equitable to the consumer, with regard to the confidentiality, accuracy,
relevancy, and proper utilization of such information in accordance with the
requirements of this title.
Click to continue with FCRA Section 603 – Definitions and Rules of Construction
