Why is accuracy important in a credit report?
To realize how important, it is for your credit reports to be accurate, you first have to know the impact these credit reports have on consumers’ lives. When you apply for a loan, the company will most likely want to know how you handle your debts. For that, they review your credit report which helps them determine your creditworthiness. Credit reports contain details about how a person manages credit including credit cards, car loans, mortgages, and also contain information sourced from public records that include tax liens, bankruptcy filings, and court judgments.
Who uses your credit reports?
The credit reports are maintained by credit reporting agencies which sell out your credit reports to the lenders. Credit reports are not only used by lenders but also by potential employers, insurance companies, and prospective landlords. While the credit reporting agencies receive and maintain data of millions of people, there is a strong likelihood that inaccuracies may occur that can severely have a negative influence on the credit reports resulting in being detrimental to the consumer’s ability to be eligible for loans, insurance, and employment.
Duties to be followed by Credit Agencies
The Fair Credit Reporting Act imposes legal obligations on the Credit Reporting agencies as well as the creditors called furnishers who report information to these agencies. Agencies are required to give maximum possible accuracy by adopting reasonable mechanisms to ensure that. Credit reporting agencies and the furnishers are obliged to provide accurate information. Credit agencies are bound to investigate inaccuracy and the first option is to investigate the dispute made by the consumer but they rely solely on furnishers for the accuracy and completeness, therefore, once the furnisher confirms the accuracy, the information stays on your file. The consumers then are left with no option but to file a lawsuit against the agency under Fair Credit Reporting Act.