Adverse Action Under the Fair Credit Reporting Act


One right the Fair Credit Reporting Act (FCRA) provides to consumers concerns “adverse action” (for example, a denial of your application for credit, employment, or insurance) based on a credit report or other consumer report. When adverse action is taken against you, the FCRA requires the entity that uses a consumer report to make its decision to inform you that its decision was based on a credit report, employment background check report, or another type of consumer report.  

Specifically, the Fair Credit Reporting Act mandates that “users” of consumer reports (i.e., credit-card issuers, employers, and insurance companies) which take adverse action against you based on the information in a consumer report must tell you the adverse action taken and provide you with the name, address, and phone number of the consumer reporting agency (CRA or credit bureau) that issued the consumer report. Some of these consumer reporting agencies are Equifax, Experian, Innovis, and TransUnion.

Whenever adverse action is taken, you are entitled to obtain a free copy of your credit report from the company that issued the consumer report that served as a basis for adverse action. If you find that there is inaccurate information, including but not limited to fraudulent information, on your credit report, the Fair Credit Reporting Act provides you with the right to dispute that inaccurate information directly to the CRA that issued the report. 

When you dispute TransUnion information, that credit bureau has an obligation under the FCRA to conduct a reasonable reinvestigation of your dispute. The same is true when you dispute Equifax information, dispute Experian information, dispute Innovis information, or dispute information on a credit report issued by any other consumer reporting agency.  

Unless a CRA can verify that information you dispute is accurate after conducting a reasonable investigation, you have the right to sue TransUnion, or sue Equifax, or sue Experian, or sue Innovis. Simply stated, the FCRA provides you with the right to sue any consumer reporting agency that fails to correct inaccurate information if the false information would have been corrected had the CRA conducted a reasonable investigation.  

For more information on your rights under the Fair Credit Reporting Act, see the website of the Consumer Financial Protection Bureau (CFPB), linked here.

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