The Fair Credit Reporting Act is a federal law that was designed to protect the rights of credit-active consumers by placing limits on who may see a copy of their credit reports.

It mandates that, while a consumer may request a copy at any time, no one else may legally review the report unless they intend to conduct a credit transaction, make an employment decision, underwrite insurance, or conduct a legitimate business transaction.

The law also provides that a credit report may be reviewed in response to a court order or federal grand jury subpoena. Anyone who knowingly and willfully obtains a credit report under false pretenses may be fined up to $5,000 and imprisoned for up to one year.

A new version of the law that went into effect on September 30, 1997, further protects credit-active consumers and gives them more control over their credit information. Among its highlights:

• Anyone reviewing a credit report for any reason other than those listed above is now guilty of a felony, instead of a misdemeanor as in the old law.
• Free credit reports must be provided once a year to victims of identity fraud and anyone who is unemployed or poor.
• Potential employers may no longer use credit reports to make employment decisions without the consent of the job applicant.
• When a consumer disputes credit information on his or her credit report, the three major credit bureaus, Experian, formerly TRW, Equifax, and TransUnion, must notify each other of the reinvestigation. In the past, it was the consumer's responsibility to notify each bureau.
• Under the updated law, credit bureaus are required to use information supplied by the consumer as well as the credit grantor when reinvestigating inaccurate credit information. Reinvestigations requested by consumers must be completed within 30 days by the major credit bureaus.
• If the completeness or accuracy of any data reported by a credit grantor to a credit bureau continues to be disputed by a consumer after the information has been reinvestigated by the credit grantor, the credit grantor may not report the information to the credit bureaus without indicating that it is still being disputed by the consumer.

If a consumer plans to apply for a loan, checking the status of his or her credit is a good idea. Consumers can now obtain a free copy of their credit report on an annual basis.

Note: This information was prepared as a public service by the Illinois State Bar Association and is a joint project with the Illinois Press Association. Its purpose is to inform citizens of their legal rights and obligations.