An Overview of the Credit Reporting System

Since the passage of the Fair Credit Reporting Act (FCRA) in 1970, our Nation's consumer credit markets have relied on the data compiled in a consumer's credit report. These reports serve as a comprehensive historical view of a consumer's financial decisions and actions. Depending on their credit history, a consumer's credit report can have a very real impact on their ability to access credit. One of the foundations of the Fair Credit Reporting Act is ensuring the accuracy of the data that appears on a consumer credit report. According to the Federal Trade Commission (FTC), nearly 20 percent of Americans have errors on their credit report. Furthermore, 5 percent of Americans have errors that could expose them to higher interest rates or could cause them to lose access to consumer credit through no fault of their own. Last year, an investigation by 60 Minutes raised significant concerns about the ability of consumers to have their errors removed. In one case, it took 6 years for a consumer to rectify inaccuracies on her credit report.