CategoryCredit Repair Tips

What Is The Fair And Accurate Credit Transactions Act?

The FACTA or Fair and Accurate Credit Transactions Act came into force in 2003. It is a law that was enacted to protect the rights of the consumers by the federal government. The new law amended the earlier FCRA or Fair Credit Reporting Act that had come into force in 1970. The key aim of the FACTA Act is to lower the risks associated with identity theft. It does so by regulating the handling of information on consumer accounts like SCNs or Social Security Numbers. It is the FTC or Federal Trade Commission, Office of Thrift Supervision, Comptroller of the Currency, National Credit Union Administration, Federal Deposit Insurance Corporation, and the Federal Reserve System’s Board of Governors that enforced the FACTA. The act lays down certain requirements to protect privacy of information, restricts the ways of sharing, disposal and accuracy of consumer information

Check out some of the other key details related to the Fair and Accurate Credit Transactions Act:

  1. Any system that is engaged in the printing of payment card receipts should employ truncation of PAN or personal account number. The aim is to ensure that the complete account number of a consumer cannot be seen on the slip.
  2. It is possible for a consumer to put an alert message on his/her file if there is a suspicion of being victims of scam or fraud.
  3. All the 3 major agencies for credit reporting should provide credit reports to the consumers without any kind of charge.

Simplifying the FACTA (Fair and Accurate Credit Transactions Ac) further for ease of understanding

After FACTA was enforced, consumers are now in a position to request for their credit reports absolutely free of cost. They can get this report once every year. The 3 key credit reporting agencies such as Transunion, Experion and Equifax are supposed to supply these reports on request,

Requirements were placed on the lenders of mortgages to share consumer information like factors contributing to a mortgage loan’s price and credit scores as a part of the FACTA. The act also specifies standards, which require both the regulators and the lenders to show more proactiveness to spot identity thefts prior to its occurrence by examining the suspicious patterns.

Defining a credit report 

It is a report that has the detailed credit history of an individual. It is the function of the credit bureaus to gather relevant information so that the credit reports can be created based on such information. On the other hand, the lenders use these reports as well as some other details for ascertaining the creditworthiness of loan applicants. The United States of America has 3 top credit reporting bureaus whose names have been already mentioned in an earlier section of this discussion. Each of these three bureaus gathers information on the personal details of the consumers as well as their habits of bill-paying for creating an individual and unique credit report. While a majority of information shared by the three bureaus appears similar to one another, small distinctions do exist between all these three credit reports.

Simplifying the ‘credit report’

A credit report constitutes of personal information of consumers like previous and present addresses, employment history and social security numbers. The reports also consist of a summary of credit history like the type and number of accounts, which are in good standing or are past due. They also include account information in detail related to dates on which an account was first opened, credit limits and high balances.

A credit report also includes account details that were shared with credit agencies like information about wage garnishments and liens and credit inquiries. Usually, a credit report contains negative information if any for a period of 7 years. On the other hand, a bankruptcy filing may be retained on the reports for around a decade.

How to read a credit report?

A credit report usually classifies information into 4 separate sections. On the top of this report, you will find your personal information. In several cases, the top section can also contain the Social Security Numbers or variances of the name of the consumers. The reason could be because an entity such as a lender would have reported the information in an incorrect manner.

How Often Does Your Credit Score Change?

Once your credit score has deteriorated or becomes poor, it is really tough to improve the same. Do not forget that your credit score is a big influencer for the lender to decide whether they should approve your loan application or reject it outright. Sadly though, once it has gone down, it is disillusioning to see how slow the change is and yet even a month can create a distinction.

However, grooming your credit score can be quicker than what you had initially expected. You may be surprised to know how frequently your credit score can improve. In fact, you may even see your rating progress faster than what you had anticipated.

A credit report contains your credit score 

There are credit bureaus that prepare your credit report. These reports contain the information of your financial standing in terms of credit scores. In fact, a credit report is a detailed document, which describes a consumer’s history with the management and handling of borrowed money. There are 3 key credit bureaus that maintain and gather this data. A credit score is usually computed by a bureau after a lender requests for it. There is a specially designed credit scoring model such as FICO or VantageScore that is used for running your credit report. The end outcome is a mathematical score, which is a representation of the data on a specific report at that particular moment.

A consumer may have multiple credit scores based on the scoring company that was used, the credit bureau that pulled the data from and the purpose for which the score will be used.

In order to get a response on how frequently your scores can change, it is imperative to learn the frequency at which a credit report gets updated.

Your credit information is typically reported by lenders on a monthly basis 

Usually both positive, as well as negative information is reported by lenders to all the major credit bureaus once every month. Thus, it is possible to see some changes in your credit score every month based on the information that is getting featured on your credit report. The 3 key credit bureaus in the United States are TransUnion, Equifax, and Experan. A lender may either report to any one, two, all of them or even none of them. In a majority of cases, big banks may report to all these credit bureaus.

Do you want to know the kind of data that go to these credit bureaus every month from the lenders?

The data about your account or you may constitute of the following:

  • Recent inquiries on credit
  • Activities conducted by authorized users
  • Account balance
  • Status of account (in collections, defaulted, delinquent, closed, in good standing)
  • Timeliness of the last payment (whether the borrower was late for a month or even more than that period)

It is possible to see occurrence of big fluctuations

A majority of changes in the credit scores typically take place incrementally. Your score may gain a few points or go down by some points. In the subsequent month, your score may again go up by some more points. Thus, over a period of time, the gains can add up to become big. However, you are not likely to witness a big swing within a brief time period. Yet, there could be exceptions too. Here are some following contributors that may lead to a significant fluctuation of about 20 points or even more than that in your credit score within a time period of one or a couple of months

Change on the debt load of a credit card

A key influencer on the credit score is the credit utilization ratio that is the amount one owes as compared to the credit limit or the amounts owed. An increase in the debt of your credit card may affect your utilization ratio and that can cause your score to dip.

Delinquency

Most of you will agree that your payment history is a big influence on your credit score. A drastically late payment may pinch you eventually as it gets reflected on your credit report. Your credit score may go down significantly if you are yet to make your bill payment although a month or more than 30 days have passed.

You should also remember that a delinquency for 60 days is even worse than a delinquency for 30 days. Thus, it makes sense to return to good standing as quickly as possible.

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