Fair Credit Reporting Protections

I recently applied for a loan at my local credit union and was denied. All the lender told me was that I didn’t have good enough credit.  As far as I know, I should have good credit. I always pay my bills on time and don't go over my credit limits. How can I find out why my lender didn’t give me a loan? 

Sincerely, 

In-credit-ly confused 

Hi there, 

The credit industry can feel confusing and quite honestly, shady at times. There is good news though. As a consumer in the US, you do have rights and protections when it comes to your credit file and how information is used. These protections come from the Fair Credit Reporting Act (FCRA) and are intended to establish accuracy, fairness, and privacy for your consumer credit file, aka your credit report. 

Here's what you need to know: 

• You have free access to your credit report. Every individual has access to one free credit report from each of the 3 credit bureaus (Equifax, Transunion, and Experian) every year. As of July 2022, you get access to all 3 every week for free because of the COVID-19 Pandemic. You may not need to look at it that often, but it's there for now if you need to. 

When you are applying for credit I would always recommend you take a peek at your credit report so you know what your lender is going to see. 1 in 5 credit reports have errors on them that could affect your ability to get a loan or could make borrowing more expensive for you. If you feel like you should have good credit and your lender is saying otherwise, there is a chance there are errors being reported. To check your credit report go to Annualcreditreport.com. Their reports are always free! 

• You have the right to dispute inaccurate or incomplete information on your credit report. When you take a look at your credit report you may find errors. If that happens, you do have the right to dispute the information. You can usually do so right on the credit report or you can initiate it on the individual credit bureaus' websites. 

It is important that you keep good financial records so you can prove when you paid on your accounts, your balances, etc. You will want to provide as many supporting documents as possible to prove the inaccurate info. The credit bureau has 30 days to complete an investigation and report back to you their findings. Once you find out that there were corrections made to your credit report, request another copy to verify that the information has been corrected. 

• You have the right to the information used to make a credit decision. If your lender denies you credit, they have to provide you with an “adverse action notice” detailing the reason for their decision. They will also give you the name, address, and phone number of the agency that furnished them with your credit report. You can contact that company and obtain the credit report they saw for free within 60 days. They will also provide you with the exact credit score they were provided during the application process. Lenders must use risk-based factors determined by your credit report, income, etc. to determine credit worthiness. They can't deny you a loan because they didn’t like your style! 

The Financial Guide team at Your Money Line is here to work with your employees to help them understand their credit report, score, and steps to improve their financial health. To learn more about financial wellness services, contact us today!