Somebody has to keep all of this under control. Some businesses attempt to abuse the system. They might limit who gets access to money based on unreasonable criteria. For example, does one's race or sex determine whether or not they will be a good borrower? In the past, these factors have been used to discriminate, so the regulators stepped in to limit discrimination.

In addition, inaccuracies have hurt consumers over the years. If you have inaccurate information in your credit reports, it can make a huge difference in your standard of living. You might not be able to buy a home or a car. In the past, consumers were absolutely powerless. Newer regulations attempt to level the playing field so that information is kept accurate. The Federal Trade Commission (FTC) is the main watchdog when it comes to managing and improving your credit.

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) gives you rights related to the information that is kept by consumer-reporting companies. While the major credit-reporting companies might come to mind first, the Act also applies to companies that track check-writing history, medical records, employment history, and tenancy records. The gist of the law is that you have the right to know what your records say, and to correct inaccuracies.

The FCRA made credit reporting and scoring more transparent. Previously, you might have had a hard time finding out what your credit reports said. If there were errors, you could complain about them until you were blue in the face, but they probably wouldn't get fixed. The provisions for “fairness” in the FCRA make it easier for you to ensure the accuracy of your credit reports.

In addition to accuracy, privacy is an important part of the FCRA. The Act lays out specific circumstances that enable somebody to ask for your credit report. In general, these relate to applications for credit, underwriting for some insurance policies, and situations where you give somebody permission to view your report. In the past, people could violate your privacy more easily. These days, you sometimes hear about a person accessing an ex-spouse's credit reports. If there is no permissible purpose, you get in big trouble for this.

An especially important part of the FCRA is your right to a free credit report each year. Previously, there were a limited number of reasons that qualified you for a free report. For example, you had to have adverse action taken against you or suffer some other inconvenience. Now consumers nationwide can get a free report. Chapter 5 details how you can get your free credit reports.

Other Regulations

There are a number of other regulations related to your credit. While many of these do not have much to do with improving your credit, they are important to eliminating discrimination and abuse in the marketplace. The most important rules relating to your credit are probably those related to identity theft. They make it easier to recover from, and repair your credit after, a documented case of identity theft.