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Friday, June 19, 2009

15 U.S.C. 1681c - part 2

Here's part 2 of my explanation of 15 U.S.C. 1681c of the Fair Credit Reporting Act.

"(b) Exempted cases. The provisions of paragraphs (1) through (5) of subsection (a) of this section are not applicable in the case of any consumer credit report to be used in connection with

(1) a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more;

(2) the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or

(3) the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more."

[This means that, if the credit report is generated either for a transaction whose principal amount (i.e. not including interest or other fees) exceeds $150,000, or life insurance worth more than $150,000 or for a job whose salary is $75,000 or more, then the items on the credit report do not have to be less than seven years old (or 10 years in the case of a bankruptcy).]

"(c) Running of Reporting Period

(1) In general. The 7-year period referred to in paragraphs (4) and (6) of subsection (a) shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action."

[Subsection (4) deals with collections and charge offs while subsection (6) relates to medical accounts published to the credit bureaus. Subsection (c)(1) starts the 7 year obsolescence period 180 days after the delinquency immediately before the account was assigned to collection or charged off. Thus, if the debt was most recently late 30 days before it is sent to collection, it must be removed from the credit report 6 years and 11 months after collection.]

"(2) Effective date. Paragraph (1) shall apply only to items of information added to the file of a consumer on or after the date that is 455 days after the date of enactment of the Consumer Credit Reporting Reform Act of 1996."

[I think the Consumer Credit Reporting Reform Act of 1996 was when the FCRA was amended prior to the 2003 amendments (i.e. the FACTA amendments). The 1996 amendments included the furnisher's duties under 15 U.S.C. 1681s-2(b). Obviously 455 days has already come and gone, so this section has little meaning.]

"(d) Information Required to be Disclosed

(1) Title 11 information. Any consumer reporting agency that furnishes a consumer report that contains information regarding any case involving the consumer that arises under title 11, United States Code, shall include in the report an identification of the chapter of such title 11 under which such case arises if provided by the source of the information. If any case arising or filed under title 11, United States Code, is withdrawn by the consumer before a final judgment, the consumer reporting agency shall include in the report that such case or filing was withdrawn upon receipt of documentation certifying such withdrawal."

[This subsection requires the credit bureau to report the type of bankruptcy (i.e. Chapter 7, Chapter 11, Chapter 13) if the type of information is reported by the source of the information. This subsection also requires the credit bureau to report any withdrawal of a bankruptcy filing if it is provided with documentation certifying the withdrawal.]

"(2) Key factor in credit score information. Any consumer reporting agency that furnishes a consumer report that contains any credit score or any other risk score or predictor on any consumer shall include in the report a clear and conspicuous statement that a key factor (as defined in section 609(f)(2)(B)) that adversely affected such score or predictor was the number of inquiries, if such a predictor was in fact a key factor that adversely affected such score. This paragraph shall not apply to a check services company, acting as such, which issues authorizations for the purpose of approving or processing negotiable instruments, electronic fund transfers, or similar methods of payments, but only to the extent that such company is engaged in such activities."

[In other words, if the number of inquiries (i.e. the number of times the credit report was accessed by third parties) negatively affected the credit score, the credit bureau has to tell the consumer in a "clear and conspicuous statement" that the number of inquires affected his or her credit score.]

"(e) Indication of closure of account by consumer. If a consumer reporting agency is notified pursuant to section 623(a)(4) [Section 1681s-2] that a credit account of a consumer was voluntarily closed by the consumer, the agency shall indicate that fact in any consumer report that includes information related to the account."

[This subsection requires the credit bureau to list any account as closed by the consumer if the credit bureau is notified pursuant to 1681s-2(a)(4) that the account was closed by the consumer.]

"(f) Indication of dispute by consumer. If a consumer reporting agency is notified pursuant to section 623(a)(3) [Section 1681s-2] that information regarding a consumer who was furnished to the agency is disputed by the consumer, the agency shall indicate that fact in each consumer report that includes the disputed information."

[In other words, if the consumer disputes to the company that provided information about the consumer to the credit bureau the way the information is published on his or her credit report (i.e. if the consumer tells the furnisher that the information it is furnishing is wrong or incomplete), then the credit bureau must list the account on the credit report as "disputed".]

That's it for part 2 of the explanation of 15 U.S.C. 1681c. I will finish my explanation of 1681c in the next installment.

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