Uses and Application of the FCRA (Fair Credit Reporting Act)
Uses and Application of the FCRA (Fair Credit Reporting Act)
The FCRA (Fair Credit Reporting Act) has been established in order to maintain balance and transparency on the financial status of a consumer. People are unaware that majority of the banks are adding penalties and hidden fees that are not allowed under the law. The banks use a very ineffective and unreliable system to establish the credit rank of a person. At times, the system is subjective based on the financial capability of the consumer. The banks prefer clients who have greater bank accounts since they can conduct profitable transactions. This is very unfair especially for consumers who are having financial distress and crisis. They are given a negative credit ranking so that the banks can penalize them and earn more money. This has a lot of negative implications to society since the poor becomes poorer while the rich becomes richer. The unfair bad credit rating has been blamed for the continual repossession and foreclosure of homes and houses.
The FCRA (Fair Credit Reporting Act) has been created to protect the middle and lower class families from being unfairly treated and penalized by banks and lending institutions. The law requires the banks to conform to a standard when establishing the credit record of a consumer. The standards are applied to people with different financial status and standings. This is a good way to ensure fairness and equality. Through the law, the credit rating would be primarily based on the paying habits and financial history of the consumer. People who pay on time would be given a high rating while people who are negligent are demoted. The penalties are fairly imposed based on the monthly income and salary of the consumer.
The FCRA (Fair Credit Reporting Act) also require the banks to submit all the evaluations and assessments established regarding the financial status of the consumer. This is done in order to maintain transparency. All the payments, transactions and other financing records would be directly presented to the proper government agencies. This can also be used as evidence if ever a consumer has claimed that the banks violated protocols and laws.