How Fair Credit Reporting Act Protects Home Buyers

Whether you are a first time homebuyer or want to buy a residential property as real estate investment, you can be protected in your dealings by the provision of the Fair Credit Reporting Act that provides the right to every citizen to receive a free copy of his or her credit report on an annual basis.

The Fair Credit Reporting Act further mandates that the report should contain all the information that is present in a person’s file at the time he or she placed a request for the same. By using this service, you can get a copy of your credit report free of cost and assess your credibility before applying for a home loan.

• Helps in Calculating the Cost of Home Loan

You can make an approximate calculation of the rate of interest that you will be charged for the loan based on which credit score range your FICO score falls in. In addition to ascertaining the rate of interest that you will qualify for, you can even identify and dispute any incorrect information presented on your report and can get it removed to improve your score and thus your eligibility for a home loan.

In fact, Congress passed the Fair Credit Reporting Act to offer the power to citizens to ensure that all the information furnished in their credit report is correct. Thus, this legislation empowers the homebuyers as well as those people seeking some form of credit-based services.

• Helps in Avoiding Errors

In order to prevent being denied a home loan due to a clerical error in your report, you can use the right provided by Fair Credit Reporting Act to obtain a free copy of your credit report and check for any erroneous reporting. In case you spot any, you should dispute it immediately and wait for the credit rating agency to respond to it in the next 30 days.

It is important to do so to ensure that you are not denied a home loan due to erroneous reporting. As per the law, a misinformation on the credit report of a citizen should be removed immediately and a notification about the same should be sent to all parties that pulled out the credit report in the last 6 months.

• Mandates the Removal of Outdated Information

The FCRA also protects homebuyers by mandating the rating agencies to remove any outdated information from the report of a citizen. 

It is clear from the above discussion how FCRA is a boon for all homebuyers.