You asked for information on (1) whether an individual must be notified that an action may harm his or her credit score, (2) how long a credit score can be affected, and (3) whether any legislation exists to change the way in which credit scores are evaluated.

SUMMARY

A financial institution must inform the consumer in writing within 30 days of reporting negative information to a consumer reporting agency.

Most negative information must be removed after seven years. This does not include records of convictions of crimes or bankruptcies, nor does it apply to reports requested in relation to employment offers for jobs salaried at over $75,000 annually.

Federal law prohibits states from imposing a requirement or prohibition relating to information contained in consumer reports.

NOTIFICATION

Any financial institution that furnishes negative information to a consumer reporting agency must, within 30 days of forwarding the negative information, inform the consumer in writing of the negative use

of credit report information. Negative information includes information regarding delinquencies, late payments, insolvency, or any form of default. Information that is not negative may be furnished without such notice (15 U.S.C. § 1681s-2(a)(7)).

The term “financial institution” includes a state or national bank or savings and loan association, a mutual savings bank, a state or federal credit union, or any other person that, directly or indirectly, holds a transaction account belonging to a consumer (15 U.S.C. § 1681a(t)).

REPORTING NEGATIVE INFORMATION

Sections 605(a)(1-4) of the amended Fair Credit Reporting Act provide specific rules relating to the reporting of information related to bankruptcies, suits and judgments, paid tax liens, and certain credit accounts. Section 605(a)(5) provides that a CRA may not report “any other adverse item of information, other than records of convictions of crimes, which antedates the report by more than seven years.”

Except for records of criminal convictions, which may now be reported without any time limitation, Section 605 of the FCRA prohibits consumer reporting agencies from providing adverse information that is more than seven years old (10 years in the case of bankruptcies) for employment purposes where the annual salary is less than $75,000. There are no restrictions upon reporting adverse information for jobs involving salaries of more than $75,000.

FEDERAL PREEMPTION

Under federal law, “no requirement or prohibition may be imposed under the laws on any State… relating to information contained in consumer reports…” (15 USCA § 1681t (b)(1)(E)).

MR:ak