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In 1970, the first major federal law designed to protect the privacy of individuals. This law was called the Fair Credit Reporting Act and is Title VI of the Consumer Credit Protection Act. This law applies to businesses that regularly collect consumer credit information for other businesses, for a fee or as part of a cooperative exchange.
Any report by a credit bureau or credit reporting bureau is covered by this law if it concerns a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living. Also, if it is to be used to evaluate a consumer for credit or insurance for personal, family or household purposes, employment, license to operate certain businesses or to practice a profession; or any other legitimate business need.
After recognizing that an elaborate mechanism had been been developed for investigating and evaluating the credit worthiness, credit standing, credit capacity, character and general reputation of the consumers, The Fair Credit Reporting Act was enacted by Congress. This was done to insure that the credit reporting agencies exercised their grave responsibilities with fairness, impartiality and a respect for the consumer's right to privacy.
The law specifies when a financial report on a consumer can be used, prohibits inclusion of obsolete date, describes what information must be released to the government and outlines how a consumer may gain access to his file, as well as, challenge information he thinks is incomplete or inaccurate.