Your Credit and Your Consumer Rights
A good credit rating is very
important. Businesses inspect your credit history when
they evaluate your applications for credit, insurance,
employment, and even leases. Based on your credit payment
history, businesses can choose to grant or deny you
credit provided you receive fair and equal treatment.
Sometimes, things happen that can cause credit problems:
a temporary loss of income, an illness, even a computer
error. Solving credit problems may take time and
patience, but it doesn’t have to be an ordeal.
The Federal Trade Commission (FTC) enforces credit
laws that protect your right to obtain, use, and maintain
credit. These laws do not guarantee that everyone will
receive credit. Instead, the credit laws protect your
rights by requiring businesses to give all consumers a
fair and equal opportunity to receive credit and to
resolve disputes over credit errors. This article
explains your rights under these laws and offers
practical tips to help you solve credit problems.
Your Credit Report
Your credit payment history is recorded in a file or
report. These files or reports are maintained and sold by
"consumer reporting agencies" (CRAs). One type
of CRA is commonly known as a credit bureau. You have a
credit record on file at a credit bureau if you have ever
applied for a credit or charge account, a personal loan,
insurance, or a job. Your credit record contains
information about your income, debts, and credit payment
history. It also indicates whether you have been sued,
arrested, or have filed for bankruptcy.
The Fair Credit Reporting Act (FCRA) is
designed to help ensure that CRAs furnish correct and
complete information to businesses to use when evaluating
your application.
Your rights under the Fair Credit Reporting Act:
- You have the right to receive a copy of your
credit report. The copy of your report must
contain all of the information in your file at
the time of your request.
- You have the right to know the name of anyone who
received your credit report in the last year for
most purposes or in the last two years for
employment purposes.
- Any company that denies your application must
supply the name and address of the CRA they
contacted, provided the denial was based on
information given by the CRA.
- You have the right to a free copy of your
credit report when your application is denied
because of information supplied by the CRA. Your
request must be made within 60 days of receiving
your denial notice.
- If you contest the completeness or accuracy of
information in your report, you should file a
dispute with the CRA and with the company that
furnished the information to the CRA. Both the
CRA and the furnisher of information are legally
obligated to reinvestigate your dispute.
You have a right to add a summary explanation to your
credit report if your dispute is not resolved to your
satisfaction.
Your Credit Application
When creditors evaluate a credit application, they
cannot lawfully engage in discriminatory practices.
The Equal Credit Opportunity Act (ECOA)
prohibits credit discrimination on the basis of sex,
race, marital status, religion, national origin, age, or
receipt of public assistance. Creditors may ask for this
information (except religion) in certain situations, but
may not use it to discriminate when deciding whether to
grant you credit.
The ECOA protects consumers who deal with companies
that regularly extend credit, including banks, small loan
and finance companies, retail and department stores,
credit card companies, and credit unions. Everyone who
participates in the decision to grant credit, including
real estate brokers who arrange financing, must follow
this law. Businesses applying for credit also are
protected by this law.
Your rights under the Equal Credit Opportunity Act:
- You cannot be denied credit based on your race,
sex, marital status, religion, age, national
origin, or receipt of public assistance.
- You have the right to have reliable public
assistance considered in the same manner as other
income.
- If you are denied credit, you have a legal right
to know why.
Your Credit Billing & Electronic Fund Transfer Statements
It is important to check credit billing and
electronic fund transfer account statements regularly.
These documents may contain mistakes that could damage
your credit status or reflect improper charges or
transfers. If you find an error or discrepancy, notify
the company and contest the error immediately. The
Fair Credit Billing Act (FCBA) and Electronic Fund
Transfer Act (EFTA) establish procedures for
resolving mistakes on credit billing and electronic fund
transfer account statements, including:
- charges or electronic fund transfers that you
— or anyone you have authorized to use your
account— have not made;
- charges or electronic fund transfers that are
incorrectly identified or show the wrong amount
or date;
- computation or similar errors;
- failure to reflect payments, credits, or
electronic fund transfers properly;
- not mailing or delivering credit billing
statements to your current address, as long as
that address was received by the creditor in
writing at least 20 days before the billing
period ended;
- charges or electronic fund transfers for which
you request an explanation or documentation, due
to a possible error.
The FCBA generally applies only to "open
end" credit accounts— credit cards, revolving
charge accounts (such as department store accounts), and
overdraft checking accounts. It does not apply to loans
or credit sales that are paid according to a fixed
schedule until the entire amount is paid back, such as an
automobile loan. The EFTA applies to electronic fund
transfers, such as those involving automatic teller
machines (ATMs), point-of-sale debit transactions, and
other electronic banking transactions.
Your Debts and Debt Collectors
You are responsible for your debts. If you fall
behind in paying your creditors or an error is made on
your account, you may be contacted by a "debt
collector." A debt collector is any person, other
than the creditor, who regularly collects debts owed to
others. This includes lawyers who collect debts on a
regular basis. You have the right to be treated fairly by
debt collectors.
The Fair Debt Collection Practices Act (FDCPA)
applies to personal, family, and household debts. This
includes money owed for the purchase of a car, for
medical care, or for charge accounts. The FDCPA prohibits
debt collectors from engaging in unfair, deceptive, or
abusive practices while collecting these debts.
Your rights under the Fair Debt Collection
Practices Act:
- Debt collectors may contact you only between 8
a.m. and 9 p.m.
- Debt collectors may not contact you at work if
they know your employer disapproves.
- Debt collectors may not harass, oppress, or abuse
you.
- Debt collectors may not lie when collecting
debts, such as falsely implying that you have
committed a crime.
- Debt collectors must identify themselves to you
on the phone.
- Debt collectors must stop contacting you if you
ask them to in writing.
Solving Your Credit Problems
Your credit report influences your purchasing
power, as well as your chances to get a job, rent or buy
an apartment or a house, and buy insurance. A history of
timely credit payments helps you get additional credit. Accurate
negative information can stay on your report for seven
years. A bankruptcy can stay on your report for 10 years.
If you are having problems paying your bills, contact
your creditors at once. Try to work out a modified
payment plan with them that reduces your payments to a
more manageable level. Don't wait until your account has
been turned over to a debt collector.
Here are some additional tips for solving credit
problems:
- If you want to contest a credit report, bill or
credit denial, contact the appropriate company in
writing and send it "return receipt
requested."
- When you contest a billing error, include your
name, account number, the dollar amount in
question, and the reason you believe the bill is
wrong.
- If in doubt, request written verification of a
debt.
- Keep all your original documents, especially
receipts, sales slips, and billing statements.
You will need them if you dispute a credit bill
or report. Send copies only. It may take more
than one letter to correct problems.
- Be skeptical of businesses that offer instant
solutions to credit problems.
- Be persistent. Resolving credit problems can take
time and effort.
- There is nothing that a credit repair
company can do for you —for a fee—
that you cannot do for yourself for little or no
cost.
If you can't resolve your credit problems yourself or
if you need help, you may want to contact a credit or debt
counseling service. Nonprofit organizations in every
state counsel consumers in debt. Counselors try to
arrange repayment plans that are acceptable to you and
your creditors. They also can help you set up a realistic
budget. These services usually are offered at little or
no cost (see Debt Counseling Services).
The FTC cannot represent individuals in private
disputes. You can take a legitimate grievance to your
state attorney general or local consumer protection
office. You also may take your case to a private
attorney.
Note: For affordable legal assistance The Center For Debt Management highly recommends Standard Legal's Do-It-Yourself Software Kits. For credit repair services, Lexington Law Firm
is the most trusted law firm in America, with over 15 years of experience.
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Your Credit and Your Consumer Rights: Credit Rating, Credit History
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