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Consumer Credit Laws and Your Credit Rights
In order to understand your consumer credit rights, you need to know what those rights are and how they work. Here are the four major credit card laws that govern your consumer credit rights and dictate how creditors are able to conduct their business with you:
1. The Truth in Lending Act (enacted 1968)
The Truth in Lending Act was created in an effort to help protect consumers’ rights when dealing with creditors. Originally part of the Consumer Protection Act, which requires creditors to disclose interest rates and fees associated with the consumer prior to extending loan offers, the Truth in Lending Act works by making creditors disclose all information prior to negotiating a loan or loan terms.
Q. What are lenders required to tell me?
A. Under the Truth in Lending Act, lenders are required to tell you the terms and costs of all loan plans including but not limited to:
- Total Principal Amount being Financed
- Payment Due Date and Terms
- Total Finance Charges
- Application Fees
- Service Fees
- Pre-Payment Penalties
Q. If I don’t like the terms of the loan, can I back out?
A. Yes. Neither the lender nor anyone working for the lender can charge you for providing terms and costs of the loan. As long as it is before you have signed the documents and received the loan proceeds.
2. The Fair Credit Reporting Act (enacted 1970)
The Fair Credit Reporting Act was created to help protect your private information. This credit law defends consumers by requiring credit reporting agencies to follow “reasonable procedures” to protect the confidentiality, accuracy, and relevance of credit information.
Here are some common questions related to the Fair Credit Reporting Act:
Q. Can I see my credit report?
A. Yes. You have the right to receive a copy of your credit report.
Q. Do I have to pay for my credit report?
A. Under the Fair Credit Reporting Act, you have the right to one free credit report per credit reporting bureau per year. The three credit reporting bureaus are Experian, Equifax and TransUnion.
Q. If I see a mistake on my credit report, what should I do?
A. You should report the mistake to the creditor in question and the credit reporting agency. Both the creditor and credit reporting agency are required to re-investigate the matter to see if a mistake has been made.
3. The Equal Credit Opportunity Act (enacted 1974)
The Equal Credit Opportunity Act prohibits creditors from discriminating against an individual on the basis of race, color, religion, national origin, sex marital status, sexual orientation, age or enrollment in public assistance programs. This law makes sure everyone has an “equal” chance of receiving credit.
Here are some common questions related to the Equal Credit Opportunity Act:
Q. What should I do if I think a lender discriminated against me?
A. Report the ECOA (Equal Credit Opportunity Act) violation to the appropriate government agency that supervises the lender:
- Federal Trade Commission (FTC) – Most retailers, finance companies and creditors are covered by this agency.
- Office of Thrift Supervision (OTS) – Federally chartered savings banks (have “Federal” or “F.S.B.” after name of the bank)
- Comptroller of Currency (OCC) – National banks (have “National or N.A.” after name of the bank)
- Federal Reserve Board (FRB) – Financial institutions that are members of FRB but are not national banks
- Federal Deposit Insurance Corporation (FDIC) – State chartered banks that are not members of FRB
- National Credit Union Association (NCUA) – Federal credit unions
4. The Fair Credit Billing Act (enacted 1974)
The Fair Credit Billing Act regulates how creditors bill individuals and sets up procedures for disputing bills. It was created to help protect you from unfair billing practices, and it makes it easier for you to both address and dispute errors on your credit report.
Here are some common questions related to the Fair Credit Billing Act:
Q. What kind of credit accounts does The Fair Credit Billing Act apply to?
A. This credit law generally applies to “open end” credit accounts such as credit cards, revolving charge accounts (i.e. department store cards), and overdraft checking accounts.
Q. What kinds of disputes are covered?
A. The Fair Credit Billing Act only applies to “billing errors” made by a creditor that include but are not limited to:
- Unauthorized charges
- Charges with wrong date or amount
- Goods and/or services that were never delivered
- Accounting errors
- Failure to post payments or other credits due
- Failure to send bills to current address (must provide written proof that you notified a creditor of any address changes 20 days before billing period ended)
- Charges that you requested additional explanation or proof of purchase because of a possible error.
For more information on your credit rights, or for more information on our nonprofit debt consolidation services, contact us online by filling out the form above, or call CreditGuard of America at 1-800-500-6489.