Credit Laws

What you need to know

It is always good to know both your rights and your responsibilities. The arena of credit is no different. Each consumer definitely has responsibilities, but there are plenty of laws to protect our rights.

The Fair Credit Reporting Act (FCRA): This statute aims to protect you from unfair, misleading or inaccurate information being included in your credit reports. This is really important to us and that is why this law is crucial for you to understand and learn.

The FCRA regulates how the “credit bureaus” treat consumers. The law also compels “credit bureaus” to provide consumer information to third parties, all the while safeguarding the consumer’s right of confidentiality. It’s not as good and safe as you might think though. Anyone who has permission to view your credit sees a lot of information…

Your credit report and everything on it can be submitted to your employers, creditors and insurers, who may take negative action towards you. You might not even realize what you’re giving permission for these people to view, but they will see lots of things about you that you might wish they weren’t able to.

The Fair Credit Reporting Act (FCRA) controls the use of credit reports and requires consumer reporting agencies to maintain complete and accurate information on your credit reports. It also gives you the right to review and correct errors on your credit reports.

Issuing Credit Reports – Credit bureaus are required to help you with understanding your credit reports and can only issue your credit reports and personal information to those who have a legitimate reason (permissible purposes) to request your credit information.
Credit Report Errors – The “credit bureaus” are also responsible under the FCRA for responding to you in a timely manner to change or remove incorrect data.
Denied Credit – If you’ve been denied credit, the lender must give you the name and address of the creditor that issued the report (they rarely do). Then you can request your free credit report within that 30 day window of being denied. (So, do it right away if this happens!)
Disclosure – Reporting agencies must give you access to the information on your credit report and identify anyone who has recently requested your credit information (credit inquiry).
Limiting Access – You can limit the inclusion of your name on lists that creditors use to make unsolicited offers of credit.

FACTA or Fair and Accurate Credit Transactions Act: The FACTA was an add-on to the FCRA. It allows us all to get our free credit report once a year for free. This is another great credit law that protects consumers in America.

FACTA allows us to get our credit report for free, including an explanation of the factors that went into computing the score. As mentioned earlier, we are charged a “reasonable” fee for our credit scores. Reasonable has yet to be determined by the FTC, even though they have been working on it since 2004!

Unfortunately “reasonable” fees do not seem to be reasonable to some companies out there. Some companies want to charge you $12 – $20 per credit score. That doesn’t always include your credit reports either!
Another cool benefit of the FACTA is that it updated the identity theft and fraud laws, mostly in our favor to further protect us as consumers. How is that for awesome credit laws that protect consumers and give us power!?!?

In regards to fraud, FACTA now requires that when you feel you have been a victim of identity theft, that upon your request, “credit bureaus” must place a fraud alert on your file for at least 90 days, and notify all other consumer reporting agencies of the fraud alert. Also, you may request an extended fraud alert in which case requires the ”credit bureau” to disclose this fraud alert on every credit report that they issue for you during a seven year period. An extended alert also requires the “credit bureau” to exclude you from any list distributed to third parties for the purpose of extending credit or offering insurance.

The FACTA also allows you to dispute your inaccuracies not only to the “credit bureaus” but also to the furnishers of the data themselves. This would include banks, collection companies, public records, credit cards, etc.There are more provisions to the FACTA but I don’t want to bore you with the details. Instead it’s important to focus on what this law can do for you and your rights.

FDCPA or also known as The Fair Debt Collection Practices Act: The Fair Debt Collection Practices Act (FDCPA) is awesome because it protects us from abuse by overeager debt collectors who work for these evil collection agencies. We discussed why we are against collection agencies earlier so we don’t need to further explain why…
But, we still need to let you know why this law is so great, so here we go.

The FDCPA was put in place to tame these wild collectors. See, before the FDCPA these collectors could call you anytime of the day and threaten you in practically any way they pleased. So, now the collectors have to abide by much stricter rules. They cannot make crazy threats like that anymore. They are also only allowed to contact you by telephone between the hours of 8:00 a.m. to 9:00 p.m. YOUR LOCAL TIME. They CANNOT make the excuse that it is within that time frame in their time zone.

Also, when the collector calls you, they have to provide you with who they are and what company they work for. They have to give you the name and address of the original creditor in writing within 30 days of your written request.
The FDCPA also allows the consumer to ask the collector and the collection company to cease all communications or partial (only contact you through phone or only contact you through mail) communications with you. This can be done with a simple letter.

They also cannot call you at work. All you have to do is verbally tell the collector that this is your place of employment and they are not allowed to call again. This usually does the trick. They are also not allowed to call you if they know you are being represented by an attorney. This is a great way to get them to leave you alone. There are a lot of inexpensive legal services out there.

Thanks to the FDCPA, once you ask for validation of the debt, the collection company cannot contact you during that 30 day validation period unless it is to tell you the results of the validation. How great is that!
The collector is also not allowed to publicize that you have bad debt to anyone else or put you on a bad debtor list.
Collectors are not allowed to use profane language or be abusive on the phone thanks to the FDCPA. We know that is a big relief for a lot of our readers and members!

Did you know they can’t talk about this debt you “supposedly” owe them with anyone except for your spouse or attorney? Okay, so maybe it’s a debt that you don’t want your husband/wife to know you have and you might be out of luck, but still, it greatly reduces the amount of people who might find out about your debts!
That means they can’t talk to your parents or friends or other family about what it is you owe or how much you owe them.

The Fair Credit Billing Act (FCBA): This is explained in one simple “sentence” by the government is “to protect the consumer against inaccurate and unfair credit billing and credit card practices”.

The FCBA requires your creditors to correctly bill you and to make amends if there is a mistake on their part.
The FCBA stipulates that your creditors must promptly acknowledge any complaints raised by you regarding the billing of goods or services. It also makes the creditor to investigate the billing errors and give you the result of the investigation in writing.
Thanks to the FCBA you are protected from knee-jerk reactions by creditors which may negatively affect your credit profile, even before the investigations have been completed. This was meant to allow you the time you need to have your investigations resolved before your credit is affected.
The FCBA also provides dispute resolution channels for creditors and consumers to use. This makes it much more clear cut than it was before the FCBA. It also requires the creditor to credit you an immediate payment or refund any overpaid amounts.
You have to be careful because billing errors happen all the time and most people don’t think they can do anything about it.

The following are some examples of billing errors that could fall under the FCBA and these also consist of credit laws that protect consumers:

Calculation (math) errors
Charges that list the wrong amount
Failure to properly reflect payments or credits to an account
Billing you for unauthorized charges
Sending a bill to the wrong address
Charges for goods that were damaged by the time they were delivered to you
Charges for goods that weren’t delivered as you both agreed
Charges for goods not received by you the consumer
Charges that you requests proof of or clarification about

OTHER RESOURCES INCLUDE:
1. Consumer Credit Laws

2. Federal Consumer Credit Laws Checklist

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Credit Laws

What you need to know

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