CREDIT APPLICATION REGULATIONS
Most businesses are honest in their business dealings. Unfortunately, some are not. Because of this, it became necessary for federal and state governments to pass laws to protect credit consumers.
Truth-in-Lending ActThe Truth-in-Lending Act of 1968 was the first of a series of credit protection laws. Truth-in-Lending requires that you be told the cost of credit before signing an agreement. The lender must clearly state the annual percentage rate (APR) and total finance charge.
The Truth-in-Lending Act also protects consumers against unauthorized use of credit cards. The law limits your liability to $50 for unauthorized credit card purchases made prior to notifying the card issuer. You are not liable for any fraudulent charges made after you have notified the credit card company. You can notify the company by telephone, but you should also put your notification in writing.
Credit Card Act of 2009The Credit Card Accountability Responsibility and Disclosure Act of 2009 was designed to establish fair and transparent credit card practices. Among its provisions, the CARD Act keeps credit card companies from changing fees and interest rates without cardholder approval. Cardholders must be notified of changes and they then have the right of refusal. Cardholders can also control their credit limit.
The CARD Act requires a credit card statement to show how long it would take to pay off the balance if the cardholder pays only the minimum due. The act also protects people under 21, college students, and other vulnerable consumers.
Most businesses are honest in their business dealings. Unfortunately, some are not. Because of this, it became necessary for federal and state governments to pass laws to protect credit consumers.
Truth-in-Lending ActThe Truth-in-Lending Act of 1968 was the first of a series of credit protection laws. Truth-in-Lending requires that you be told the cost of credit before signing an agreement. The lender must clearly state the annual percentage rate (APR) and total finance charge.
The Truth-in-Lending Act also protects consumers against unauthorized use of credit cards. The law limits your liability to $50 for unauthorized credit card purchases made prior to notifying the card issuer. You are not liable for any fraudulent charges made after you have notified the credit card company. You can notify the company by telephone, but you should also put your notification in writing.
Credit Card Act of 2009The Credit Card Accountability Responsibility and Disclosure Act of 2009 was designed to establish fair and transparent credit card practices. Among its provisions, the CARD Act keeps credit card companies from changing fees and interest rates without cardholder approval. Cardholders must be notified of changes and they then have the right of refusal. Cardholders can also control their credit limit.
The CARD Act requires a credit card statement to show how long it would take to pay off the balance if the cardholder pays only the minimum due. The act also protects people under 21, college students, and other vulnerable consumers.
Equal Credit Opportunity ActThe Equal Credit Opportunity Act prohibits creditors from denying a person credit because of age, race, sex, or marital status. Young people who may have just entered the labor market cannot be denied credit based only on age. Older, possibly retired, people also have special protection under this act.
Married women who previously found it difficult to establish credit in their own names now have a legal right to do so. Under this law, a woman has a right to her own credit if she proves to be creditworthy.
Unless your state still requires a person to be at least 21 to enter into a contract, a creditor cannot deny you credit based on your age alone. A creditor must look into your creditworthiness. Upon request, a creditor must give any person who is denied credit a written statement of the reasons for denial.
Married women who previously found it difficult to establish credit in their own names now have a legal right to do so. Under this law, a woman has a right to her own credit if she proves to be creditworthy.
Unless your state still requires a person to be at least 21 to enter into a contract, a creditor cannot deny you credit based on your age alone. A creditor must look into your creditworthiness. Upon request, a creditor must give any person who is denied credit a written statement of the reasons for denial.
CREDIT USE REGULATIONS
Several laws have been created to protect your rights when using credit.
Fair Credit Billing ActThe Fair Credit Billing Act requires prompt correction of billing mistakes. To get a correction of an error, you must notify the creditor in writing within 60 days after your statement was mailed. A good rule is to report errors as soon as you discover them. After you report an error, remember the following points.
Several laws have been created to protect your rights when using credit.
Fair Credit Billing ActThe Fair Credit Billing Act requires prompt correction of billing mistakes. To get a correction of an error, you must notify the creditor in writing within 60 days after your statement was mailed. A good rule is to report errors as soon as you discover them. After you report an error, remember the following points.
- While waiting for an answer, you are not required to pay any amount in question.
- The creditor must acknowledge your complaint within 30 days unless your statement is corrected before that time.
- You do not pay finance charges on any amount in error.
- If no error is found, the creditor must bill you again. The bill may include finance charges that have accumulated plus any minimum payments that were missed while the statement was being questioned.
The Fair Credit Billing Act also provides that you may withhold payment of any balance due on defective merchandise or services purchased with a credit card. Your first step should be to contact the business and try to resolve the problem. You can correct many situations if your complaint is made in a courteous but firm manner. The law protects you if you have made this “good faith” effort to work with the business.
Fair Credit Reporting ActThe Fair Credit Reporting Act is the law that gives consumers the right to know what information credit bureaus are giving to potential creditors, employers, and insurers. This law provides that if credit is denied based on information in a credit report, the applicant must be given the name, address, and phone number of the credit bureau that provided the information. In addition, credit records for both a husband and wife are kept if both are responsible for the debt. This allows a credit history to be developed for each spouse.
Prior to the passage of this law, many consumers were unaware that potential lenders had access to reports on their bill-paying habits. This act makes those reports available to the consumer. It provides ways in which consumers can access and correct information.
The Fair Credit Reporting Act also requires that credit bureaus must delete any information dealing with a personal bankruptcy that is more than 10 years old. The credit bureau must also delete any other adverse information if it is more than seven years old.
Consumer Credit Reporting Reform ActAn unfavorable credit report can force you to pay a higher interest rate on a loan or you might be denied a loan. The Consumer Credit Reporting Reform Act places the burden of proof for accurate credit information on the credit reporting agency rather than on you. Under this law, the creditor must certify that disputed data is accurate. If a creditor or the credit bureau verifies incorrect data, you can sue for damages. The federal government and state attorneys general can also sue creditors for civil damages.
Fair Debt Collection Practices ActA debt collection agency attempts to obtain money that is past due. The agency may contact people who are overdue with credit payments.
To prevent threats and other inappropriate actions, the Fair Debt Collection Practices Act requires that debt collectors treat you fairly. It bans various debt collection actions. This law does not take away the debts that are owed.
A debt collector may contact you in person, by mail, telephone, telegram, or fax. A debt collector may not contact you at inconvenient times or places, such as before 8 A.M. or after 9 P.M. They also may not contact you at work if your employer prohibits such contact.
Fair Credit Reporting ActThe Fair Credit Reporting Act is the law that gives consumers the right to know what information credit bureaus are giving to potential creditors, employers, and insurers. This law provides that if credit is denied based on information in a credit report, the applicant must be given the name, address, and phone number of the credit bureau that provided the information. In addition, credit records for both a husband and wife are kept if both are responsible for the debt. This allows a credit history to be developed for each spouse.
Prior to the passage of this law, many consumers were unaware that potential lenders had access to reports on their bill-paying habits. This act makes those reports available to the consumer. It provides ways in which consumers can access and correct information.
The Fair Credit Reporting Act also requires that credit bureaus must delete any information dealing with a personal bankruptcy that is more than 10 years old. The credit bureau must also delete any other adverse information if it is more than seven years old.
Consumer Credit Reporting Reform ActAn unfavorable credit report can force you to pay a higher interest rate on a loan or you might be denied a loan. The Consumer Credit Reporting Reform Act places the burden of proof for accurate credit information on the credit reporting agency rather than on you. Under this law, the creditor must certify that disputed data is accurate. If a creditor or the credit bureau verifies incorrect data, you can sue for damages. The federal government and state attorneys general can also sue creditors for civil damages.
Fair Debt Collection Practices ActA debt collection agency attempts to obtain money that is past due. The agency may contact people who are overdue with credit payments.
To prevent threats and other inappropriate actions, the Fair Debt Collection Practices Act requires that debt collectors treat you fairly. It bans various debt collection actions. This law does not take away the debts that are owed.
A debt collector may contact you in person, by mail, telephone, telegram, or fax. A debt collector may not contact you at inconvenient times or places, such as before 8 A.M. or after 9 P.M. They also may not contact you at work if your employer prohibits such contact.
CREDIT PROBLEMS AND ASSISTANCEA person who cannot pay his or her bills when they are due might take these four steps.
1. Contact creditors and explain the situation.
2. Make a realistic proposal for when and what you can pay. Don't just say, “I can't pay.”
3. Keep any promises you make.
4. Make a written copy of your agreement to avoid problems later.
You may be able to work out a debt repayment plan . A creditor and a debtor develop this agreement to reduce payments to a more manageable level and still pay off the debt. This is good for both the creditor and the debtor.
One thing to avoid is being misled by advertisements that tell you, “Erase bad credit! 100% guaranteed.” Claims such as these are fraudulent. No one can unconditionally correct a bad credit record—it does not work that way. If you need help with a credit problem, contact a reputable credit counseling organization.
Credit CounselingDifferent kinds of help are available to people with credit problems. A credit counselor discusses and suggests actions to take to reduce spending and eliminate credit difficulties.
1. Contact creditors and explain the situation.
2. Make a realistic proposal for when and what you can pay. Don't just say, “I can't pay.”
3. Keep any promises you make.
4. Make a written copy of your agreement to avoid problems later.
You may be able to work out a debt repayment plan . A creditor and a debtor develop this agreement to reduce payments to a more manageable level and still pay off the debt. This is good for both the creditor and the debtor.
One thing to avoid is being misled by advertisements that tell you, “Erase bad credit! 100% guaranteed.” Claims such as these are fraudulent. No one can unconditionally correct a bad credit record—it does not work that way. If you need help with a credit problem, contact a reputable credit counseling organization.
Credit CounselingDifferent kinds of help are available to people with credit problems. A credit counselor discusses and suggests actions to take to reduce spending and eliminate credit difficulties.
Various nonprofit counseling services are available around the country. The National Foundation of Consumer Credit can direct you to a local credit assistance program. This nonprofit organization has hundreds of member agencies that operate local offices around the country. Many of the member agencies are known as Consumer Credit Counseling Service (CCCS). Consumers are warned to be cautious of for-profit credit counseling services.
BankruptcyConsumers may take one additional step when facing credit problems. They should use this final option only for extreme situations. Bankruptcy is the legal process of reducing or eliminating an amount owed. This process is costly and requires legal assistance. Consumers can usually avoid bankruptcy by using credit wisely and practicing sensible money management.
BankruptcyConsumers may take one additional step when facing credit problems. They should use this final option only for extreme situations. Bankruptcy is the legal process of reducing or eliminating an amount owed. This process is costly and requires legal assistance. Consumers can usually avoid bankruptcy by using credit wisely and practicing sensible money management.