Cutting Credit Costs: Know Your Credit Rights

This article covers the laws that provide rights and some protection to credit users.
Cutting Credit Costs: Know Your Credit Rights - Articles

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Laws covered include the Truth in Lending Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Equal Opportunity Act, and the Fair Debt Collection Practices Act.

Almost every adult needs some form of credit to maneuver in mainstream society today. Several federal laws provide rights and protection for consumers who use credit. While all the technical details may not interest you, a basic understanding of what is covered by each law can help you assert your rights in the marketplace, if necessary. Most of the laws were passed in the 1970s when credit became available to most consumers. However, the laws have been amended several times to address changes in the way money and credit are handled today.

Equal Credit Opportunity Act

This act sets guidelines to prevent lenders from discriminating on the basis of race, color, religion, national origin, gender, marital status, age, or receipt of income from public assistance programs. Some specific rights and protections under this law include the following:

  • Women can have credit in their birth name (e.g., Susie Smith), their first and their spouse's last name (e.g., Susie Jones), or their first name and a combined last name (e.g., Susie Smith-Jones).
  • You may have a cosigner other than your husband or wife, if necessary.
  • You can get credit without a cosigner, if you meet the creditor's standards.
  • You may keep your own accounts after you change your name or marital status, reach a certain age, or retire, unless the creditor has evidence that you are not willing or able to pay.
  • You can find out whether your application was accepted or rejected within thirty days of filing a complete application.

Fair Credit Billing Act (FCBA)

This amendment to the Truth in Lending Act protects you against billing mistakes related to open-ended credit accounts, such as credit cards and department store cards. Below are specific requirements:

  • Your responsibility for unauthorized charges is limited to $50 per card.
  • You can dispute charges for goods and services you did not accept or that were not delivered as agreed.
  • You can dispute failures to post payments or credit for returned items.
  • If you have a problem with the quality of goods and services bought with a credit card and you have not been successful in settling the problem with the retailer, you may be able to withhold payment until the matter is settled. Disputed items or services must cost $50 or more.

Fair Credit Reporting Act (FCRA)

The FCRA regulates accuracy, fairness, and privacy of information in the files of consumer reporting agencies (CRA), such as credit bureaus, by

  • outlining the type of information that can be in your credit report;
  • defining who can get a copy of your report;
  • providing a way for you to dispute errors in your credit report;
  • describing procedures that CRAs must use to correct or delete inaccurate, incomplete, or unverifiable information;
  • defining how long negative accurate information can be maintained in your report;
  • stating that your employer or potential employer must get your consent before accessing your credit report;
  • providing provisions for opting out of prescreen offers for credit and insurance;
  • requiring each of the nationwide consumer reporting companies--Equifax, Experian, and TransUnion--to provide you with a free copy of your credit report, at your request, once every twelve months. You can order your free annual credit report online at annualcreditreport.com, by calling 1-877-322-8228, or by completing the Annual Credit Report Request Form (available online) and mailing it to Annual Credit Report Request Service, PO Box 105281, Atlanta, GA 30348-5281.

Fair Debt Collection Practices Act

This act provides the following guidelines for debt collectors:

  • Collection agencies cannot call you before 8:00 A.M. or after 9:00 P.M.
  • Collectors cannot contact you at work if your employer disapproves.
  • They may not use threats of violence or harm.
  • They may not use profane language or repeatedly use the phone to contact you.
  • A collector may not contact you if, within thirty days of receiving the written notice, you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.

Truth in Lending Act (TILA or REGULATION Z)

Banks and lending agencies are required to disclose the costs and terms of credit cards and other loans to make it easier for you to compare the costs of loans.

Prepared by Cathy F. Bowen, associate professor of agriculture and extension education.

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