Fair
Credit Reporting Act
The Fair Credit Reporting Act
promotes the accuracy and privacy of information in consumer credit reports. It
also controls the use of credit reports and requires consumer reporting
agencies to maintain correct and complete files.
According to this act, you have a
right to review your credit report and to have incorrect information corrected.
Issuing Credit
Reports
Credit bureaus, the most common type
of consumer reporting agency (CRA) that compiles and issues credit reports, are
required to help you understand your report. Reports can be issued only to
those with a legitimate business reason. These include creditors, employers,
insurers, and government agencies reviewing your status for licensing or
benefit purposes, or any third party for whom you request a report.
Credit Report
Errors
If you find an error on your report,
you should notify the credit bureau in writing immediately. The bureau is
responsible for investigating and for changing or removing any incorrect data.
The source of the error must then notify all consumer reporting agencies where
they sent information. If you are not satisfied with the correction, you have
the right to add a brief statement (100 words or less) about the issue to your
credit report. The statement should be a clarification, not an explanation, of
credit problems.
Denied Credit
If your credit application is turned
down because of an error on your report, the lender is required to provide you
with the name and address of the credit bureau that issued the report. Then,
you have 30 days to request a free copy from the bureau. The bureaus
must disclose to you all information in the report, its source, and who has
recently received the report.
You have the right to have the credit bureau re-issue corrected reports to
lenders who received reports within the last six months, or to employers who
received one in the past two years.
Disclosure
Consumer reporting agencies must provide you access to the information in
your credit report, as well as identify those who have requested the
information recently. There is usually a charge for each report, unless you
have been denied credit recently.
You are entitled to one free report a year if you certify in writing that:
(1) you are unemployed and plan to look for a job within 60 days, (2) you are
on welfare, or (3) your report is inaccurate due to fraud.
Equal
Credit Opportunity Act
The Equal Credit Opportunity Act requires that individual creditors apply
credit standards in a fair manner, so that all consumers are given an equal
chance to obtain credit. It does not require all creditors to have the same
standards, nor does it guarantee approval of loan applications.
In reviewing your credit application, lenders cannot discriminate on the
basis of sex, marital status, race, religion, national origin, age, income from
assistance programs, or if you exercise your rights under the Consumer
Protection Act. The only acceptable criteria are your ability and intent to
repay funds borrowed.
Prohibited Information
Credit applications cannot ask you about your sex, race, color, religious
affiliation, or national origin unless you are applying for residential real
estate. Even then, you are not required to answer. The information is used only
to enforce fair housing laws, not for evaluation purposes.
You cannot be asked your marital status, unless your spouse will help
secure, use, or be legally responsible for the loan. Creditors are also
prohibited from asking about your plans to have children.
Credit for Couples
Spouses have the right to have their credit histories listed separately,
including the accounts they use jointly. Married women have the option of using
their birth name or married name. In the case of couples who jointly
established credit, but whose credit appears in the name of only one spouse,
the other partner has the right to rely on that credit history as well.
Divorced
Individuals
If you pay or receive alimony, child support, or maintenance, you can be
asked how these items affect your income. However, if you do not plan to use
this income to repay the loan for which you are applying, you do not have to
list it on your application.
Age
Creditors can ask how old you are in order to be certain you have reached
legal age to enter into contracts. They can also consider your age to estimate
how long you will continue to work. However, age cannot be used to deny credit
to those 62 or older (in the case of credit-scoring systems) or to those
applicants whose age exceeds that required for credit insurance.
Changed Circumstances
The terms of your credit cannot be changed simply because your life
circumstances do. For example, the length, interest, or other features of loans
cannot be changed; you cannot be forced to reapply for a loan; and you cannot
be terminated because you change your name or marital status, reach a certain
age, or retire.
Applicant Notification
Lenders must notify credit applicants of their decision within 30 days after
the application is completed. If credit is denied, the creditor must provide a
written statement that includes the action taken, reason for denial (or how to
request it), the applicant's rights, and the name and address of the enforcing
federal agency. If you believe that discrimination has taken place, you have
the right to file suit. If creditors are found to have discriminated unfairly,
they can be held liable for actual damages and punitive damages up to $10,000.
Fair Credit Billing Act
The Fair Credit Billing Act provides for the prompt correction of errors on
open-end credit accounts (department store credit accounts, for example) and
protects consumers' credit ratings while they are settling disputes.
Under this law, if a consumer is disputing a charge, creditors cannot report
the consumer's account as delinquent. This applies to open-end credit
instruments, such as credit cards, revolving charge accounts, and overdraft
checking. Consumers who question an item are responsible for notifying the
creditor in writing within 60 days of receiving the bill. The creditor must
acknowledge the notice within 30 days and may not do anything to damage the
consumer's credit rating while the item is in dispute.
Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act promotes the fair treatment of
consumers by prohibiting debt collectors from using unfair, deceptive, or
abusive practices.
This act applies to professional debt collectors who collect on loans they
did not originate. Though it technically does not apply to banks, department
stores, and other lenders who collect their own debts, no reputable lender is
permitted to use such practices.
- Debt collectors are permitted to contact people other than the debtor
only to locate the debtor or make a reasonable effort to communicate with the
debtor about the debt.
- After making contact, debt collectors are required to send written notice
informing the debtor of the amount of the debt, the name of the creditor, and
the fact that the debt will be considered valid unless disputed within 30
days.
- Debt collectors are prohibited from harassing, oppressing, or being
abusive in collecting a debt. This includes using threats or obscene
language, publicizing the debt, making annoying or anonymous telephone calls,
and misrepresenting the identity of the collector, the status of the debt,
and the consequences if it is not paid.
If debt collectors violate the Fair Debt Collection Practices Act, consumers
can sue for actual and punitive damages.
