| Your
Credit Rating A good credit rating is very important. Businesses inspect your credit
history when they evaluate your applications for credit, insurance, employment, and even
leases. Based on your credit payment history, businesses can choose to grant or deny you
credit provided you receive fair and equal treatment. Sometimes, things happen that can
cause credit problems: a temporary loss of income, an illness, even a computer error.
Solving credit problems may take time and patience, but it doesn’t have to be an
ordeal.
Your rights
under the Fair Credit Reporting Act
The Federal Trade Commission (FTC)
enforces credit laws that protect your right to obtain, use, and maintain credit. These
laws do not guarantee that everyone will receive credit. Instead, the credit laws protect
your rights by requiring businesses to give all consumers a fair and equal opportunity to
receive credit and to resolve disputes over credit errors. This brochure explains your
rights under these laws and offers practical tips to help you solve credit problems.
Your Credit
Report
Your credit payment history is recorded
in a file or report. These files or reports are maintained and sold by "consumer
reporting agencies" (CRAs). One type of CRA is commonly known as a credit bureau. You
have a credit record on file at a credit bureau if you have ever applied for a credit or
charge account, a personal loan, insurance, or a job. Your credit record contains
information about your income, debts, and credit payment history. It also indicates
whether you have been sued, arrested, or have filed for bankruptcy.
The Fair Credit
Reporting Act (FCRA) is designed to help ensure that CRAs furnish correct and
complete information to businesses to use when evaluating your application.
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You have the
right to receive a copy of your credit report. The copy of your report must contain all of
the information in your file at the time of your request.
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You have the
right to know the name of anyone who received your credit report in the last year for most
purposes or in the last two years for employment purposes
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Any company
that denies your application must supply the name and address of the CRA they contacted,
provided the denial was based on information given by the CRA.
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You have the
right to a free copy of your credit report when your application is denied because
of information supplied by the CRA. Your request must be made within 60 days of receiving
your denial notice.
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If you contest the completeness or accuracy of information in your report,
you should file a dispute with the CRA and with the company that furnished the information
to the CRA. Both the CRA and the furnisher of information are legally obligated to
reinvestigate your dispute.
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You have a right to add a summary
explanation to your credit report if your dispute is not resolved to your satisfaction.
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| Your Credit Application When creditors evaluate a
credit application, they cannot lawfully engage in discriminatory practices.
The Equal Credit
Opportunity Act (ECOA) prohibits credit discrimination on
the basis of sex, race, marital status, religion, national origin, age, or receipt of
public assistance. Creditors may ask for this information (except religion) in certain
situations, but may not use it to discriminate when deciding whether to grant you credit.
The ECOA protects
consumers who deal with companies that regularly extend credit, including banks, small
loan and finance companies, retail and department stores, credit card companies, and
credit unions. Everyone who participates in the decision to grant credit, including real
estate brokers who arrange financing, must follow this law. Businesses applying for credit
also are protected by this law.
Your
rights under the Equal Credit Opportunity Act
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You cannot be denied credit based on your race, sex, marital status,
religion, age, national origin, or receipt of public assistance.
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You have the right to have reliable public assistance considered in the
same manner as other income
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If you are denied credit, you have a legal right to know why.
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| Your Credit Billing and
Electronic Fund Transfer Statements It is important to check credit
billing and electronic fund transfer account statements regularly. These documents may
contain mistakes that could damage your credit status or reflect improper charges or
transfers. If you find an error or discrepancy, notify the company and contest the error
immediately.
The Fair Credit
Billing Act (FCBA) and Electronic Fund Transfer Act (EFTA) establish procedures for resolving mistakes on credit billing and
electronic fund transfer account statements, including:
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charges
or electronic fund transfers that you or anyone you have authorized to use your account
have not made;
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charges or electronic fund transfers that are incorrectly identified or
show the wrong amount or date;
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computation or similar errors;
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failure to reflect payments, credits, or electronic fund transfers
properly;
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not mailing or delivering credit billing statements to your current
address, as long as that address was received by the creditor in writing at least 20 days
before the billing period ended;
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charges or electronic fund transfers for which you request an explanation
or documentation, due to a possible error.
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The FCBA generally applies only
to "open end" credit accounts, credit cards, revolving charge accounts (such as
department store accounts), and overdraft checking accounts. It does not apply to loans or
credit sales that are paid according to a fixed schedule until the entire amount is paid
back, such as an automobile loan. The EFTA applies to electronic fund transfers, such as
those involving automatic teller machines (ATMs), point-of-sale debit transactions, and
other electronic banking transactions.
Your
Debts and Debt Collectors
You are
responsible for your debts. If you fall behind in paying your creditors or an error is
made on your account, you may be contacted by a "debt collector." A debt
collector is any person, other than the creditor, who regularly collects debts owed to
others. This includes lawyers who collect debts on a regular basis. You have the right to
be treated fairly by debt collectors.
The
Fair Debt Collection Practices Act (FDCPA) applies to
personal, family, and household debts. This includes money owed for the purchase of a car,
for medical care, or for charge accounts. The FDCPA prohibits debt collectors from
engaging in unfair, deceptive, or abusive practices while collecting these debts.
Your
rights under the Fair Debt Collection Practices Act
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Debt collectors may not harass, oppress, or abuse you.
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Debt collectors may not lie when collecting debts, such as falsely
implying that you have committed a crime.
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Debt collectors must identify themselves to you on the phone.
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Debt collectors may contact you only between 8 a.m. and 9 p.m.
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Debt collectors may not contact you at work if they know your employer
disapproves.
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Debt collectors may not harass, oppress, or abuse you.
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Debt collectors may not lie when collecting debts, such as falsely
implying that you have committed a crime.
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Debt collectors must identify themselves to you on the phone.
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Debt collectors must stop contacting you if you ask them to in writing.
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Solving Your Credit Problems
Your credit report influences your purchasing power, as well as your chances to get a job,
rent or buy an apartment or a house, and buy insurance. A history of timely credit
payments helps you get additional credit. Accurate negative information can stay on
your report for seven years. A bankruptcy can stay on your report for 10 years. If you
are having problems paying your bills, contact your creditors at once. Try to work out a
modified payment plan with them that reduces your payments to a more manageable level.
Don't wait until your account has been turned over to a debt collector.Here are some additional tips for
solving credit problems.
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If you want to contest a credit report, bill or credit denial, contact the
appropriate company in writing and send it "return receipt requested."
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When you contest a billing error, include your name, account number, the
dollar amount in question, and the reason you believe the bill is wrong.
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If in doubt, request written verification of a debt.
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Be skeptical of businesses that offer instant solutions to credit
problems.
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Be persistent. Resolving credit problems can take time and effort.
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There is nothing that a credit repair company can do for you for a
fee that you cannot do for yourself for little or no cost.
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| If you can't resolve your credit
problems yourself or if you need help, you may want to contact a credit counseling
service. Nonprofit organizations in every state counsel consumers in debt. Counselors try
to arrange repayment plans that are acceptable to you and your creditors. They also can
help you set up a realistic budget. These services usually are offered at little or no
cost. Universities,
military bases, credit unions, and housing authorities also may offer low- or no-cost
credit counseling programs. Check the white pages of your telephone directory for a
service near you.
www.ftc.gov
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