When it comes to our legal relationship with credit card issuers and consumer loan agencies, it may feel like these mammoth companies hold all the cards. But in fact, there is an alphabet soup’s worth of state and federal laws designed to protect consumers of credit, along with another catalog of government agencies to enforce those laws. So while it may feel like you don’t have any leverage in dealing with these institutions, in fact you do, provided that you are willing and able to put the time and effort into using them. Here’s a rundown of the central consumer protection laws that apply to consumers of credit.
The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) are the agencies charged with enforcing the Equal Credit Opportunity Act (ECOA). The ECOA does not allow credit discrimination on the basis of race, religion, national origin, gender, marital status, age, or the acceptance of public assistance. Any person or legal entity that extends credit is covered by this law, and any party that sets credit terms, including real estate agencies, must comply with its terms.
The law bars creditors from asking about your marital status if you apply for a separate unsecured loan, from making credit decisions based on your age unless you are under 18 or unless your income is due to go down because you are close to retirement. Creditors must treat reliable public assistance as income in calculating creditworthiness, and may not assume a woman of childbearing age will stop working to raise children in assessing her income. Lenders also must consider alimony or child support as income.
And when lenders deny an application for credit, or offer credit but on less favorable terms than the terms you applied for the law requires that they supply a written explanation of their reasons for the denial or the less favorable terms.
The FCRA covers the storage of your financial information and its distribution to others. This law extends to the activities of the major credit bureaus, Experian, Equifax, and Transunion, and also to other consumer reporting agencies, including LexisNexis. The FCRA also gives you the right to be provided with a free credit report each year from each credit reporting agency. Taking advantage of that right will enable you to examine your credit report for errors and for negative items that you believe you can legitimately dispute.
The FCRA dictates the length of time that negative information can remain on your credit report, and here are the time limits. Make sure nothing older than these state limits remains on your report.
Late payments can remain for seven years from when they first became delinquent. Bankruptcies can remain for seven years for a Chapter 13 filing, and 10 years for a Chapter 7 filing. Tax liens can stay for seven years from the date paid, and court-ordered judgments can remain for seven years from the date the judge granted them. Foreclosures and repossessions can also remain for seven years, as can collection actions, counting from the date of the first late payment that led to the collection.
A lender, credit card issuer, or other financial institution actually does not need to report your payment information to a credit bureau. If they do, however, the FCRA requires that the information reported must be accurate.
You can dispute any item on your credit report at any time by going to the credit bureaus’ websites, transunion.com, equifax.com, and experian.com. Write a dispute letter to the bureaus identifying the items you are disputing and your basis for disputing, and the bureaus will be obligated, again under the FCRA, to respond. The bureaus within thirty days must either accept your contention and remove the item from your report, or deny your request, and give their reasons for the denial.
Under another law, the Fair Debt Collection Practices Act (FDCPA) debt collectors can only call you between 8:00 in the morning and 9:00 at night, and they have to stop contacting you after you make a written request to them to cease contact. They can’t call you repeatedly or continuously about a debt, and they cannot call you at work if you notify them that they may not do so. They also cannot discuss your debt with anyone except you, and that includes family members.
This is just a brief overview of your rights as a consumer of credit under the relevant statutes. Now that you know these rights, make sure they are not infringed, and if they are, feel free to use these laws to your advantage. That’s why they were written.