Your Credit-Related Rights and Consumer Protection Laws
When it comes to consumer protection laws, most people are not aware of how these laws exist to help them. We can often feel like credit card issuers and consumer loan agencies 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. In addition, there is 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, you do. You just have to be 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 Major Credit Consumer Protection Laws
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. Pretty much 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. They also 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.
Furthermore, when lenders deny an application for credit or offer less favorable terms, the law requires that they supply a written explanation.
The Fair Credit Reporting Act (FCRA)
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 you can legitimately dispute.
The Right To Have Old Negative Information Removed From Your Credit Report
The FCRA dictates the length of time that negative information can remain on your credit report. 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, repossessions and collection actions can also remain for seven years. This is counting from the date of the first late payment that led to the collection.
The Accuracy Requirement And Your Right To Dispute
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’ website. Write a dispute letter to the bureaus identifying the items you are disputing and your basis for disputing. The credit bureaus will be obligated, again under the FCRA, to respond. They have thirty days either to accept your contention and remove the item from your report, or deny your request, and give their reasons for the denial.
What Debt Collectors Can And Cannot Do
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. They have to stop contacting you after you make a written request to them to cease contact. Once this is in place, they can’t call you repeatedly and they cannot call you at work. They also cannot discuss your debt with anyone except you, and that includes family members.
Now That You Know Your Rights, Insist On Them
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 upon and feel free to use these laws to your advantage. That’s why they were written.