Know Your Credit Consumer Rights

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In the U.S. there are many rules regarding personal finance and many consumers do not know all of their rights, especially when it comes to credit. Feel like you’re getting the runaround when dealing with a creditor? Are you the victim of collection abuse or credit report error? This article covers your rights in these situations.

Applying for New Credit

The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) enforce the Equal Credit Opportunity Act (ECOA).  The ECOA prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age or because you get public assistance.  The law applies to any organization or person who extends credit: banks, credit unions, small loan and financing companies, retail and department stores.  Anyone involved in setting the terms of credit, including real estate brokers, must comply with the law.

Under the law, creditors may not:

  • Discourage you from applying for credit because of race, color, religion, national origin, sex, marital status, age or because you get public assistance.
  • Impose different terms, interest rates or fees based on race, color, religion, national origin, sex, marital status, age or because you get public assistance.
  • Ask about your marital status if you are applying for a separate unsecured loan.
  • Ask for information about your spouse unless you are applying with your spouse, your spouse will be allowed to use the account, you live in a community property state or you are relying on income from your spouse.
  • Make credit decisions based on your age unless you are under 18 or your income will drop because you are close to retirement.
  • Refuse to consider reliable public assistance income the same way as other income.
  • Assume a woman of childbearing age will stop working to raise children when assessing income.
  • Refuse to consider income coming from part time work, Social Security, pensions or annuities.
  • Refuse to consider alimony or child support.
  • Know the reason why credit was refused, and this reason must be specific.
  • Know whether your application was accepted or rejected within 30 days of filing a complete application.
  • Learn the specific reason why you were offered less favorable terms than you applied for – but only if you reject those terms.

You also have the right to:

  • Know the reason why credit was refused, and this reason must be specific.
  • Know whether your application was accepted or rejected within 30 days of filing a complete application.
  • Learn the specific reason why you were offered less favorable terms than you applied for – but only if you reject those terms.

Your Credit/Consumer Report

The Fair Credit Reporting Act (FCRA) governs how your information regarding financial matters is stored and distributed to others.   It doesn’t just cover the credit bureaus: there are many consumer reporting agencies, which are all for-profit corporations.  Some examples: Experian, Equifax, Transunion, Chexsystems, Innovis, LexisNexis and Telecheck. The complete list, along with the type of information they store, mailing address and phone numbers, can be found here.

Most people will only be concerned with the credit bureaus:  Experian, Equifax and Transunion. Note: the credit bureaus receive some of their information from other consumer reporting agencies, most notably LexisNexis.

One Free Report a Year

You are entitled to see one free credit report a year from each of the consumer reporting agencies under the FCRA.  To get free copies of your reports from the credit bureaus, go to annualcreditreport.com.  To get a copy of your report from the other agencies, you must call or write to receive a copy.

How Long Negative Information Can Remain on Your Consumer Report

Negative information appears on your consumer report when you fail to make a payment on time, have a public record (examples: bankruptcies and judgments) or default on a financial obligation.   The FCRA limits how long this information can stay on your report.

  • Late payments: 7 years from the date of the first delinquency
  • Bankruptcies: 10 years for a Chapter 7, 7 years for a Chapter 13.
  • Tax liens:  7 years from the date they were paid.
  • Judgments: 7 years from the date they were granted.
  • Foreclosures: 7 years.
  • Repossessions: 7 years
  • Collections:  7 years from the date of the first late payment leading up to the collection.

Information Reported to Consumer Reporting Agencies must be Accurate

Under the FCRA, a financial institution does not have to report your information to a consumer reporting agency, but any information they do report must be accurate.

You May Dispute Errors on Your Report

You have the right dispute any information on your consumer report whenever you wish.  To dispute errors on your credit reports, you can visit the credit reporting agencies websites: experian.com, transunion.com and equifax.com.   To dispute errors on any of the other consumer reporting agencies, you must write a dispute letter to the company.

A consumer reporting agency has 30 days to investigate any dispute, and must take reasonable steps in an investigation.  If they cannot complete the investigation within 30 days, the agency must remove the information from your report.

You Must Authorize Access to Your Report

Your information is private under the FCRA.  Copies of your consumer report cannot be obtained without your explicit permission.  There are exceptions.  Any company with whom you have an existing financial relationship can pull your credit report at any time.  Other reasons your report may be accessed without your express permission:  court orders, employment and insurance applications.

Debt Collection

The Fair Debt Collection Practices Act (FDCPA) governs the actions of any organization that engages in third party collections of debts, including law firms.

Debt collectors may not:

  • Contact you by telephone outside of the hours of 8 a.m. to 9 p.m. (your local time).
  • Contact you after a written, explicit request to cease contact is made.
  • Harass you by calling you continuously or repeatedly about a debt.
  • Contact you at your work after receiving notice that you cannot receive calls at work.
  • Claim to be an attorney or law enforcement officer if they are not such a person.
  • Discuss your debt with anyone but you.   However, they are allowed to ask others about your whereabouts or ask for your contact information.
  • Use abusive or profane language.
  • Threaten to take action that cannot legally be taken.
  • Continue collection activities if a written request to validate the debt was sent to the collection agency within 30 days, and the request was never granted, or inadequate validation was returned to the consumer.
  • Inflate the amount of the debt with interest or fees not allowed by contract or law.
  • Contact you if they know you are being represented by an attorney.
  • Identify themselves in every communication, including phone calls.
  • Notify the consumer in every written communication that the communication is from a debt collector, and that any information obtained will be used to collect the debt.
  • Give the name and address of the original creditor.
  • Notify the consumer of his or her right to dispute the validity of the debt within the first 30 days of receiving written notice.
  • Follow initial contact by telephone with a written letter within 5 days.

Debt Collectors must:

  • Identify themselves in every communication, including phone calls.
  • Notify the consumer in every written communication that the communication is from a debt collector, and that any information obtained will be used to collect the debt.
  • Give the name and address of the original creditor.
  • Notify the consumer of his or her right to dispute the validity of the debt within the first 30 days of receiving written notice.
  • Follow initial contact by telephone with a written letter within 5 days.

If your rights have been violated

It may be as simple as pointing it out the credit grantor, consumer reporting agency, or collection agency to set things right.  If you still feel like you need to take more serious action, report the offense to your state attorney general’s office, the FTC or the CFPB.  If you’re still not receiving satisfaction over the matter, you may consider filing a lawsuit in federal district court.   Citizens may personally sue for violations of the FCRA or FDCPA.  Violations of the FCRA carry a $1000 fine per incident; violations of the FDCPA carry a $1000 fine per account.  Only federal or state authorities may sue over violations of the ECOA.

Posted in Credit 101
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