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Federal Credit Laws

Federal Laws include credit reporting, collections, billing acts, and more. Learn how these federal credit laws affect you and how companies are allowed to bill, report, and collect from you. It's important to understand lending and credit laws to avoid credit problems.

It is important to know your consumer rights. There are some very definite laws that protect you from unscrupulous creditors. Unfortunately, few people know their rights, and are harassed needlessly. Here are some of the basic credit laws, and how they protect you:

Fair Credit Reporting Act (FCRA)

The idea behind FCRA is to protect you from inaccurate information in your credit report, and to protect your privacy. This credit law is designed to ensure that credit reporting agencies strive to provide accurate and complete information to those who are looking into your credit history. Here are some of the basics:


You have a right to your credit report. A small fee can be charged, but recently, a law was added that states that you can get one free credit report each year from each of the three major credit bureaus (Experian, Equifax and TransUnion). Additionally, the credit report must have all the information in your file at the time of your request.
You have the right to know the name of any company or person that requests your credit information in the past year. For employers, that is extended to two years.
If a company denies your credit application, it has to provide you with the name and the contact information of the credit bureau it used.
If you have been denied credit, you can request a free copy (this is on top of the required yearly copy) of your credit report from the credit bureau that was used. However, you must request this copy of your report within 60 days of the denial.
The credit bureau and the company or person that provided information to the bureau must investigate your claim if you find an inaccuracy and dispute it. If you are right, the issue must be resolved within 30 days.
If you feel that a dispute has not been resolved to your satisfaction, it is possible to add an explanation to be included on your credit report.
Outdated information (that is 7 years old or 10 years old for bankruptcies) cannot be included on your credit report. This is to protect you from old negative information.
You have the right to contact a credit bureau and have your name excluded from insurance quotes and unsolicited credit card offers.
Only those who legitimately need to know your credit have access to it (lenders and banks). Others (employers, medical personnel, etc.) much get your permission first.

Equal Credit Opportunity Act (ECOA)

This credit law basically says that creditors and lenders cannot use race, sex, marital status, public assistance, religion, origin or age as factors in deciding your credit worthiness. This law states that if you receive public assistance in a reliable manner, it must be considered as income. Additionally, the ECOA assures your right to know the reasons behind any decision to deny you credit.

Fair Credit Billing Act (FCBA) and the Electronic Fund Transfer Act (EFTA)

These two credit laws work in tandem to set the rules for how to resolve mistakes in the event of credit billing and mistakes due to electronic fund transfers. Some of the things covered in these two acts include:


Unauthorized or fraudulent purchases or electronic transfers.
Transactions that are identified incorrectly, or that show the wrong amount.
Errors in computation.
Problems with showing credits, transfers or payments correctly.
Not sending statements to your current address. But you are responsible for sending the information to your creditors in writing at least 20 days before the end of the current billing period.
Requested explanations and documentation with regard to errors.

Note that the FCBA mostly applies to accounts like credit cards and checking accounts with overdraft protection. Loans and debit cards unattached to overdraft checking are usually not covered. With the EFTA, electronic banking transactions, such as ATMs, debits at the store and other similar transactions are covered.

Fair Debt Collection Practices Act (FDCPA)

This is a credit law that protects you from badgering and harassment by debt collectors. Additionally, this law prohibits debt collectors from using deceptive practices. Debts included are family, household and personal, and include all money owed including for medical bills, car loans and credit cards. Here are some of the highlights of the FDCPA:


You can only be contacted between 8 a.m. and 9 p.m.
Debt collectors cannot contact you at work if you have said that your employer disapproves.
You cannot be harassed, abused or oppressed.
Debt collectors cannot lie to you. This includes the implication that nonpayment constitutes a crime.
Debt collectors must clearly identify themselves when they call.
If you ask, in writing, for debt collectors to stop contacting you, they must.

Because laws are always changing, and because state laws often offer added protection, it is a good idea to look up all of these laws on your own in order to assure yourself of changes and to stay up to date on additional rights you may have.

For more information, you should also visit the Web site of the Federal Trade Commission: www.ftc.gov.

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