Consumer Credit Protection Laws: Know Your Rights
Federal consumer protection laws give you important rights when dealing with credit reports, lenders, credit card companies, debt collectors, and credit-repair organizations.
Understanding these protections can help you recognize inaccurate reporting, unfair collection practices, credit discrimination, billing problems, and misleading credit-repair claims.
Different laws apply to different situations, so knowing which protection applies can help you determine the appropriate next step.
The Fair Credit Reporting Act — FCRA
The Fair Credit Reporting Act (FCRA) regulates how consumer credit information is collected, reported, accessed, and disputed.
Among other protections, the FCRA gives you the right to review information in your consumer reports and dispute information you believe is inaccurate or incomplete.
When you submit a legitimate dispute, the credit reporting company generally must conduct a reasonable investigation at no cost to you.
The FCRA also provides protections when information in a credit report contributes to an adverse decision, such as being denied credit. In certain situations, you may have the right to obtain a free copy of the report used in that decision.
Accurate negative information generally cannot simply be removed because it is unfavorable. However, information that is inaccurate, incomplete, duplicated, or does not belong to you may be disputed.
The Fair Debt Collection Practices Act — FDCPA
The Fair Debt Collection Practices Act (FDCPA) is the primary federal law regulating the conduct of many third-party debt collectors.
Debt collectors generally may not use abusive, deceptive, or unfair practices when attempting to collect a consumer debt.
For example, debt collectors may not threaten violence, misrepresent the amount or legal status of a debt, falsely claim to be law enforcement, or threaten actions they cannot legally take or do not intend to take.
Consumers also have important rights involving validation information, disputed debts, and certain communications from collectors.
The FDCPA generally applies to third-party debt collectors and certain debt buyers and collection attorneys. It does not necessarily apply in the same way to an original creditor collecting its own debt.
The Equal Credit Opportunity Act — ECOA
The Equal Credit Opportunity Act (ECOA) protects consumers against unlawful discrimination in credit transactions.
Federal law prohibits creditors from discriminating on certain protected grounds, including race, color, religion, national origin, sex, marital status, age when the applicant has legal capacity to contract, receipt of income from public assistance, or the good-faith exercise of certain consumer credit rights.
These protections can apply to many forms of credit, including credit cards, mortgages, auto loans, personal loans, student loans, and business credit.
Lenders may still consider legitimate creditworthiness factors such as income, debt, and credit history when making lending decisions.
Truth in Lending Act — TILA
The Truth in Lending Act (TILA) and its implementing rules are designed to help consumers understand the cost and terms of credit.
Depending on the type of credit, required disclosures may include information about the annual percentage rate (APR), finance charges, payment terms, fees, and other important costs.
TILA protections apply to many consumer credit products, including credit cards, installment loans, mortgages, home-equity credit, and certain other loans.
These disclosures are intended to make it easier for consumers to compare credit offers and understand what borrowing will actually cost.
Credit Card Billing Errors and Your Rights
Federal law also provides procedures for addressing certain credit card billing errors.
If you believe your credit card statement contains an incorrect charge or another qualifying billing error, act promptly. Written notices used to preserve federal billing-error rights generally must be sent within specified time limits.
You should continue paying the portions of your bill that are not in dispute while the card issuer investigates the disputed amount.
Always keep copies of correspondence and supporting documentation when disputing a billing problem.
The Credit Repair Organizations Act — CROA
The Credit Repair Organizations Act (CROA) provides protections for consumers purchasing certain credit-repair services.
Credit-repair companies are subject to requirements involving disclosures, written contracts, payment practices, and cancellation rights. They also may not make false or misleading claims about what they can accomplish.
Be cautious of any company that promises to create a new credit identity, tells you to dispute information you know is accurate, or guarantees that accurate negative information will be removed.
No legitimate credit-repair organization can guarantee how a credit bureau, creditor, collector, or credit-scoring model will respond.
Security Freezes and Identity Theft Protection
Federal law also gives consumers the right to place a security freeze on their credit files at no charge.
A security freeze generally prevents prospective creditors from accessing your credit file, which can make it more difficult for an identity thief to open new credit in your name.
You must generally contact Equifax, Experian, and TransUnion separately to freeze each credit file.
You can also temporarily lift or remove a freeze when you legitimately need to apply for credit.
What If Your Credit Application Is Denied?
If a lender takes an adverse action based in whole or in part on information in your credit report, you generally should receive information explaining the decision and identifying the credit reporting company that supplied the report.
You may have the right to obtain a free copy of that credit report within the applicable time period.
If you review the report and find inaccurate information, you may dispute the information with the credit reporting company and the business that furnished the information.
A denial does not automatically mean your credit report contains an error, but reviewing the report can help you understand what contributed to the lender’s decision.
Know Your Rights — and Use Them Responsibly
Consumer protection laws give you important rights, but those rights should be used accurately and responsibly.
Dispute information when you have a legitimate reason to believe it is inaccurate or incomplete. Keep documentation, review correspondence carefully, and respond promptly when deadlines apply.
Consumer protection laws do not create a right to have accurate negative information deleted simply because it is damaging to your credit.
Understanding the difference between inaccurate reporting and legitimate negative credit history is an important part of responsible credit repair.
How Credit Help USA Can Help
At Credit Help USA, we help clients understand what is being reported on their credit files, identify information that may be inaccurate or incomplete, and develop a personalized strategy for moving forward.
We believe consumers should understand their rights as well as their responsibilities.
Credit Help USA does not provide legal advice or represent clients in court. When a matter involves a lawsuit, legal interpretation, or other issue requiring legal representation, consulting a qualified consumer-law attorney may be appropriate.
Sources & Consumer Resources
Consumer Financial Protection Bureau (CFPB)
• Consumer Reporting Companies and Your Rights
• Credit Discrimination Is Illegal
• Debt Collection and Your Rights
• Truth in Lending — Regulation Z
• Credit Freezes and Security Freezes
Federal Trade Commission (FTC)
• Credit Repair Organizations Act
AnnualCreditReport.com
• Free Credit Reports Authorized by Federal Law
