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The Credit Handbook

Credit Laws and Your Credit Rights

Credit laws help reduce the problems and confusion people have when they use credit. Together, a number of laws set a standard for how you should be treated in your financial dealings. For example, you cannot be turned down for a credit card because you are a single woman; your credit won’t disappear just because you’ve turned 65; you have protections from abusive debt collection practices; your risk is limited if your credit card is lost or stolen; and much more. It is important to know your rights, so that you can use them to your advantage.

Truth in Lending Act

The federal Truth in Lending Act requires creditors to give you certain basic information about the cost of credit. The Act requires open-end creditors to tell you the terms of the credit they are offering, so you can shop for the best deal. The following information must be disclosed in writing:

In addition, the Act does the following:

Fair Credit Billing Act

This federal law sets up procedures to promptly correct billing mistakes, to withhold payments for defective goods, and protect you from credit card fraud. Specifically, the act protects you from the following types of errors:

In addition, the Fair Credit Billing Act sets the procedures to follow if you have a billing dispute. Periodically, creditors must send you a copy of the procedures. These include:

Fair Credit Reporting Act

This federal law sets up procedures to correct information in your credit report. It gives you the following rights:

Electronic Funds Transfer Act

The federal Electronic Funds Transfer Act of 1978, along with the Federal Reserve Board’s Regulation “E,” provide guidelines for electronic banking. Together, these regulations provide the following protections:

You have 60 days from the date a problem or error appears on your written receipt or statement to notify your financial institution. If you miss the 60-day period, you may have little recourse.

If you report an ATM or EFT card missing before it is used without your permission, the card issuer cannot hold you responsible for any unauthorized withdrawals. If unauthorized use occurs before you report the card lost, the amount for which you can be held responsible depends upon how quickly you report the loss.

Equal Credit Opportunity Act

The Equal Credit Opportunity Act, another federal law, prohibits discrimination in granting credit. Creditors may not consider the following factors when deciding whether to grant credit: sex, marital status, race, color, religion, national origin, age, or income from public assistance. Creditors may not discriminate against you because you have used your legal rights, such as contacting a creditor about a billing error. The Equal Credit Opportunity Act applies to companies that regularly extend credit including banks, credit unions, finance companies, retail and department stores, and credit card companies. Specifically, the Equal Credit Opportunity Act requires that:

Creditors must not:

In addition:

Creditors may develop their own criteria to judge potential customers as good credit risks. Items that a creditor may legally ask you about include:

Consumer Leasing Act

The Consumer Leasing Act requires the disclosure of important lease terms and costs so that you can compare one lease with another or compare the cost of buying with cash to buying on credit. This federal law applies to personal property leased by a consumer for more than four months. It covers cars, furniture, appliances, and other personal property.

The Consumer Leasing Act does not cover:

The law requires a written contract with the following costs and terms stated:

Fair Debt Collection Practices Act

This law was established to ensure that consumers are treated fairly by debt collectors. All kinds of personal and household debts are covered in the law, including automobile loans, medical expenses, credit card debts, and more. However, the law does not apply to businesses collecting their own debts. The Act provides the following protections: