Before You Apply For Credit

Understand Your Credit Rights

Your Credit Score is everywhere these days. It affects everything from your mortgage rates, car loan rates, credit cards, and may even be checked when applying for a job. Knowing your rights as a credit consumer can save you lots of time and trouble when you apply for credit, and staying the course for a bright credit future ahead.

Applying for Credit

The Equal Credit Opportunity Act (ECOA) was created to allow everyone who applies for credit to be given an equal chance of obtaining credit, regardless of who they are. The ECOA states that:

All credit lenders cannot discrimination on the basis of sex, race, marital status, religion, national origin, age, or receipt of public assistance. Although creditors can never use this information to discriminate against a credit applicant, they may ask for this information (except religion) in certain situations. Businesses are also covered under this law when applying for credit.

When you are denied credit, for whatever reason, you have a legal right to know why.

The Truth in Lending Act was designed to provide the consumer a way to see exactly what the credit agreement entails by requiring useful, uniform disclosures of the costs and terms of credit cards and other loans. You can see the Truth in Lending Act in action whenever you receive a credit card application. Every lender is required by law to state clearly what they expect you to pay and what terms you are agreeing to. Forget the clever advertisement on the front of the application promising you the lowest rate - look to the Credit Disclosure with the application - that's where you'll find the detailed rate info.

Billing Mistakes

The Fair Credit Billing Act -- which is part of the Truth in Lending Act -- protects you against billing mistakes. The FCBA settlement procedures apply only to disputes about "billing errors." For example:

Unauthorized charges. Federal law limits your responsibility for unauthorized charges to over $50;

Charges that list the wrong date or amount;

Charges for goods and services you didn't accept or weren't delivered as agreed;

Mathematical errors;

Failure to post payments and other credits, such as returns;

Failure to send bills to your current address - provided you supply a change of address at least 20 days before the billing period ends; and

Charges for which you ask for an explanation, or written proof of purchase along with a claimed error or request for clarification.

Credit Reports

Your credit payment history is recorded in a file or report by several organizations. These files or reports are maintained and sold by "consumer reporting agencies" (CRAs). One type of CRA is commonly known as a credit bureau. You have a credit record on file at a credit bureau if you have ever applied for a credit or charge account, a personal loan, insurance, or perhaps even a job. Your credit record contains information about your income, debts, and credit payment history. It also indicates whether you have been sued, arrested, or have filed for bankruptcy. The three largest credit bureaus are Experian, TransUnion and Equifax.

The Fair Credit Reporting Act regulates the type of information that can be in your credit report, outlines who can get a copy of your report, limits how the report can be used, and gives you the right to get a copy of your credit report, and to dispute any errors. The FCRA is designed to help ensure that CRAs furnish correct and complete information to businesses to use when evaluating your application.

Your rights under the Fair Credit Reporting Act:

You have the right to receive a copy of your credit report. The copy of your report must contain all of the information in your file at the time of your request.

You have the right to a free copy of your credit report when your application is denied because of information supplied by the CRA. Your request must be made within 60 days of receiving your denial notice.

You have the right to know the name of anyone who received your credit report in the last year for most purposes or in the last two years for employment purposes.

Any company that denies your application must supply the name and address of the CRA they contacted, provided the denial was based on information given by the CRA.

If you contest the completeness or accuracy of information in your report, you should file a dispute with the CRA and with the company that furnished the information to the CRA. Both the CRA and the furnisher of information are legally obligated to reinvestigate your dispute.

You have the right to add a summary explanation to your credit report if your dispute is not resolved to your satisfaction.

Debt Collectors

As soon as you receive credit, you are in debt to the lender. You are responsible to pay back that debt as stated in your credit agreement. If you fail to meet your obligations, or an error is made on your account, you may be contacted by a "debt collector."

The Fair Debt Collection Practices Act (FDCPA) applies any type of debt including mortgages, car loans, charge accounts, or even medical care. The FDCPA prohibits debt collectors from engaging in unfair, deceptive, or abusive practices while collecting these debts.

Your rights under the Fair Debt Collection Practices Act:

Debt collectors may contact you only between 8 a.m. and 9 p.m.

Debt collectors may not contact you at work if they know your employer disapproves.

Debt collectors may not harass, oppress, or abuse you.

Debt collectors may not lie when collecting debts, such as falsely implying that you have committed a crime.

Debt collectors must identify themselves to you on the phone.

Debt collectors must stop contacting you if you ask them to in writing.

Solving Your Credit Problems

Your credit report influences your purchasing power, as well as your chances to get a job, rent or buy an apartment or a house, buy insurance or even rent a car. Accurate negative information can stay on your report for seven years. A bankruptcy can stay on your report for 10 years!

It is possible, and legal, to clean up your credit report. Join over 80,000 people who have used Lexington Law firm to improve their credit score and get back on track to better credit. To learn more about our services, please visit http://www.lexingtonlaw.com.

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