Credit is a convenient way to pay for things, allowing you to purchase items and services now and pay for them later. Having credit is nice, but knowing how to manage and maintain good credit without too much debt can be very challenging. Therefore, understanding legislation on credit is crucial to avoid confusion and debt.
Understanding Legislation On Credit
There are a few pieces of legislation on credit that you need to be aware of. Let’s break it down!
The Federal Fair Credit Reporting Act (FCRA)
Promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies. There are many types of consumer reporting agencies, including credit bureaus and specialty agencies. Some of the major rights include:
- The consumer must be told if the information in your file has been used against you.
- You have the right to know what is in your file.
- You have the right to ask for a credit score.
These are only some, you can find a summary of your major rights under the FCRA.
Fair Credit Billing
This is yet another important area when understanding legislation on credit. Have you ever been billed for merchandise you returned or never received? Has your credit card company ever charged you twice for the same item or failed to credit a payment to your account? While frustrating, you can correct these errors. It takes a little patience and knowledge of the dispute settlement procedures provided by the Fair Credit Billing Act (FCBA).
Equal Credit Opportunity
Millions of consumers use credit for many things. The Equal Credit Opportunity Act (ECOA) ensures that all consumers are given an equal chance to obtain credit. This doesn’t mean all consumers who apply for credit get it: Factors such as income, expenses, debt, and credit history are considerations for creditworthiness.
Fair Debt Collection
If you use credit cards, owe money on a personal loan, or are paying on a home mortgage, you are a “debtor.” If you fall behind in repaying your creditors, or an error is made on your accounts, you will likely be contacted by a debt collector. You should know that in either situation, the Fair Debt Collection Practices Act requires that debt collectors treat you fairly and prohibits certain methods of debt collection. Of course, the law does not erase any legitimate debt you owe.
The Credit Card Act 101:
On May 22, 2009, President Obama signed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act into law. Also known as the Credit Reform Bill or the Credit Card Bill of Rights, this bill takes huge steps toward defining and protecting credit cardholder rights. The new rules were in effect from February 2010. The main focus is in the areas of billing, rate increases, the discretion of giving credit, and advanced notice of account changes.
Understanding legislation on credit ensures your responsible use of it. Responsible credit usage ensures a strong financial foundation.
If you are seeking credit management services, speak with a certified counselor today at ACCC. Call 800-769-3571.