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This brochure replaces Your Credit Rights.
View a PDF of this brochure. (633 KB, 16 pages)
Credit can play an important role in your daily life. For example, you may use a credit card to make purchases, or you may obtain a loan from your bank to finance the purchase of a car or house. The importance of credit in your life, however, is not limited to loans. If you apply for a job, a potential employer can obtain a copy of your credit report to verify your employment history. If you want to lease an apartment, the landlord can obtain your credit report to determine whether you are a good credit risk. Therefore, it is important that you understand how credit applications are approved or denied and what your legal rights are if you are treated unfairly. The major federal laws that regulate credit are summarized in this brochure.
Regulates the accuracy, fairness, and privacy of consumer credit information.
Most of your creditors file reports once a month with the three major credit bureaus — Equifax, Experian, and TransUnion — to let them know the status of your loan repayments. Creditors report the amount of credit originally extended, the amount of your most recent payment, whether the payment was late, the current balance owed, and the date you applied for the credit. If your loan has a credit limit, creditors also report the amount of the credit limit and whether you have exceeded it. The credit bureaus also collect negative information about you from public records, such as bankruptcy filings, tax liens, and court judgments. All of this information is included in your credit report. When you apply for credit, the information in your credit report is reviewed to determine whether you are a good credit risk.
Credit reports contain sensitive, private financial information about you. To protect your privacy, the FCRA states that credit reports can be obtained only when there is a permissible purpose. This includes obtaining your credit report when you apply for credit, a job, a lease, insurance, or a license or benefit from a government agency.
You should review your three major credit reports at least once a year to ensure that they are accurate and do not contain any errors. Under federal law, you are entitled to one free credit report each year from Equifax, Experian, and TransUnion. If you find an error in any of your reports, you should contact the credit bureau immediately. The FCRA requires credit bureaus to investigate a consumer dispute within 30 days. If your dispute is validated, the inaccurate information will be removed. The source of the error must then notify all credit bureaus to which the information was sent. If you are not satisfied with the correction, you have the right to add a brief statement to your credit report about the nature of the dispute.
If you apply for credit, such as a car loan, and your credit application is denied because of negative information in your credit report, the lender is required to provide the name, address, and telephone number of the credit bureau that issued the report. You then have 60 days to request a free copy of the report from the credit bureau, which must disclose all information in the report, its source, and who recently received the report. In addition, because of a recent amendment to the FCRA, you will also receive a copy of your credit score whenever you apply for credit, insurance, employment, or a government benefit and the application is denied because of information in your credit report. This change is scheduled to take effect on July 21, 2011, but could be delayed by six months.
You have the right to have the credit bureau reissue corrected reports to lenders who received an erroneous report within the past six months or to employers who received one in the past two years.
You may exclude your name and address from credit bureau lists used by creditors and insurers to make unsolicited offers of credit and insurance. Requests made by telephone are good for two years. For permanent exclusion from such lists, you must complete a form available from each credit bureau. To request exclusion from Equifax, Experian, and TransUnion, call 1-888-567-8688 or fill out a form online at www.optoutprescreen.com .
If your rights under the FCRA are violated, you can file a lawsuit in state or federal court against the person who violated your rights. Under the FCRA, if you win the lawsuit, you are entitled to have your attorney’s fees paid.
Combats identity theft, protects privacy, and improves consumer access to (and the overall accuracy of) credit reports. It is an amendment to the FCRA, described above.
Since September 1, 2005, consumers have been entitled to obtain a copy of their credit report free of charge from each of the three main credit bureaus once every 12 months. The reports allow consumers to monitor the number of accounts and the amount of credit outstanding, so they can discover and correct errors in their credit records and make sure that accounts have not been fraudulently opened in their names.
You can order all three reports at the same time, or you can request these reports at various times throughout the year. Some financial advisors suggest that you review one of your three credit reports every four months. This scheduled review will help you detect errors and monitor changes in your credit profile.
However, a report generated by one of the three main agencies may not contain all of the information pertaining to your credit history. If you want a complete view of your credit record at a particular moment, you must examine your report from each of the three agencies.
You can get your free credit reports under the FACT Act by going to http://www.annualcreditreport.com . You can also obtain your reports by calling 1-877-322-8228.
Consumers who reasonably suspect that they are victims of identity theft or are military personnel on active duty away from home can place an alert on their credit files. The alert will put potential creditors on notice that they must proceed with caution when granting credit.
Several provisions are aimed at preventing the spread of erroneous credit information and helping consumers recover their credit reputations after they have been victims of identity theft.
Each of the three credit bureaus calculates a credit score for you based on information in your credit report. Credit scores measure your creditworthiness. Your credit score is presented as a number that can fall within a range — usually from 350 to 850. However, some credit scoring products use different ranges — such as 501 to 990. If you obtain multiple credit scores and the same range was not used, you cannot directly compare the scores. For example, a credit score of 720 within the 350 to 850 range is not the same as a credit score of 720 using the 501 to 990 range.
Creditors rely on credit scores when you apply for credit. Applicants with high credit scores are more likely to be approved for credit and obtain good interest rates, whereas borrowers with low credit scores are more likely to be denied credit or pay higher rates. It is important to note that your credit report does not contain your credit score. If you obtain a free credit report by calling 1-877-322-8228 or through annualcreditreport.com , you will be offered the option of obtaining your credit score. The charge varies from $7.95 to $16, depending on the credit bureau and the credit scoring model used. However, you are not obligated to purchase your credit score in order to receive your free credit report. If you do not need to obtain your credit report but are interested in obtaining your credit score, you can contact the credit bureaus to purchase your credit score. Contact information for the bureaus is listed at the end of this brochure.
Effective July 1, 2010, the FACT Act allows you to file a direct dispute with any source that furnishes inaccurate information about you to the credit bureaus. You can also file a dispute with the credit bureaus. The advantage of the direct dispute is that it speeds up the process of investigation because you directly notify the entity furnishing the disputed information. If you file a direct dispute, the furnisher must investigate and notify you of the results of its investigation. If the furnisher determines that the information it furnished was inaccurate, it must promptly file corrected information with all three credit bureaus.
Prevents discrimination with respect to consumers and businesses applying for credit. It does not require creditors to have the same standards, nor does it guarantee approval of loan applications.
The ECOA prohibits lenders from discriminating against consumers and businesses in all aspects of credit on the basis of sex, marital status, color, race, religion, national origin, age, reliance on income from a public assistance program, or exercise of rights under the Consumer Credit Protection Act. Your ability and intent to repay borrowed funds are the only acceptable criteria.
Credit applications cannot ask about your sex, race or national origin, marital status, or age unless you are applying for the purchase or refinance of your principal residence. You cannot be asked your marital status if you are applying for individual unsecured credit, such as a credit card. Creditors are also prohibited from asking about childbearing plans.
Spouses have the right to have their credit histories listed separately, including the accounts they use jointly. Married women have the option of using their birth name or married name. In the case of couples who jointly established credit but whose credit appears in the name of only one spouse, the other partner has the right to rely on that credit history as well.
You do not have to reveal income from alimony, child support, or separate maintenance unless you want the creditor to consider it in the review of your application.
Creditors may ask how old you are, to be certain you have reached legal age to enter into contracts, and may consider your age in estimating how long you will continue to work. However, age may not be used to deny credit to those 62 or older or because the applicant’s age exceeds that required for credit insurance.
The terms of your credit may not be changed simply because your life circumstances change. That is, the length, interest, or other features of loans may not be changed; you may not be forced to reapply; and you may not be terminated because you change your name or marital status, reach a certain age, or retire.
Lenders must notify credit applicants of their decision within 30 days of receiving a completed application. If credit is denied, the creditor must provide a written statement of the action taken, the reason for denial (or how to request it), the applicant’s rights under the ECOA, the name and address of the enforcing federal agency, and the name and address of the creditor. If you believe that discrimination has taken place, you have the right to file suit. Creditors found to have discriminated unfairly can be held liable for actual damages and punitive damages up to $10,000.
Provides for the prompt correction of errors on open-end credit accounts (department store credit card accounts, for example) and protects consumers’ credit ratings while they are settling disputes.
Creditors are prohibited from reporting an account as delinquent when a consumer disputes a charge under this law, which applies to open-end credit accounts such as credit cards. Consumers who question the accuracy of an item on a periodic statement are responsible for notifying the creditor in writing within 60 days of receiving the bill. The creditor is then obligated to mail or deliver written acknowledgment within 30 days and may not do anything to damage the consumer’s credit rating while the item is in dispute. The creditor must resolve the dispute within two billing cycles (but not later than 90 days) after receiving a billing-error notice from the consumer.
In addition, under the FCBA, if you use your credit card to purchase property or services and have a dispute, you can notify the credit card issuer about the dispute and withhold payment for the property or service to the card issuer as well as any finance charges that accrue while the dispute is being investigated. Also while the dispute is being investigated, the FCBA prohibits the card issuer from reporting you as delinquent to the credit bureaus.
To invoke this right under the FCBA, you must first make a good-faith attempt to resolve the dispute with the merchant before notifying the card issuer. In addition, the amount in dispute must exceed $50, and the disputed transaction must have occurred in the same state as your designated address with the credit card issuer or within 100 miles from that address.
Promotes the fair treatment of consumers by prohibiting debt collectors from engaging in unfair, deceptive, or abusive practices.
This act applies to professional debt collectors who attempt to collect on delinquent payments to creditors. The law does not apply to the original creditor. Debt collectors are:
The FDCPA allows you to request debt collectors to stop contacting you. Although this will not eliminate your debt, it forces the debt collector to stop contacting and harassing you. To invoke this right, you must notify the debt collector in writing that you want him or her to cease further communication with you. If you invoke this right, the only permissible way for the debt collector to contact you is to file a lawsuit to collect the debt.
Consumers can sue in federal or state court for actual and punitive damages against debt collectors who violate the FDCPA. Additional information about this law and your rights under this law is available on the Federal Trade Commission’s website at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm .
The credit reporting agencies (Equifax, Experian, and TransUnion) have established a single website and toll-free telephone number for requesting a free credit report once every 12 months:
Toll-free number: 1-877-322-8228
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
Equifax — www.equifax.com
Equifax Credit Information Services, Inc.
P.O. Box 740241
Atlanta, GA 30374
Equifax Fraud Division
P.O. Box 740250
Atlanta, GA 30374
To place a fraud alert on your credit report, call 1-888-766-0008.
Experian — www.experian.com
Experian National Consumers Assistance
TransUnion — www.transunion.com
TransUnion Consumer Solutions
2 Baldwin Place
P.O. Box 1000
Chester, PA 19022
Obtain a free TransUnion credit report under the FACT Act:
Dispute information in your TransUnion credit report:
TransUnion Fraud Assistance Dept.
P.O. Box 6790
Fullerton, CA 92834
Federal Trade Commission
Consumer Response Center
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
Federal Reserve Bank of Philadelphia
Public Affairs – Publications
P.O. Box 66
Philadelphia, PA 19105-0066
Brochure revised 01/2011