Credit Basics
Credit Bureaus
They must establish a
toll-free credit report phone number
enabling consumers to contact them without
charge. Currently most have toll-free numbers, but the law stipulates that consumers
must be able to reach a "live" person rather than only automated responses.
Credit bureaus must investigate consumer complaints
within 30 days and notify the complainant of the results. The new law gives 30 days,
not an unspecified amount of time as was the case, to verify complaints or eliminate
them from the report. In addition, the burden of proof will be on the credit bureau
instead of the consumer. Consumers will no longer be in the position to prove that,
for example, they are not someone else whose file has been mixed up with theirs.
Credit bureaus must furnish a free copy of a consumer's
credit report if it has an adverse effect to the consumer. Consumers have this right
under the previous law only if they are turned down for credit. The new law widens
the meaning of an "adverse effect" to include such things as employment, licenses,
insurance, and housing. The law requires that consumers be given all the information
in their file with the exception of credit scores or similar "predictors" used by
credit grantors to determine who to offer credit.
The report must also include a list of everyone
who received a copy of the consumer's report during the past year (two years, if
employment related). The report must show all inquiries received by the credit bureau
in the past year pertinent to credit or insurance that was not initiated by the
consumer.
Credit Reports Users
They must establish a
toll-free credit report phone number
enabling consumers to contact them without
charge. Currently most have toll-free numbers, but the law stipulates that consumers
must be able to reach a "live" person rather than only automated responses.
Credit report users such as banks, car
dealers, employers, stores, etc., must disclose consumers rights when an unfavorable
action has been taken against them. This includes advising consumers of their right
to get a free copy of the report and to contest any information in it. If an employer
or potential employer wants to pull an individual's credit report, they must get
the person's permission.
Credit Reports Suppliers
Information providers are lenders, stores,
and others who report to credit bureaus. They must investigate disputed information
within the same 30-day limit as the credit bureaus and correct any errors. They
must also notify the credit bureau if a consumer disputes information they are giving to the credit bureau.
Like credit bureaus, credit report information suppliers
must take steps to guarantee incorrect information does not reappear in a consumer's
files after it has been eliminated. The new law holds firms who fail to correct
mistakes liable for damages and liable for punitive damages if the failure is found
to be willful.
NOTE: The above changes in the Fair Credit
Reporting Act, do not take effect until September of 1997.
Fair Debt Collection Practices Act prohibits debt collection agencies from abusive collection
practices. The act allows consumers to dispute a debt and to stop any unreasonable
collection activities such as: calling before 8 AM or after 9 PM, harassment, false
statements, threatening action that is not permissible, and other unfair practices.
Truth in Lending Act requires credit grantors to
provide you with the annual percentage rate (APR) of any loan prior to signing.
The APR reflects the true cost of the credit.
Equal Credit Opportunity Act prohibits discrimination
against you for the reasons of age, sex, marital status, race, color, religion,
national origin, or receipt of public assistance.
Fair Credit Billing Act allows for the prompt correction
of errors on a credit account and prevents damage to your credit record while you
are settling disputes.
