Debt Management

Consumer Credit Rights

There are a number of laws in place to help consumers get a fair share when it comes to their credit. Some are old, and others were just passed in the last few years.

For example, the Fair Credit Reporting Act became law in 1971 and was designed to give consumers more privacy while protecting them from incorrect credit reporting to scoring bureaus. In addition, those credit bureaus must adopt fair practices for gathering, maintaining and distributing consumers' financial information. The law was updated in 1996 to better suit modern consumers' needs.

Also in 1996, Congress passed the Fair Debt Collection Practices Act (FDCPA) to protect individuals against aggressive debt collectors. This law ensures that debt collectors can’t harass consumers at their job or give out personal financial information to other parties. It also stops them from making false threats of violence or harming one’s reputation. It’s very important for consumers to understand their rights so debt collectors don’t take advantage of their ignorance.

More recently, however, a pair of bills was passed in the wake of the financial meltdown that sank the country into a recession. The first is the Credit Card Accountability, Responsibility and Disclosure Act of 2009, which is designed specifically to ensure that consumers receive better protections against credit card lending practices that have been judged to be unfair or even predatory.

For example, now consumers must receive notice if their fixed-rate credit card is going to experience an increase in APR or other changes to the account which may have a negative impact on their debt. In addition, the law has required lenders to make credit card agreements easier to understand, with less fine print and confusing or misleading jargon. It also reduced the fines for making late payments and being hit with penalty interest rates. Further, it required lenders to post all credit card agreements online so that they could be more easily compared.

Then in 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, intended to provide more safeguards for borrowers against costly lending practices. Among them is that when consumers are rejected for a line of credit - or even receive less than the best rate - on the basis of their credit history or credit score, they have the right to receive a free copy of the document used to disqualify them, as well as an explanation of why it happened.

But perhaps the most practical part of this overhaul was that it created the federal Consumer Financial Protection Bureau, to operate within the Federal Reserve System, which is now tasked with regulating consumer financial products.

Among the goals that the CFPB has outlined as being part of its core responsibilities is to add and enforce fairness and clarity to lending agreements that include those for credit cards and mortgages, among others. For example, the agency recently opened a hotline and Web service that allows consumers to alert the agency to potential abuses of credit agreements. It also plans to launch a searchable database of all credit card agreements available in the U.S. so that consumers will be able to find the card that works best for them.

The experienced professionals at Consolidated Credit Counseling Services are trained and certified specifically to understand consumers’ credit rights, so they can advise clients about the best ways they can safeguard themselves against predatory lending practices. For this reason, those who have any questions about the way they're dealing with a lender should consult with one of our credit counselors as soon as possible.