Your Credit Rights as a Consumer
Understanding the laws that protect your rights in personal finance.
The federal government heavily regulates the financial services industry. These laws are necessary to help ensure fairness when it comes to financial issues. Without these laws, you could be blacklisted for bad credit or face loan rejections based on your race or gender.
Luckily Congress takes frequent steps to ensure consumers aren’t the victims of unfair and predatory lending practices. That way, the financial deck won’t be stacked against you. The information below can help you understand the laws that protect you rights as a consumer. If you have questions, we’re here to help. Call Consolidated Credit today at to speak with a certified credit counselor at no charge.
Consumer Credit Protection Act
This is the cornerstone of consumer protection legislation. Enacted in 1968, the Consumer Credit Protection Act includes the Truth in Lending Act (TILA). TILA provides key guidelines that are used in load and credit decisions for consumers. Basically, anytime you apply for a loan or a new line of credit, TILA regulates how that money is borrowed and how the lender can interact with you as you repay the amount extended.
The Consumer Credit Protection Act also created the National Commission on Consumer Finance.
The FDCPA was added to the Consumer Credit Protection Act ten years after the original law was passed. This important piece of legislation governs how debt collectors must act as they seek repayment on debts that have been charged off by the original creditor. Once a debt is moved to charge-off status due to nonpayment, the FDCPA regulates how collectors contact and talk to you, and what practices they have to avoid according to the law, such as making physical threats or putting you on a credit blacklist.
The Credit CARD Act – also known as a Credit Cardholders Bill of Rights was passed in 2009 in order to expand the Truth in Lending Act. The goal was to better protect consumers specifically with regard to open-end credit lines (i.e. credit cards). The Credit CARD Act clarifies many points in TILA, regulating everything from how much advance notification is required prior to interest rate changes to what information has to be shown on your monthly credit card statement next to the minimum payment requirement.
The FCRA was passed in 1970 in order to provide oversight and regulation to the consumer credit reporting industry. Essentially, private entities called credit bureaus maintain consumer credit profiles in order to provide credit risk assessments to lenders when you try to borrow money or apply for a credit card. The FCRA outlines what your credit report can say, what information can’t be included and who has a legal right to review your report.
Within the FCRA, language is contained that protects a consumer’s right to a fair and accurate credit profile. Basically, the FCRA ensures a consumer can take action to correct or remove credit report information that cannot be verified. CROA is the follow-up legislation that governs the procedure third-party credit repair providers must follow when advertising and providing services to consumers.
Servicemembers Civil Relief Act
The SCRA protects Service Members, Guard and Reservists called to active duty, by offering key financial protections. It helps limit interest rates during your deployment and prevents certain actions, such as foreclosure and eviction. The SCRA can even help you get out of lease agreements when you have a Permanent Change of Station.
Dodd-Frank Wall Street Reform and Consumer Protection Act
This act, passed in 2010, was the largest financial service industry reform passed by Congress since the financial legislation following the Great Depression. In addition to sweeping reforms to a wide range of financial sectors, Dodd-Frank also creates additional rules to protect consumers from unfair financial service practices. It attempts to guarantee clarity and transparency in any financial service a consumer receives.
This piece of legislation is also what created the Consumer Financial Protection Bureau. The CFPB is similar in structure to the FTC, but focused entirely on the financial sector. The agency is meant to be the watchdog for consumers to protect against unfair banking and lending practices. The organization has the authority to prosecute those found in violation of the laws outlined above and companies found to be in violation face legal penalties.
If you have a complaint about a financial service provider, visit consumerfinance.gov.