There are countless laws that you are not aware of. It is important to be aware of the law. However, you should aim to specifically know laws that personally affect you. That is why you should familiarize yourself with the bare minimum of consumer credit laws. You are able to be better prepared if situations arise when you become familiar with these laws.
Law #1: The Equal Credit Opportunity Act
The Equal Credit Opportunity Act (ECOA) protects tenants against lender discrimination based on non-financial factors. This law applies to not only consumers, but businesses as well. A lender can not discriminate against an individual based on factors like:
- Skin Tone.
- Marital Status.
- Age (Unless legally too young.)
- Public Assistance Recipient Status.
Law #2: The Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) details the specifics around how consumer credit information is taken and used. This dictates credit bureaus like Experian, Equifax, Transunion, etc.
You have the right to review your credit report any time upon request under this act. You are also eligible to receive a free copy of your credit report annually from the reporting agency. This information is readily available at AnnualCreditReport.com.
You also have the right to have an accurate credit report. This allows you the opportunity to initiate disputes with bureaus who must investigate by law. The bureau will then update or remove any false information.
Law #3: The Fair Debt Collection Practices Act
Understanding the Fair Debt Collection Practices Act (FDCPA) is important because it pertains to debt collectors. This law is only for personal debt, but sets guidelines for communication between debt collectors and the consumer. Many individuals don’t realize that a cease and desist letter addressed to the debt collecting agencies can make them stop contacting you. Debt collectors can contact you during a set time frame. The time frame that the FDCPA outlines is between 8 A.M. to 9 P.M. unless specifically permitted otherwise by the person that has the debt.
Law #4: The Truth in Lending Act
The Truth in Lending Act (TILA) outlines what information will be disclosed to consumers. This law specifically applies to commercial credit cards, loans, and businesses. Under TILA, lenders must provide the following information to consumers:
- The amount financed.
- Finance charges and applicable fees like prepayment penalties, application fees, late fees, etc.
- The annual percentage rate (APR).
- Payment schedule.
- Gross repayment amount over the lifetime of the loan.
Not only does this information need to be shown to the consumer before they can sign, but it must be easily digestible on billing statements as well.
Law #5: The Credit Repair Organizations Act
If a person or business takes money in order to improve your credit, they get directly affected by the Credit Repair Organizations Act (CROA). This act states that credit repair agencies cannot be deceitful when it comes to your credit history. They must be 100% honest. They can not misrepresent the services that they will be providing to you.
You should be aware of red flags when looking for credit repair organizations. If you are asked to pay for the services upfront, then you should be wary of the agency. A disclosure that details your rights should be provided to you.
If you are interested in a legitimate credit repair company, you will be provided with a contract with a “cooling off” period of 72 hours. You have the right to cancel the contract with no cancellation fees.