A new bankruptcy law passed both houses of Congress in March 2001, focusing public attention on that legislation.
A batch of other federal credit laws, however, are just as important for people with credit problems. It pays to be familiar with the following 8 key laws:
- Fair Credit Reporting Act (1971) -- This covers the reporting of debt repayment information. It establishes when a credit reporting agency may provide a report to someone; states that obsolete information must be taken off (after 7 or 10 years); gives you the right to know what is in your credit report; requires that both a credit bureau and an information provider (such as a department store) have an obligation to correct mistakes; gives you the right to dispute inaccurate information and add a 100-word statement to your report to explain accurate negative information; and gives you the right to know what credit bureau provided a report when you are turned down for credit.
- Fair Credit Billing Act (1975) -- This covers credit card billing problems. It applies to all open-end credit accounts (such as credit cards, overdraft checking). It states that you should send a written billing error notice to the creditor within 60 days of receiving the first bill containing an error; that the creditor must acknowledge the notice within 30 days; that the creditor must investigate; and that the creditor may not damage your credit rating while a dispute is pending.
- Fair Debt Collection Practices Act (1978) -- This prohibits debt collectors from engaging in unfair, deceptive, or abusive practices when collecting debts. Collectors must send a written notice telling the amount owed and name of the creditor; collectors may not contact you if you dispute the collection in writing within 30 days (unless the collector furnishes proof of the debt); collectors must identify themselves on the phone and can call only between 8am and 9pm unless you agree to another time; and collectors cannot call you at work if they are told not to.
- Equal Credit Opportunity Act (1975) -- This ensures that individuals are given an equal chance to receive credit. It prohibits discrimination on the basis of sex, race, marital status, religion, national origin, age or receipt of public assistance. Lenders cannot ask about your plans for having children or refuse to consider consistently received alimony or child support payments as income. If you are denied credit, you have a legal right to know why.
- Truth in Lending Act (1969) -- This mandates disclosure of information about the cost of credit. Both the finance charge (such as all charges to borrow money, including interest) and the annual percentage rate or APR (the percentage cost of credit on a yearly basis) must be displayed prominently on forms and statements used by creditors. The law provides criminal penalties for willful violators, as well as civil remedies. It also protects you against unauthorized use of your credit card. If your card is lost or stolen and you report it, the most you have to pay is $50.
- Fair Credit and Charge Card Disclosure Act (1989) -- A part of the Truth in Lending Act that mandates a box on credit card applications that describes a credit card's key features and costs (such as APR, grace period for purchases, minimum finance charge, balance calculation method, annual fees, transaction fees for cash advances, and penalty fees such as over-the-limit fees and late-payment fees).
- Consumer Credit Reporting Reform Act (1996)- Federal amendments to the Fair Credit Reporting Act. Major provisions include rules on reinsertion of deleted information (credit bureaus must notify consumers); free credit reports for the unemployed, persons on public assistance, and fraud victims; a requirement to list the full trade name of those requesting a credit report within the past year; sharing of corrections among credit bureaus through an automated system; clarification of when the seven-year period for negative information begins; and raised limits for situations where information can be reported longer than seven years (jobs paying $75K or more and loans or life insurance of $150K or more).
- Credit Repair Organizations Act (1996)- Federal law that makes it illegal for credit “clinics” to advise consumers to make untrue statements to dispute accurate, negative information or to alter or hide their identity to remove or hide negative credit information. Credit repair organizations must provide consumers with a summary of rights under federal and state credit laws and a dated, written contract, which can be canceled within three business days.