Laws you need to know

Through legislation, the government has provided credit protection for all consumers. There are several consumer credit laws that all consumers should understand, especially if you have any issues with your credit report, or have been denied credit. 

Truth In Lending Act

The Truth In Lending Act requires creditors to provide the consumer with accurate and complete credit costs and terms.

Equal Credit Opportunity Act (ECOA)

The ECOA prohibits a creditor from discriminating against a consumer on the basis of age, sex, or marital status, reliance on income from a public assistance program, and race, color, religion, or national origin. 

Fair Credit Reporting Act (FCRA)

The purpose of the Fair Credit Reporting Act is to ensure that information contained in a credit report is accurate and that it will be used in a confidential manner. Consumers have a right to dispute information that may be derogatory or erroneous, inaccurate information must be corrected or deleted, and a consumer explanation statement of 100 words or less can also be included in the report. A credit bureau must also delete adverse information that is more than seven years old and information on bankruptcy that is more than ten years old.

Fair and Accurate Credit Transactions Act (FACT Act)

The FACT Act was signed into law at the end of 2003. This act amends the FCRA and gives every consumer the right to a free annual credit report from each of the three major credit bureaus: Equifax, Experian and TransUnion. To get your free credit reports, visit AnnualCreditReport.com or call 877.322.8228.

Fair Debt Collection Practices Act (FDCPA)

The Fair Debt Collection Practices Act establishes rules related to the collection of a debt.  For example, under the FDCPA, a third party collector is prohibited from: 

  • Using abusive language to coerce a consumer into making payments.
  • Calling at unreasonable hours (before 8 a.m. and after 9 p.m.) or making excessive calls.
  • Threatening to notify the employer or friends that the consumer has not paid his bills.
  • Using false pretenses to gain entry to the home with the intent to identify or take something of value.
  • Attempting to collect more than what is owed.
  • Sending the consumer misleading letters that may appear to be from a government agency or a court of law.

Fair Credit Billing Act (FCBA) and Electronic Fund Transfer Act (EFTA)

The FCBA and the EFTA can help consumers resolve mistakes on credit billing and electronic fund transfer account statements. The acts outline procedures for correcting several types of errors including unauthorized charges and the failure to properly reflect payments. 

Bankruptcy 

A legal proceeding declaring that a consumer overextended and is unable to pay obligations. Some loans may be excused and assets may be distributed among the creditors. There are two main types of bankruptcy available to individuals: 

  • Chapter 7 – A type of bankruptcy that is designed for debtors in financial difficulty who do not have the ability to pay their existing debts. The purpose is to obtain a discharge (i.e. elimination) of their existing debts.
  • Chapter 13 – Intended for individuals with regular income who are temporarily unable to pay their debts but would like to pay them in installments over a period of time. The bankruptcy courts will approve a repayment plan that will repay their debts in no more than five years. 
  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.