Consumer Credit Regulation – Know Your Rights When Borrowing
The Consumer Credit Protection Act (CCPA) is a law enacted in 1968 that ensures consumers in the United States will receive only fair and honest credit practices. Other laws include the Fair Credit Reporting Act (FCRA) and the Truth in Lending Act (TILA). Knowing the details about these laws is important for understanding how they protect consumers from unjust practices.
- About the Fair and Accurate Credit Transactions Act of 2003 (or Consumer Credit Law)
- About the Fair Credit Reporting Act
- About the Truth in Lending Act
- About the Equal Credit Opportunity Act
About the Fair and Accurate Credit Transactions Act of 2003
This Consumer Credit Law was created in 2003, under President George W. Bush to ensure that all resident citizens of the United States receive fair treatment when applying for mortgages and other types of credit.
Here’s a list of the protections this Act provides:
- Every consumer has a right to a copy of their credit report for free from each of the three credit bureaus, ever 12 months.
- A national system of fraud prevention was created to increase the likelihood of catching identity thieves.
- Requires regulators to create a list of red flag indicators of identity theft.
- Requires creditors and credit agencies to take action before the victim even knows identity theft has occurs.
The Fair Credit Reporting Act
This act commands how a consumer’s credit information is collected and used. It oversees the credit bureaus annually. The consumer maintains the right to review their credit reports for accurate information. Upon discovering any errors, the consumer is allowed to legally dispute them with the credit bureaus. Once the error is confirmed, the credit bureaus are required to correct the information, or delete it altogether.
It also requires that information become outdated after seven to ten years.
The FCRA requires companies to accurately report information to the credit bureaus, which conversely means they must inform consumers of any negative information that is reported. They are not allowed to report any accounts that resulted as a target of identity theft, once they’ve become aware of the crime.
About the Truth in Lending Act
This federal law determines the standards for the information that the creditor must provide in an installment credit contract. This includes the total amount being financed, the minimum monthly payment, the total amount of monthly payments, and the annual percentage rate. They must all be provided to the consumer prior to signing any credit contracts. The TILA also regulates the credit advertising methods, allowing consumers to shop around for accurate comparisons.
With regard to credit cards and loans, this law determines the information consumers receive, including the following:
- APR (annual percentage rate)
- Total amount that’s financed
- Finance charges- includes fees and penalties
- Payment schedule
- Total amount of repayment over the duration of the loan
About the Equal Credit Opportunity Act
This law prevents lenders from any discrimination against people based on non-financial factors like:
- Marital status
- The receipt of public assistance
Lenders may be allowed to ask for this information, but they cannot use that information to decide whether or not to extend credit to the applicant. It also prevents lenders from using the information to determine the terms of the approvals.
It’s a great idea to keep up to date with any changes to the Consumer Credit Protection Act to be aware of the rules in the market place.