Quick rundown of 6 credit laws
Equal Credit Opportunity Act (ECOA)
The Equal Credit Opportunity Act (ECOA), prohibits creditors from discriminating against credit applications based on race, color, religion, national origin, sex, marital status, age; because an applicant receives income from a public assistance program; or because an applicant has in good faith exercised any right under the Consumer Credit Protection Act.
Fair and Accurate Credit Transactions Act (FACTA) The Fair and Accurate Credit Transactions Act, amended the Fair Credit Reporting Act (FCRA) & added provisions designed to improve the accuracy of consumers’ credit-related records. It also gives you the right to one free credit report a year from the credit reporting agencies & also have the right to purchase (for a reasonable fee) a credit score… along with information about how the credit score is calculated.
FACTA also requires lenders to provide and explain “risk-based pricing” notices and credit scores to consumers. That you’ve applied for credit. The Act also added provisions designed to prevent and mitigate identity theft, including a section that enables consumers to place fraud alerts in their credit files.
Fair Credit Billing Act (FCBA) The Fair Credit Billing Act of 1974 is a federal law designed to protect consumers from unfair credit billing practices.
- Consumers have 60 days from the time they receive their credit card bill to dispute a charge with a card issuer. Charges must be over $50 to be eligible for dispute. The consumer must make their complaint in writing and mail it to the issuer.
- The card issuer has 30 days to acknowledge receipt of a complaint. They then have two billing cycles to complete their investigation. And during that time… the issuer is not allowed to try to collect the payment, charge interest on it, or report it to credit bureaus as late.
- If the card issuer finds that the disputed payment was invalid, it must correct the error and refund any fees or interest charged as a result.
- If it finds there was no error, it must explain its findings & provide documentation to back them up. Consumers can challenge the results of the investigation within 10 days, at which point the issuer must add a note to the charge.
- If a card was lost or stolen, consumers may dispute charges by phone rather than in writing. If an unauthorized user makes purchases with a card, the cardholder’s liabilities are limited to $50 (which issuers generally agree to pay).
- If a person is authorized to use a card but makes unauthorized purchases with it, those charges are not covered by the Fair Credit Billing Act. And, the cardholder is liable for them.
- If a consumer has a dispute with a merchant, they can ask the card issuer to withhold payment and request that the issuer helps resolve the dispute. However… the card issuer is not required to settle the disagreement.
Credit Card Accountability Responsibility and Disclosure Act (CARD Act) of 2009
The Credit Card Accountability Responsibility and Disclosure Act (CARD Act) oseek9 seeks to curtail deceptive and abusive practices by credit card issuers. The CARD Act mandates consistency and clarity in terminology and terms across credit card issuers.
- Account Changes: Under the Credit CARD Act, banks may only change interest rates on existing balances if you are 60 days or more late on your monthly minimum payment. In addition, after you make six months of on-time payments, they must restore your original rate.
- Third-Party Credit Reporting: Credit card issuers are no longer allowed to impose penalty rates and fees when a credit bureau reports a default with another lender, including other credit cards.
- Promotional Terms: The Credit CARD Act requires promotional rate periods to last at least six months & forbids changes to the purchase rate of any new accounts within the first year… with very few exceptions.
- Adequate Time: The Credit CARD Act mandates that statements be mailed or posted online no later than 21 days before an account’s due date. Credit card companies cannot “trap” consumers by setting payment deadlines on the weekend or in the middle of the day… or changing their payment due dates each month.
- Interest Cycle: Lenders must calculate interest (during a single payment cycle)… based only on the balance.
- Payment Rules: Credit card companies must apply payments to a consumer’s highest interest rate balances first.
- Over-Limit Charges: Credit card customers now have to be given the choice to “opt in” to over-limit charges on their credit card account. If they develop an opt-in, they will have their cards declined when a proposed charge or withdrawal would put the balance over the limit, and no fees may be charged in connection with that purchase attempt.
- Financial Consequences: Banks must educate consumers by including information about how long customers could stay in debt, by paying only minimum payments… based upon their account balance and terms.
- Readability: Banks must now use clear language in an easily readable font to explain products and services.
ThActARD ACt also provides additional protections to college-age students… as well as other protections regarding prepaid & gift cards.
The Credit Practices Rule
The Credit Practices Rule has three major provisions.
- First, it prohibits creditors from using certain contract provisions, such as confessions of judgment, waivers of exemption, wage assignments, and security interests in household goods.
- Second, the Rule requires creditors to advise consumers who cosign obligations about their potential liability… if the other person fails to pay.
- Third, the Rule prohibits late charges… in some situations.
Truth-in-Lending Act (TILA)
The Truth in Lending Act (TILA) is a federal law passed in 1968… to ensure that consumers are treated fairly by businesses in the lending marketplace and are informed about the true cost of credit.
Servicemembers Civil Relief Act (SCRA) of 2003 The Servicemembers Civil Relief Act of 2003 gives military members a wide range of legal protections not available to the general public.
Protections afforded to you by the SCRA include:
- Prevents your landlord from evicting you… unless the rent is higher than $3,991.90 per month, for 2020.
- Stops foreclosures without a court order.
- Your vehicle can’t be repossessed without a court order… if you made at least one payment before you joined the military.
- You can’t be taken to court for civil proceedings during deployment, and this includes divorce and child support hearings.
- Keeps the owner of a self-storage facility from selling your belongings for overdue rent without a court order.
Benefits provided to you by the SCRA include:
- Lets you terminate your telecom and/or utility agreements (telephone, cable, internet, etc.) if you relocate for at least 90 days to a location that doesn’t have coverage under your current provider.
- Lets you keep your current phone number (even if you cancel your service), due to a relocation that lasts less than 3 years.
- Lets you end a vehicle lease (that you signed before joining the military)… if you are mobilized, PCS OCONUS, or deploy OCONUS for at least 180 days.
- Lets you end a housing lease without penalty if you deploy for 90 days or more.
- Lets a surviving spouse terminate leases if their partner dies on active duty.
- Lets a military spouse claim either their home of record, the service member’s state of legal residence, or the state they are living in for tax purposes.
- Limits interest on all auto, mortgage, student loans, and/or credit cards (taken out before joining the military) to a maximum of 6 percent.
- Also, it says that if you use any of your SCRA rights and delay payments… it won’t reflect on your credit report
The SCRA also gives you other rights regarding property taxes, federal taxes, life insurance, and other financial or legal penalties or proceedings.