FICO

 Consumer Credit Laws 

Over the years, the government has adopted many laws and regulations designed to protect and inform consumers who seek and use credit. It's important that you are aware of these laws, and the rights and protections they provide. Below is a list of the most important laws.

The Risk-Based Pricing Rule (2011), issued in accordance with an amendment to the Fair Credit Reporting Act, is intended to: increase the level of transparency in the lending process, raise the awareness that your credit history is being used to set credit terms offered by lenders, and further improve the accuracy of information maintained by credit reporting agencies. Today consumers who receive Risk-based Pricing notices from lenders will find the credit score that was used in making the credit decision included in their notice.

The Credit CARD Act (2009) provides important consumer credit protections. For example, your credit card company generally cannot increase the rate on your existing balance and must tell you 45 days before increasing your rate for new transactions. The Act also places new limits on fees and rate increases, and requires consistency in payment dates and times. See also the Truth in Lending Act.

To learn more about your rights under the CARD Act, read the summaries of the Federal Reserve Board's new credit card rules:

Fair and Accurate Credit Transactions Act (2003), an amendment to the Fair Credit Reporting Act, allows consumers to request and obtain a free credit report once every twelve months from each of the three nationwide consumer credit reporting companies. These free credit reports may be accessed at annualcreditreport.com.

The Credit Repair Organizations Act (1996) prohibits a variety of false and misleading statements, as well as fraud by credit repair organizations.

The Fair Credit and Charge Card Disclosure Act (1988) requires a lender offering you a credit card to tell you about certain terms on the card, including the annual percentage rate (APR), the amount of any annual fee and whether you have an interest-free period to pay your bill before any interest charges are added. See also Truth in Lending Act.

The Fair Debt Collection Practices Act (1977) details the rules a debt collector must follow when trying to collect a debt. It prohibits collectors from engaging in abusive collection practices such as calling outside of the hours of 8:00 a.m. to 9:00 p.m. local time, or communicating with you at work after they have been advised that this is unacceptable or prohibited by the employer.

The Equal Credit Opportunity Act (1974) prohibits discrimination in credit transactions on the basis of certain personal characteristics including race, color, religion, national origin, sex, marital status, age, being a recipient of public assistance or exercising your rights under the Consumer Credit Protection Act.

The Fair Credit Billing Act (1974) requires that a credit card company promptly credits your payments and corrects mistakes on your bill without damage to your credit score. It also lets you dispute credit card billing errors and withhold payment for damaged goods. See also Truth in Lending Act below.

The Fair Credit Reporting Act (1970) protects you against inaccurate or misleading information in credit files maintained by credit reporting agencies. It requires that you must be told what's in your credit file and have the ability to correct any errors. The Risk-Based Pricing Rule implements section 615 (h) of the Fair Credit Reporting Act.

The Consumer Credit Protection Act (1969) is an umbrella consumer protection law that includes the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, Credit Repair Organizations Act, and the Truth in Lending Act.

The Truth in Lending Act (1968) requires that lenders use uniform methods for computing the cost of credit and for disclosing credit terms so that you can tell how much it will cost to borrow money. It also limits your liability to $50 if your credit card is lost, stolen, or used without your authorization, and it prohibits the unsolicited issuance of credit cards. The Fair Credit Billing Act and the Fair Credit and Charge Card Disclosures Act were later additions to the Truth in Lending Act, as are many provisions of the Credit CARD Act.

You can find more information on consumer financial regulations in the Federal Reserve's Consumer Help list of Consumer Protection Laws or its comprehensive list of regulations.