What are the Laws that Protect My Credit?

CROA[1] (Credit Repair Organizations Act) – The Credit Repair Organization Act was put in place to protect consumers from unscrupulous practices by organizations who claim to repair credit. The Act seeks to ensure that consumers who decide to use credit repair services are aware of their rights and are able to make an informed decision about choosing to pay a credit repair company. A credit repair organization is any person or business who takes money in exchange for improving your credit. Here are a few things credit repair organizations cannot legally do:

Lie or advise you to lie about your credit history to your current or future creditors
Alter your identity, e.g. get a new EIN (Employer Identification Number) or new identity, to try to get a new credit history
Misrepresent the services they provide to you
Ask you to pay for services before they have been provided

The law requires the organization to provide you with a disclosure called “Consumer Credit File Rights Under State and Federal Law” that lets you know your right to obtain a credit report and dispute inaccurate information on your own. You also have the right to sue an organization for violating the CROA.

ECOA[2] (Equal Credit Opportunity Act) – The Equal Credit Opportunity Act (ECOA) is a United States law (codified at 15 U.S.C. § 1691 et seq.), enacted in 1974, that makes it unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction, on the basis of race, color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract);[1] to the fact that all or part of the applicant’s income derives from a public assistance program; or to the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The law applies to any person who, in the ordinary course of business, regularly participates in a credit decision, including banks, retailers, bankcard companies, finance companies, and credit unions.

FACTA[3] (Fair and Accurate Credit Transactions Act) – The Fair and Accurate Credit Transaction Act of 2003 (FACTA) added new sections to the federal Fair Credit Reporting Act (FCRA, 15 U.S.C. 1681 et seq.), intended primarily to help consumers fight the growing crime of identity theft. Accuracy, privacy, limits on information sharing, and new consumer rights to disclosure are included in FACTA. (Pub. L. 108-159, 111 Stat. 1952)

This is all good news for consumers. However, consumers came out on the losing end when Congress virtually barred states from adopting stronger laws. The law governs the following:

Identity Theft:
Free Reports
Fraud Alerts and Active Duty Alerts
Truncation: Credit Cards, Debit Cards, Social Security Numbers
Information available to Victims
Collections Agencies
Red Flags
Change of Address with Request for Replacement Cards
Address Discrepancy in Credit Report
Disposal of Consumer Reports
Notice of Consumer Rights

FCBA[4] (Fair Credit Billing Act) – The Fair Credit Billing Act (FCBA) is a United States federal law enacted in 1975 as an amendment to the Truth in Lending Act (codified at 15 U.S.C. § 1601 et seq.). Its purpose is to protect consumers from unfair billing practices and to provide a mechanism for addressing billing errors in “open end” credit accounts, such as credit card or charge card account

FCRA[5] (Fair Credit Reporting Act) – The federal Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness and privacy of information in the files of consumer reporting agencies. There are many types of consumer reporting agencies, including credit bureaus and specialty agencies (such as agencies that sell information about check writing histories, medical records, and rental history records).

You must be told if information in your file has been used against you
You have the right to know what is in your file
You have the right to ask for a credit score
You have the right to dispute incomplete or inaccurate information.
Consumer reporting agencies must correct or delete inaccurate, incomplete or unverifiable information
Consumer reporting agencies may not report outdated negative information
Access to your file is limited
You must give your consent for reports to be provided to employers
You may not be limited with “prescreened” offers of credit and insurance you get based on information in your credit report
You may seek damages from violators
Identify theft victims and active duty military have additional rights

FDCPA[6] (Fair Debt Collection Practices Act) – The Fair Debt Collection Practices Act offers protection from illegal and unethical tactics of the debt collectors. A clear understanding of debt collection laws under the FDCPA will empower you with the knowledge to fight the third party debt collectors. Stopping the debt collector harassment starts with your knowing your rights as ordained by the FDCPA, or the Fair Debt Collection Practices Act. The Fair Debt Collection Practices Act is also known as the Fair Debt Act or FDCPA. The Fair Debt Act or FDCPA is a federal law and it protects consumers from the debt collector abuse. Much depends on how one is going to use it. Many states have their own laws on par with those by the FDCPA and they lay the ground rules for debt collection for creditors out to collect their debts. Next time a debt collector calls, let your rights under FDCPA deal with them.

FTC[7] (Federal Trade Commission) – Provides many rules that must be followed by telemarketers, including Do Not Call provisions of the Telemarketing Sales Rule, The Can-Spam Act, Protection of Consumer Privacy, The Business Opportunity rule, Blog Email Updates, and Debt Collection. Simply stated, if you are marketing through the telephone, you are allowed only one outbound call to a potential customer without their permission.

HMDA[8] (Home Mortgage Disclosure Act) – The Home Mortgage Disclosure Act (HMDA) was enacted by Congress in 1975 and was implemented by the Federal Reserve Board’s Regulation C. On July 21, 2011, the rule-writing authority of Regulation C was transferred to the Consumer Financial Protection Bureau (CFPB). This regulation provides the public loan data that can be used to assist:

in determining whether financial institutions are serving the housing needs of their communities;
public officials in distributing public-sector investments so as to attract private investment to areas where it is needed;
and in identifying possible discriminatory lending patterns.

RESPA[10] (Real Estate Settlement Procedures Act) – was enacted in 1974 by the U.S. Department of Housing and Urban Development (HUD). According to HUD, its purpose is to clarify and outline the settlement process and fees to consumers and eliminate illegal activity such as kickbacks and referral fees among settlement service providers. Mortgage loans on one- to four-family residential property are covered by RESPA, which includes most purchase loans, assumptions, refinances, home improvement loans, and equity lines of credit.

RESPA also requires that written disclosure of estimated settlement costs be provided to the borrower. The Good Faith Estimate is the form that itemizes these costs at the beginning of the application process. HUD’s HUD-1 or -1A Settlement Statement itemizes these costs exactly at loan closing. The fees can vary based on changes in the loan that may occur between the time of origination and closing.

RESPA mandates that borrowers receive disclosure documents at various times during the loan process. At the time of application, or within three days afterward, the lender must provide the borrower with the Good Faith Estimate; HUD’s Settlement Cost Guide, which describes the home buying process; and a Mortgage Servicing Disclosure Statement, which tells the borrower whether the lender intends to service the loan or sell it to another party.

All affiliated business arrangements (AfBA) must be disclosed to the borrower at or before the time of referral. This disclosure must identify and describe the relationship between the two providers, and also must give an estimate of the referred provider’s charges.

State Disclosure Laws – Each state has its own set of disclosure laws. It is up to the person selling credit repair and other financial services to explore and abide by these laws.

TILA[11] (Truth In Lending Act (Regulation Z)) – The Truth-in-Lending Act was enacted by the U.S. Congress in 1968 as part of the Consumer Protection Act. Its purpose is to protect borrowers by ensuring that they are aware of the terms and costs of credit, so that they can knowledgeably compare different loans and lenders. Consumers must be provided with a written disclosure of the costs associated with a mortgage loan, such as Annual Percentage Rate (APR), finance charges, annual fees, and the size of the credit line. Also known as Regulation Z, TILA also gives consumers the right to cancel certain credit transactions that involve a lien on the consumer’s principal dwelling.

If you would like to get started restoring your credit, click here.

Also see: What is Credit Restoration? Credit Restoration is Legal! The Credit Report Revealed – Part I The Credit Report Revealed – Part II Example Credit Report Credit Terms Glossary

Also See Categories: Credit Education – Credit Restoration Credit Education – Credit Scoring Credit Education – Your Money Credit Education – Miscellaneous

[1] CROA. See full text at: http://ftc.gov/os/statutes/croa/croa.shtm

[2] ECOA. See full text at: http://ftc.gov/bcp/edu/pubs/consumer/credit/cre15.shtm

[3] FACTA. See full text at: http://gpo.gov/fdsys/pkg/PLAW-108publ159/pdf/PLAW-108publ159.pdf

[4] FCBA. See full text at: http://ftc.gov/os/statutes/fcb/fcb.pdf

[5] FCRA. See full text at: http://ftc.gov/os/statutes/031224fcra.pdf

[6] FDCPA. See full text at: http://ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf

[7] FTC. See site at http://ftc.gov/bcp/edu/pubs/consumer/telemarketing/tel13.shtm

[8] HMDA. See full text at: http://ffiec.gov/hmda

[10] RESPA. See full text at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/res/respa_hm