A creditor is any bank, finance company, store, credit card company, car dealer or other business entity to which you owe money. Creditors look at your income, expenses, debts and credit history before deciding whether to give you credit. Any creditor who regularly extends credit, must follow the federal law.
YOUR APPLICATION RIGHTS
You have the right to know whether your application was accepted or rejected within 30 days of filing.
You also have the right to know why your application was rejected. For example: Your income is too low or you have not worked at your job long enough. If you do not understand the reason, ask for a specific explanation you can understand.
CO-SIGNERS
In some situations, a co-signer is required for receiving credit. A co-signer is someone who is equally responsible for the amount of the debt. If your credit is good enough, the creditor cannot require you to use a co-signer. If you are married and must use a co-signer, it does not necessarily have to be your spouse.
CREDIT TERMS
You have the right to learn why you were offered less favorable terms (higher finance charges or less money) than what you wanted.
ACCOUNTS
You have the right to know why your account was closed, unless you are behind in your payments.
You have the right to keep your own account after you change your name, marital status, after you retire or reach a certain age.
Women have the right to their own credit history if the account was opened after June 1, 1977. If your account was opened before that time, it may only be in your husband's name. Ask the creditor to put your name on the account too.
On your application, a creditor may not discriminate against you because of your sex, marital status, age, religion, race, national origin, or because you receive public assistance income. That means that the creditor cannot make it hard for you to apply for credit, refuse to take your application, or refuse to give you credit for any of those reasons.
A CREDITOR MAY NOT:
- ask whether you are divorced or widowed;
- ask whether you are married or applying for a separate, unsecured account;
- ask about your spouse unless you are applying together;
- ask about your plans for having children;
- ask if you are receiving alimony or child support unless you will rely on it for your credit; or
- ask you about the race of the people who live in the neighborhood where you want to buy or improve your home.
A creditor can ask if you are paying alimony or child support.
In deciding whether to give you credit, a creditor may not consider your age unless you are under 18 or over 62. A creditor may not consider whether you have a telephone listed in your name. However, a creditor can ask whether there is a phone in your home.
INCOME
If you have a regular public assistance income, the creditor must count it the same as any other income. A creditor cannot count your income less because of your sex or marital status. A creditor cannot count income less or ignore income that is received from part-time work or from retirement programs. A creditor cannot refuse to count alimony or child support if you can prove that this income has been received regularly.
DISCRIMINATION—WHAT TO DO?
If you think you have been discriminated against, complain to the creditor in writing and tell the creditor that you know about the Equal Credit Opportunity Act. The creditor may change its decision or correct an error.
Contact the U.S. Attorney General's Office at the Federal Department of Justice to see if the creditor has violated federal laws.
Contact your local Legal Services Office to see if a case can be brought in state or federal court against the creditor. Look for the telephone number in the phone book.
SHOPPING FOR CREDIT
Credit can be provided in different ways depending on whether you are buying a house, using a charge account or credit card, or buying an item with installment payments. Open-end and close-end credit are two ways credit can be given.
Open-end credit is credit given on a charge account or an overdraft checking account. Open-end credit usually involves several purchases, paid for on a monthly billing cycle. A finance charge can be added if the monthly bill is not paid on time.
This brochure will not tell you about open-end credit or buying a house on credit. We will look at close-end credit, which is borrowing money for a fixed amount and number of payments.
CONFUSED ABOUT WHERE TO GET THE CHEAPEST LOAN?
ASK for TRUTH IN LENDING information from the creditor. The federal Truth in Lending Law requires creditors that regularly extend credit (banks, finance companies, car dealers, retail stores) to tell you what it will cost you to borrow money.
The creditor must tell you:
- the APR (annual percentage rate) or the cost of the yearly interest rate
- the FINANCE CHARGE (the dollar amount the credit will cost you)
- the AMOUNT FINANCED (the amount of credit provided to you or on your behalf)
- the TOTAL OF ALL PAYMENTS (the amount you will have to pay after you have made all the payments as scheduled)
- the NUMBER OF PAYMENTS
- the AMOUNT OF EACH PAYMENT and
- WHEN payments are DUE
Compare the APR and the finance charge of each creditor to find the best credit terms. You want the lowest APR and the smallest finance charge.
Credit insurance is usually not required in order to get credit. Before signing for credit life, credit disability, or credit life and disability insurance, decide whether you really need insurance. Consider whether or not anyone else who uses the item purchased on credit can afford to make payments if you cannot pay because of death or disability. Also consider the cost of credit insurance in comparison to the cost of other insurance. Although you can save money by not buying credit insurance, you may wish to compare the cost of the insurance with the risk of default and loss of item if you become disabled or die.
CREDIT BUREAUSWHAT'S IN YOUR CREDIT FILE?
Credit bureaus, also called Consumer Reporting Agencies, keep files on individuals who borrow money or use credit cards. Most individuals have a file called a "consumer report" with their local credit bureau. A federal law called the Fair Credit Reporting Act gives you rights when dealing with your local credit bureau.
You have the right to review this file and make sure the information is correct and complete.
Check your credit report. The Consumer Report is a file which has information about how you pay your bills, or whether you have filed for bankruptcy.
You can call your local Credit Reporting Agency or Credit Bureau by looking for the telephone number in the yellow pages. If you have lived in more than one city, try to contact the Credit Bureau for each city that you lived in.
You have the right to know what the Credit Bureau report says. The Credit Bureau does not have to give you a copy of the report but many do. The Credit Bureau will not give you information about your credit over the phone. You must write or go in person to the Credit Bureau. You can also ask for the name of anyone who has received a report about you in the past six months (or if the report was about a job application you can get the names of those who received a report during the past two years).
It is important to check your credit report to make sure it is accurate and complete. If you are denied a loan, check with the Credit Bureau that was listed in the denial. There is no charge if you ask the Credit Bureau within 30 days after receiving the denial credit notice. There may be a small fee if you check with the Credit Bureau when you have not received a denial notice within the last 30 days.
WHAT IF THE REPORT IS WRONG?CORRECTING THE CREDIT REPORT
There are "credit fix-up" agencies which can help you obtain a copy of your credit report as well as update or correct your credit report. The fees charged for this service commonly range from $100-$500. The services offered by a "credit fix-up" agency are actions you can take yourself without any expense.
If you see that information is missing or wrong:
- Send a letter to the Credit Bureau explaining why the report is wrong and keep a copy for yourself. The Credit Bureau can send you a copy of the correction as well as send a copy of the correction to anyone who received your report in the last six months (or within the last two years if it is a job report).
- If the Credit Bureau will not change its report, you can request that the Credit Bureau include your version of what the report presents. The Credit Bureau, at your request will send your version to anyone who received a copy of the old report. You must write your version of what happened in 25 words or less and ask the Bureau to send it to anyone who received the old report.
BAD CREDIT REPORTS—HOW LONG WILL IT HURT YOU?
Bad credit information cannot be reported after seven years as a general rule. However, a bankruptcy can be reported for 10 years.
CREDIT BUREAU COMPLAINTS
If you have problems dealing with the Credit Bureau or any creditors contact your local Legal Services Office listed in the phone book or The Florida Department of Agriculture and Consumer Services, Division of Consumer Services, Mayo Building, Tallahassee, Florida 32399-0800, (904)488-2221 or 1-800-342-2176 (voice/TDD) or write to the Federal Trade Commission, Washington, D.C. 20580.
The material in this pamphlet represents general legal advice. Since the law is continually changing, some provisions in this pamphlet may be out of date. It is always best to consult an attorney about your legal rights and responsibilities regarding your particular case.
Revised 8/98