Credit Repair Laws: Know Your Legal Rights | Credit Repair Expert

Throughout the years, Federal Laws have been enacted to protect consumer rights. Knowing these laws can help you with credit repair. Here are the most common consumer rights laws.

About the Fair Credit Reporting Act or FCRA

The FCRA was put into effect in 1970. Officials enacted the law to promote fairness and accuracy as well as to protect personal information collected by credit reporting agencies. To help lenders, credit bureaus gather reports on people. They do this for credit card companies, employers, landlords, banks and others. The FCRA provides significant protections for employment background checks, credit reports and consumer investigatory reports. When it was first put into effect, the law was a complex statute. Since that time, Congress and the courts have modified it. The main protection that the law offers is that it requires credit bureaus to abide by “reasonable procedures” to protect consumer confidentiality, relevance of credit information and accuracy. To provide this protection, the FCRA established a platform of Fair Information Practices for handling personal information. This platform includes determining whether a business has the right to request personal information, the proper data security and limitations in place. Businesses are also required to have the proper setup to destroy data once it’s no longer needed. Consumers must give businesses personal information willingly.

Fair Debt Collection Practices Act or FDCPA

Congress passed the FDCPA and President Jimmy Carter signed the act into law in 1977. The law was created to protect consumers from the kind of abusive, unfair and deceptive practices that third-party debt collectors are infamous for employing. The FDCPA permits a consumer to dispute claims made by debt collectors and ask a collector to prove his or her claims. Creators of the law outlined what actions debt collectors could take to obtain a late payment from a consumer. The FDCPA only applies to personal deals. If a debt is incurred to operate a business, then it is not subject to the law. Like other consumer protection laws, the FDCPA has been changed or modified over the years.

Fair and Accurate Credit Transaction Act or FACTA

Government officials designed FACTA to decrease the risk of identify theft and consumer fraud. The act forces companies that collect sensitive consumer information like names, addresses, credit information and social security numbers to destroy it properly. This act also requires these businesses to destroy any data that they compile from sensitive consumer information. Under the law, businesses, regardless of industry or size, must protect and get rid of the sensitive information that they collect about their employees and customers. With this law, officials are trying to prevent identity theft, which is the fastest growing crime in the U.S. The law seeks to prevent important information from entering the wrong hands where it could be used for despicable purposes with the intent to commit a crime.

Credit Card Accountability Responsibility and Disclosure Act

This is a new consumer protection law. It was put into effect on May 22, 2009. It is a consumer credit law, and it modifies the Truth in Lending Act, the Electronic Funds Transfer Act and the Federal Trade Commission Act. The bill is widespread, and it includes new regulations about annual percentage rate increases, finance charges and double billing cycles. It also includes rules for fixed rates, fees in general, statement deliveries and due dates. It has a variety of other payment rules for the lending industry. This act was signed into law to make the credit card industry more transparent. The bill makes it harder for lenders to hide fee terms inside the fine print and raise the interest rate on a loan without the borrower knowing about it ahead of time. In a nutshell, the bill is meant to protect consumers from creditors that use predatory practices.

Consumer Rights

When it comes to credit repair, it’s important to know your rights. According to the law, credit bureaus must respond to all disputes, but you need to start one. File a dispute anytime you believe that something listed on your credit report is incomplete or inaccurate. Credit bureaus are required to respond to your dispute 30 days from when you first filed. This means that it’s important to begin the dispute process as soon as possible.

Consumers can initiate the dispute process online or through traditional mail. It might be in your best interest to start a dispute with a physical letter because it will give you a paper trail if you need documentation. If the investigation confirms that something on the report is incomplete, unverifiable or inaccurate, the agencies are required to resolve the dispute by correcting the entry or taking it off your credit report completely.

If you win a credit bureau dispute, then your credit score may go up, but it will depend on the type of information that was affecting it. For instance, a basic inquiry generally drops a consumer’s credit score by five points or less while a foreclosure could decrease it by as much as 100 points.

The FTC completed a credit bureau study and found that as many as 25 percent of Americans have something incorrect showing up on their credit report that is significant enough to impact their credit score negatively. Make sure that the information on file under your name is correct.

Federal Laws Can Help You Repair Your Credit

If you have a low credit score, then consumer protection acts may be able to help you repair it. These protections are federal guarantees. When it comes to repairing credit, start with them before shifting into more time-consuming repair efforts. An extremely effective way to resolve credit issues is just knowing your rights.

Getting Help

Credit repair service providers work with collection agencies, lenders and credit bureaus directly to repair your credit score. They know the consumer laws so that they are able to guide you toward exercising your legal rights. You can work with these agencies on your own, but a credit repair specialist will streamline the process for you.

Steven Millstein

Steven Millstein

Steven is a Certified Financial Planner (CFP) and Certified Credit Counselor (CCC) and joined CreditRepairExpert in June 2016 as a Credit Repair Adviser to continue his mission of making a difference in the world. Everyday, Steven speaks with individuals and families in the online credit repair community to answers questions and offer help people on their journey to repair their credit rating. If you have a story idea for Steven or you would like help with credit repair, please email him at hello@creditrepairexpert.org.
Steven Millstein