Credit Regulations Designed to Protect Consumers

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Credit Regulations Designed to Protect Consumers

The Fair Credit Reporting Act (FCRA)

Enacted in 1971 and amended in 1997, this act is enforced by the Federal Trade Commission (FTC) and state consumer protection agencies. It is designed to improve the confidentiality and accuracy of credit reports and gives consumers specific rights and protection. Consumers have the right to:

• view their credit records at credit reporting bureaus.
• challenge and correct negative aspects of their record if they can prove there is a mistake, and submit statements explaining why they received certain negative credit marks.
• have inquirers get written permission before their credit reports are released.
• not be included in direct mail or telemarketing solicitations based on pre-screened lists obtained from credit bureaus.
• have claims of disputed information investigated and reported back to them within 30 days.
• have adverse information involving collections or charge-offs removed from their credit record using a fair "date certain" calculation.

The Fair and Accurate Credit Transactions Act of 2003, an amendment to the Fair Credit Reporting Act, allows consumers to get a free credit report once every twelve months from each of the three national consumer credit reporting companies (Experian, Equifax, and TransUnion). These three major credit reporting agencies have set up a Website—annualcreditreport.com—to provide free access to annual credit reports.

Truth-in-Lending Act of 1968 and Regulation Z

This federal regulation, which is enforced by the Federal Reserve System, requires creditors to establish uniform methods for computing the cost of credit, disclosure of credit terms, and procedures for correcting errors on certain credit accounts. It also grants consumers the right to cancel certain credit transactions that involve their principal residence if they decide not to go forward with a loan.