With all of the different financial options available and the different aspects of each one, it is important for consumers to know their rights. For every aspect of the credit industry, there are laws in place to protect consumers.
Before accepting any form of credit a consumer should know and understand how the finance charges will be applied. The Truth In Lending Act, requires each credit grantor to provide, in advance the annual percentage rate on the account and their method of calculating the finance charges. This allows for consumers to make educated decisions on which credit offers to accept. The finance charges will be disclosed ahead of time, before any of the charges are applied. A consumer needs to review all of a creditors terms and conditions, prior to accepting the credit.
Also available to insure that consumers are treated fairly are several other acts that have been put in place to ensure equal treatment of credit applicants. The following is a listing of these and a brief explanation of how they apply.
Fair Debt Collections Practices Act
The Fair Debt Collections Practices Act (FDCPA) was written as an amendment to the Consumer Credit Protection Act, to prohibit abusive practices by debt collectors.
One of the reasons for the amendment was stated as; “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.” The FDCPA covers such areas as misrepresentation, the acquisition of a consumer’s personal information, communication in reference to a debt and harassment and abuse. The FDCPA is what determines when a collector can call you, and also how to stop collection calls. It’s important for consumers to understand their rights in regard to collection accounts. The FDCPA governs what a collection agency can and cannot do.
Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) essentially governs the manner in which Credit Reporting Agencies maintain and dispense information. The FCRA sets guidelines on the type of information that can be maintained, the extent of the information that is kept and the methods that the information they maintain is distributed to both consumers and to creditors. This Act also governs the accuracy requirements of the Credit Reporting Agencies to ensure that only factual information is maintained.
Equal Credit Opportunity Act
The Equal Credit Opportunity Act (ECOA) states that, “It shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction” This includes race, religion, income, national origin, sex or marital status. The primary purpose of the ECOA is to insure that every consumer is given a fair chance when applying for credit. It lists all of the circumstances that would and would not be considered discrimination.
Each of the above Acts are to insure fair treatment for consumers when seeking credit. It also insures that lenders have all of the correct information that they need to make a fair and impartial decision.
