Fair Credit Reporting Act
and other Consumer Credit Laws

The Fair Credit Reporting Act

The Fair Credit Reporting Act (FRCA) was enacted in 1971 to promote accuracy and ensure the privacy of the information used in consumer reports. The FCRA was first amended in 1996 with the Consumer Credit Reporting Reform Act and has been updated throughout the years with provisions included by various acts. 

The FCRA requires that credit bureaus use appropriate and fair procedures for obtaining, maintaining, and providing information about consumers. It stipulates:

  • You have the right to receive one free copy of your credit report every 12 months from each of the three credit reports. 

  • You have the right to know who has requested a copy of your credit report for the last year. 

  • You have the right to be told if information from your credit report was used in the the decision to deny you credit. 

  • You have the right to a free copy of your credit report if you have been denied credit due to information contained on it. You must contact the credit bureau who issued the original report that the credit denial was based on within 60 days of denial. 

  • You have the right to dispute any information contained in your credit file, and it must be investigated by the credit bureau. 

  • You may add an explanation to your credit file if the disputed item is not resolved to your satisfaction. 

  • You must give your written consent for your credit report to be provided to a potential or current employer. 

  • You have the option of opting out of pre-screened credit offers. 

  • You have the right to place a credit freeze on your credit file to prevent lenders from accessing your file without your knowledge and permission.

The Equal Credit Opportunity Act

The Equal Credit Opportunity Act(ECOA) requires that a creditor must tell you why you were rejected for credit. Under this act, it is illegal for creditors to discriminate against applicants based on sex, marital status, race, national origin, religion, or age. You also have the right:

  1. To get credit without a co-signer if you meet the creditors standards 

  2. To have someone other than your spouse as a co-signer 

  3. To have credit in your maiden name, married name, or a combination of your maiden and married name (i.e. Hill-Morris) 

  4. To keep your own accounts after you change your name, marital status, or retire 

  5. Each spouse is entitled to have their own credit history in their own name. However, if they have joint credit accounts, these accounts will appear on both spouse's credit reports.

  6. To know whether your application for credit has been rejected within 30 days of filing for credit, and why it was rejected 

  7. To know why you received different terms than what you applied for 

  8. To know why your account was closed by a creditor. 

You can find out more from the FTC article on the ECOA.

Lawful Grounds for Credit Denial

Under the EOCA and the updated Federal Reserve Board regulation B, there are recognized lawful grounds for the denial of credit. These include:

  • An incomplete credit application
  • Insufficient credit references
  • Temporary or irregular employment
  • Inability to verify employment or income
  • Length of employment
  • Insufficient income
  • Excessive obligations
  • Inadequate collateral
  • Temporary residence or unable to verify residence
  • No credit file
  • Delinquent credit obligations
  • Garnishments, attachments, foreclosures, repossessions, or suits
  • Bankruptcy

The Fair Credit Billing Act & Electronic Fund Transfer Act 

The Fair Credit Billing Act (FCBA) and the Electronic Fund Transfer Act (EFTA) protect consumers by providing procedures to correct errors on revolving charge accounts, credit cards, and electronic fund transfer account statements. Possible errors include:

  • Charges or electronic fund transfers made by an unauthorized user of your account 

  • Charges tor electronic fund transfers that contain incorrect information such as item, amount, or date 

  • Charges or electronic fund transfers for goods or services that you didn't order or didn't receive 

  • Computational errors 

  • Payments or credits not properly reported on your statement 

  • Non-delivery of your statement to your current address (as long as you have notified the creditor within 20 days before the billing period ends)

To be protected under the Fair Credit Billing Act you must send written notice to the creditor detailing the billing error within 60 days after the bill was mailed to you. Send your letter the the address listed for billing inquiries and include your name and account number, the reason why you believe there was a billing error, the dollar amount involved, and photocopies of any supporting documents (sales slips, charge slips, etc).

Once your creditor receives your statement, they must acknowledge receiving your protest within 30 days, and conduct an investigation within 90 days. While the investigation is ongoing, your account may not be closed or restricted. The disputed amount can be applied towards your credit limit, though. The creditor may report your account is being disputed, but may not report you as delinquent on the disputed amount.

If your bill is found to contain an error, the creditor must notify you of the corrections, credit your account for the disputed amount, and remove all finance charges and late fees associated with the disputed amount. If the investigation reveals that the disputed bill is correct, they must notify you in writing how much you owe, including finance charges.

If the creditor doesn't comply with the Fair Credit Billing Act dispute settlement procedures (such as taking more than 30 days to acknowledge your dispute or more than 2 billing cycles to resolve it), they may not collect the amount due.

The Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA) was enacted to protect consumers by stopping abusive practices by debt collectors. You can read the full text of the FDCPA on the FTC website. Under the Fair Debt Collection Practices Act, debt collectors may not:

  • Use threats of violence or harm against you, your property, or your reputation
  • Advertise your debt
  • Use obscene language
  • Repeatedly use the telephone to annoy someone
  • Contact you without identifying themselves
  • Use false statements when trying to collect a debt
  • Contact you by postcard
  • Continue to contact you if you have sent written notice to the collections agency requesting them to stop
  • Contact you at unreasonable times, such as before 8 am or after 9 pm
  • Contact you at work if you notify the collection agency that your employer disapproves
  • State that you will be arrested if you don't pay your debt
  • Deposit a post-dated check prematurely 

If you feel that your rights have been violated by a debt collector, contact your state Attorney Generals office and the Federal Trade Commission. Many states have their own debt collection laws and your Attorney Generals office can help you determine your rights. You can also file a complaint with the Consumer Financial Protection Bureau by visiting their site or calling (855) 411-2372. 


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