Today, building and maintaining a good credit score is of vital importance. Businesses often take your credit rating into account when evaluating you for a loan, lease, and even employment; so it is useful to understand how credit works and what your credit rights are as a consumer. There are three major federal laws that are meant to help you keep a good credit rating and protect you against unfair treatment. These are the Truth in Lending Act, the Fair Credit Reporting Act, and the Equal Credit Opportunity Act. A solid understanding of these laws will go a long way in ensuring that you know your credit rights.
The Truth in Lending Act is meant to ensure that consumers can make informed decisions about credit by requiring full disclosure of all terms, conditions, and costs as well as a standardized method of calculating borrowing costs. Clearly communicated terms and costs allow you to better understand the real price of credit transactions and makes it easier to shop around for the best offer.
The Fair Credit Reporting Act guarantees that you have access to a free annual credit report from each of the three nationwide credit bureaus, Equifax, Experian, and TransUnion. These consumer-reporting companies collect important information about your credit history, such as where you live and if you’ve ever filed for bankruptcy, and then they sell this data to creditors, employers, and other institutions who have an interest in your credit rating.
The Equal Credit Opportunity Act bans discrimination because of race, color, religion, national origin, sex, marital status, age, or because you receive public assistance on the part of creditors. It is important to understand that this law does not require a business to extend you credit, and there is no guarantee that you will receive credit. Instead, it prohibits institutions from imposing different conditions or refusing you credit altogether for the discriminatory reasons listed above.