Your credit score and report are the closest thing, outside of a criminal record, that you are ever going to have to that “permanent record” all your teachers scared you about when you were in school. It is important that you know what goes into it, how it is scored and reported and–most importantly–what your rights are when it comes to your credit, how it is reported and what companies can and cannot do with that information.
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Finding solid intel on this is difficult. This is because many consumer credit and lending agencies would rather you not know what laws govern them. After all, if you don’t know what the rules are, you can’t really challenge them when they tell you what’s what, right? To get you started, here are the most important rights and legal details you need to know to keep your financial identity under control.
#1. You Are Entitled to Your Report
The credit reporting agencies (and the agencies that contract through them) are profit-dependent. To keep them from gauging consumers, the federal government has a law in place that allows every consumer to gain access to all three major reports free of charge once every twelve months. If you want to pay for credit monitoring and extra reports, that’s up to you. Once a year, though, you can check on your progress and dispute any mistakes for free.
#2. You Get to Know Everything
If you apply for a loan or line of credit and are denied, the lender or creditor must tell you exactly why. More importantly they must supply their reasons in writing within a very specific window of time. If you do not receive this information, you have sixty days to request it and it must be provided free of charge and in a timely manner. The information contained in the report must be accurate and verifiable. Lenders, creditors, banks, etc. are not allowed to distribute false information about consumers and if they get caught doing so, the penalties are steep.
#3. You Can Challenge the Information
This is why, if you see something on your credit report or in the information provided to you in a denial letter that is wrong, you are allowed to challenge that information with the credit bureau. If you can provide or they can find proof that the information is inaccurate, the credit bureau is legally obligated to remove that item from your report. This is why it is important to read through your reports thoroughly every year, to catch mistakes before they cost you.
#4. Chain of Custody Matters
A lot of creditors and lenders will sell bad debts to collection agencies and junk debt buyers. These agencies and buyers will then try to make your life miserable in an attempt to get even a partial payment on these debts. Their goal is to get you to pay them to leave you alone. Instead, demand proof that they are legally entitled to collect the debt they insist you owe. They have to prove that they purchased the debt legally. If they can’t, you don’t have to pay them. In fact, if they can’t or refuse, they are likely scam artists posing as collectors and it is better that you don’t pay them anything.
#5. You are Entitled to Respect
Lenders, creditors, and collection agencies cannot do whatever they want in an attempt to get payments from you. There are strict rules under the Fair Credit and Reporting Act that dictate exactly what lenders, creditors and collection agents are allowed to do and say in their attempts to get you to pay your debts. It is important that you know what they are.
#6. You Can Report Them
If a creditor, lender or collection agent violates any of the rules in the FCRA, says Creditrepair.com, the penalties for that are steep. Not only can you report them to the FTC for the violation, they will often owe you money if you catch them or report them for doing it. That’s right: if they call you after hours, use threatening or abusive language, distribute your information, etc? They have to pay you money. Even better, they have to pay you for every instance in which a rule was broken. So learn these rules! It could be profitable!
Knowing your rights is important. It is what will help you keep your wits when collectors are calling all day or if a scam artist tries to take advantage of you. Hopefully the information here will give you a good start on making sure you don’t get taken advantage of!
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