Consumer Rights : Credit

What does "getting credit" mean?

Credit means you are using someone else’s money to pay for things.

It also means you are making a promise to repay the money to the person or company that loaned you the money.

There are many forms of credit, including credit cards, store accounts, bank loans, home equity loans, car loans and mortgages.

What is a credit report?

A credit report is a record of how you have borrowed money and repaid debts.

Your credit report contains information about where you live, how you pay your bills, and whether you have been sued, arrested, or filed for bankruptcy. It has personal identification information, such as your Social Security number, address, birth date and employment history.

Three major credit bureaus, or credit reporting agencies, collect information. They are Equifax, Experian and Trans Union. Almost every adult in America has a credit file with these agencies.

Creditors look at credit reports to decide whether or not to grant credit and how much to charge for that credit. Also, some employers may look at your credit report, under limited circumstances, and landlords may take your credit history into account in deciding whether to rent to you.

How can I get a copy of my credit report?

A federal law, the Fair Credit Reporting Act, gives you the right to one free copy of your credit report from each of the three major credit reporting agencies once every twelve months.

If you applied for credit and were denied, you also have the right to a free copy of your credit report, if you ask for it within 60 days of the denial.

Because each of the three agencies may have different information, and has different types of credit scores, you should request a copy from each agency. Because the content of your credit report can affect many parts of your life, you should check your credit reports periodically to make sure they are accurate. This is especially important if you believe you have been the victim of identity theft.

The three reporting companies have set up a web site, mailing address and toll-free number for consumers to order reports. Order your free reports or call 1-877-322-8228.

What can I do if my credit report has wrong information?

Federal law gives you the right to disagree with incorrect information in your credit report and ask to have it removed or corrected.

To correct your credit reports, send a letter to each credit reporting agency that has the wrong information. This letter should identify the wrong information and state why it is wrong.

Send the letters by certified mail so you will have a record. The credit reporting agency must investigate and correct mistakes. In most cases, the agency is required to get back to you with the results of the investigation within 30 days.

The creditor who supplied the information to the credit reporting agency must also correct and update information. If you can show the creditor that the information it reported was not accurate or complete, the creditor must investigate and provide the credit reporting agency with the information necessary to make your report correct or complete.

What is a credit score?

A credit score is a number that helps lenders and others predict how likely you are to make your credit payments on time.

Each score is based in the information in your credit report. Each credit reporting agency calculates your score, and each uses a slightly different scale. However, as a rule, the higher the score, the better.

The most commonly used score, called the FICO score, uses a scale of 300–850. Higher scores mean you are more likely to be approved for credit and pay a lower interest rate.

Some credit card companies will change your interest rate or credit limit based on your score. Your credit scores change when new information is reported, so you do have the opportunity to improve your credit score over time. This is why it is important to check your credit reports periodically and correct wrong information.

See suggestions about general ways to improve your scores now.

What if I am denied credit?

Not everyone who applies for credit will be approved.

Creditors may consider factors like your income, expenses, existing debts, your credit history and your credit score. However, a federal law, the Equal Credit Opportunity Act (ECOA), and an Ohio law dealing with unlawful discriminatory practices of creditors, ensures that all consumers are given an equal chance to obtain credit.

The ECOA makes it unlawful for any creditor to discriminate in credit transactions on the basis of race, color, religion, national origin, sex or marital status, age, or because all or part of your income may be public assistance.

Ohio law does not include discrimination on the basis of income, but does include national origin and ancestry under its protections. Find out more about equal credit opportunity now.

If you believe you have been denied credit for an invalid reason, you can file a complaint with the Ohio Civil Rights Commission. You may also sue in federal district court.

Before you take any legal action, you should consult an attorney regarding your rights and possible claims.

If you are a low-income Ohioan, find your local legal aid program now.

What can I do about identity theft?

Identity theft is a serious crime that occurs when someone uses your personal information such as your name, Social Security number, credit card number or other information without your permission to commit fraud or other crimes.

You may find out you have been a victim when you receive credit cards you did not apply for, or you are denied credit for no apparent reason, or you start getting calls or letters from debt collectors for debts you do not know about.

You may also call the Attorney General’s toll-free identity theft line at: 1-888-694-3463.

In addition, the Federal Trade Commission has a packet of information to explain your rights as a victim of identity theft and to help you take the steps necessary to fight back.

Should I go to a credit counselor?

A legitimate credit counseling agency offers a range of services from basic budget counseling to educational courses about finances to debt repayment plans.

Some of these agencies receive funding from creditors and may charge fees for services.

The main focus of credit counseling agencies is on credit card and other unsecured debt. If you are having problems with your mortgage, you should try to get help from a housing counselor approved by the Department of Housing and Urban Development (HUD).

One of the services that credit counseling agencies can offer is to arrange a debt management plan (DMP). Under a DMP, you deposit money each month with the credit counseling agency, and the agency uses the money to pay your debts according to a payment schedule the counselor develops with you and your creditors.

A DMP may be good for your situation, but you should not enter into a DMP without understanding exactly what your plan is and how it works. The counselor should do a thorough assessment of your situation before recommending a DMP.

Debt settlement or debt negotiation companies ARE NOT the same as credit counseling agencies. These companies are also called credit repair companies. They often make promises to remove adverse information from your credit history, or improve your credit rating, or help you get credit.

Changing your credit history is not quick or easy process.

You should be very cautious about getting help from credit repair companies that promise quick and easy results. Both credit counseling agencies and debt negotiation companies are regulated by the State of Ohio.

State law limits the fees you can be charged for consultations and the administration of any DPM you enter. Also, for-profit credit counseling or debt negotiation companies must be licensed by the State.

If you have problems or concerns about a company you have been dealing with, you may file a complaint with the Ohio Attorney General’s Consumer Protection Section

or call 1-800-282-0515. You may also want to talk to an attorney. Find your local legal aid program now.

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See also the Forms & Education tab in this section for more information.

The information in this site is not intended as legal advice.
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