Dealing With Credit Problems
You might find yourself invaded by problems with creditors and credit. But you've got rights to help you sort things out.
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With almost 200 million consumers in the credit-reporting system, mistakes are
inevitable and problems are sure to crop up. Stolen cards, lost payments, billing
errors, and disputes with lenders can all cause you grief as well as harm your
potential for getting credit in the future. But as long as you know your rights
and take a few precautions, it's not hard to take action if problems come up.
Your first step should be a preventive one. Hold on to all of your credit-related
information and paperwork, including receipts from purchases you make using
credit cards until those charges appear on your bill, billing statements, canceled checks used to pay credit bills,
credit agreements, and policy changes, and anything and everything else
that seems important. That way you'll have evidence to back you up in case
of any disputes.
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TRUTH, LENDING, AND THE AMERICAN WAYWhen you apply for credit, you're protected against discrimination
under the Equal Credit Opportunity Act (ECOA). The ECOA states that lenders cannot reject
credit applicants on the basis of race, sex, marital status, age, national origin, or
the fact that you receive government assistance. In fact, they're required to consider
public assistance in the same light as other forms of income.
You're also protected in any credit agreement by the Truth-in-Lending Act, also
known as Regulation Z. Under Regulation Z, lenders have to tell you in writing
certain terms of the credit they're offering before you borrow from them.
FITTING THE BILLIf you find what seems like an error in a credit billing statement,
you're entitled to dispute it under the Fair Credit Billing Act. This law defines
billing errors as:
- Charges that you, or other people authorized to use your account, didn't make
- Incorrect credits or payments, or ones that show the wrong amount or date
- Charges for items that you didn't accept on delivery, or that weren't delivered as
agreed upon
- Computational errors
- Failure to deliver your billing statement to your current
address with 20 days notice of an address change
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DOING YOUR PARTIf you receive a statement you believe to be incorrect,
you have 60 days from when it was mailed to notify the creditor in writing.
Be sure to write to the address for billing inquiries, and to include your name
and account number as well as an explanation of which portion of your bill
you think is incorrect.
The company then has 30 days to acknowledge your letter, and 90 days to resolve
the problem. During this time you are free to use the card, and while you should
pay all parts of your bill that aren't in dispute, you don't have to pay the
disputed amount, or any finance charges that it incurs.
Some creditors are quick to respond to queries and complaints, while others may
stall, insist you're the one in error, or otherwise make your life difficult.
If you're involved in a long-term credit relationship, as you might be with a
mortgage or car loan, you may just have to be persistent and patient.
But since you have such a choice of credit cards, there's no reason not to
cancel your account if you find that your card company seems unwilling to respond
to your inquiries or slow to get them resolved. But even if you cancel a card,
you'll still have to resolve all outstanding issues and payments.
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REJECTIONS AND REPORTSIf you're denied credit, you're entitled to know why.
So contact the lender. There's always the possibility that the decision was
based on incorrect or inaccurate information. One study found that 29% of all
credit reports contain errors that could result in your being denied credit.
Another pegged it at 33%. As simple a mistake as misspelling your name can
mean your credit history gets mixed up with someone else's.
If you've been turned down, the lender has to tell you which credit report
contains the damaging information. Ask the credit bureau for a copy of your
report — it's free if you ask within 60 days of being rejected. If
you find that your report does contain an error, notify the credit bureau
that issued it and the lender that rejected you immediately. The Fair
and Accurate Credit Transactions Act requires that they both investigate
your dispute — although they're not required to make any changes to
your report if they don't think the change is warranted.
Check your report again 90 days after you contact the credit bureau and
lender. If it hasn't been changed as a result of your complaint, you're
entitled to write an explanatory comment of 100 words or less that must be
included in all future reports.
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© 2006 by Lightbulb Press, Inc.
All Rights Reserved.
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If you're usually an exemplary credit customer, you can
sometimes persuade your lender to let you off the hook if you go over your
