Understanding The Law As It Applies To Credit

Under the terms of the Equal Credit Opportunity Act all lenders are required to apply the same credit standards to all customers regardless of race, gender, marital status, religion, national origin, age and several other criteria. The Act does not give any special privilege to any individual or group but produces a level playing field on which everyone has an equal chance of securing credit from a lender. A natural extension of the Act would however provide that the only criterion which should be used in assessing your application should be your ability to repay any loan.

Against this background you will see that, unless specific other provisions apply, you should not be asked to provide information about such things as your race, gender or marital status on any application for credit and where such information is requested it should be entirely optional as to whether you provide the information or not. An example of where you might be legitimately asked for information is your age. Although the Equal Credit Opportunity Act provides that a lender cannot discriminate against you on the basis of age the lender is entitled to ask your age (and indeed to require proof of age) to ensure that you are legally old enough to hold credit. In the case of the United States this means that you have attained your eighteenth birthday.

If you apply for credit a lender is also legally obliged to inform you of their decision regarding your application within 30 days. Furthermore, if your application is declined the lender must provide you with a written statement giving his decision and outlining the reason for denying you credit, together with your rights in respect of such a refusal.

Most credit applications are approved or denied on the basis of your credit history and credit score and the Fair Credit Reporting Act is another important act for consumers because it permits you access to your credit history, or credit report. Indeed, the Act goes one step further and provides that credit reference agencies must provide you a copy of your credit report free of charge once each year upon request.

Having received a copy of your credit report and checked through it, you are also entitled to dispute entries made on your record and to request that inaccuracies be corrected. In cases where you are unhappy with the corrections made you are also entitled to add your own comments to your credit report and can ask for a statement of up to one hundred words to be added to a disputed entry.

Whether you are concerned about your credit history or not it is always a good idea to ask for annual copies of your record from the three major credit agencies in the United States so that you can check that your record is accurate and, if necessary, correct it before any damage is done. In these days of increasing identity theft it is also a good way to catch a possible case of identity theft at an early stage and again before too much damage has been done.

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