Many inexperienced credit card holders can find themselves in over their heads with debt quickly. Often, their slide into overwhelming debt is due to not understanding their rights and obligations to creditors before signing up for a new card. Consequently, they misuse their available credit and end up with mounds of debt, a reduction in their credit score, and few options for getting back to square one.
If you’re considering a debt consolidation loan for bad credit to get a more stable financial situation, you’re off to a great start. But staying informed of your rights, no matter your credit score, is crucial for building better credit practices. Thanks to an increased priority for passing laws that protect consumers, every cardholder in the United States can count on these protections:
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Table of Contents
The right to not be discriminated against
Your credit application cannot be denied due to race, religion, nationality, marital status, if you receive public assistance, or age (unless you’re a minor). If your credit application is denied, you have the right to find out why. Credit card companies must issue an explanation of why you’ve been denied within 60 days of processing your application.
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The right to receive full information disclosures
Thanks to the Truth in Lending Act, any credit card offer you receive must include full disclosure of interest rate, annual percentage rate (APR), late fees, annual fees, and differentiate promotional rates from standard. In addition, every statement must show how long it would take to pay off the outstanding balance if only the minimum payment were made.
The right to receive accurate and timely statements and agreement changes
Creditors must issue a statement at least 21 days before your payment is due. You also must receive advance notice for any changes to your credit card agreement (new interest rates, fees, etc.) no later than 45 days before the change goes into effect.
If you feel there’s a billing error on your statement, you have the right to dispute the charge without being subjected to paying the fee or accrued interest during the investigation. Your dispute can be over the phone or online, but it’s best to get everything in writing so you can keep a copy for your records.
The right to have limited liability for fraudulent charges
If your credit card was used without your authorization, you have the right to reduce your payment obligation for those charges. If you end up reporting a lost or stolen card after fraudulent charges are made, you could be liable for up to $50 though many creditors offer $0 liability. Check your credit card agreement for details.
The right to view and amend your credit report
Credit card companies will report your activity, including balance carried, number of late payments, how long you’ve had the card, and the amount of credit you have to at least one of the three major reporting bureaus (TransUnion, Equifax, and Experian). You have the right to request one free credit report every year from these agencies without it being considered a “hard pull” on your report. Too many hard pulls will lower your overall score, so take advantage of your free report every year.
In addition, many companies are now offering the ability to monitor your credit daily with “soft pulls.” These give an overall summary of your credit history and don’t affect your score.
If you see an error on your credit report, you have the right to file a dispute with both the creditor and the reporting agency.
What should you do if your rights have been violated?
If you feel a creditor has violated your rights, you should file a complaint with the appropriate governing agency. Your first stop should be to the Consumer Financial Protection Bureau (CFPB), as they’re the enforcement agency responsible for credit card companies. If your complaint is against a bank, contact the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) if your bank is a credit union. Finally, look into if your state has any enforcement agencies specifically responsible for complaints against smaller regional banks.
