How to Protect Yourself: Credit

Source: The Florida Attorney General's Office

When you apply for a loan, credit card or other account, lenders will check your credit to determine what amount they are willing to lend, what the interest rate will be and other terms of the loan.

What is a credit report?

A credit report can be a crucial tool that allows consumers to know where they stand financially and can also indicate whether their identity has been stolen. Your credit report includes information on where you live, how you pay your bills and whether you have been sued or have filed for bankruptcy. Your credit score is a numerical representation of information in your credit report on a scale from 300 to 850. A credit report and credit score offer an indication of whether a consumer is a good risk for lenders.

Get a free copy of your credit report each year.

Under the Fair and Accurate Credit Transactions Act, an amendment to the federal Fair Credit Reporting Act passed in 2003, consumers are able to receive one free credit report per year from each of the nationwide credit reporting companies — Equifax, Experian and TransUnion. The free report can be requested and viewed online through the government-authorized website www.annualcreditreport.com. While consumers may receive a credit report for free, reporting agencies often charge a fee should a person request his or her specific credit score.

Know your rights.

If you are denied credit, the name of the credit reporting agency that gave the information must be supplied to you. You have a right to review the credit report and dispute any errors that appear. If your credit application was denied because of information supplied by the agency and you request the report within 30 days of the denial, the information is free. Otherwise, the agency may charge a reasonable fee. If information in your credit report is wrong, send a written letter to each credit reporting agency explaining the errors and that these need to be corrected immediately. The agency must investigate the items in question. If the new investigation reveals an error, then a corrected version will be sent to you. If the investigation does not resolve the dispute, request the agency to keep a summary of your version of the disputed information in your file and in future reports.

What is a secured credit card?

If you have a poor credit history or no credit history, it may be difficult to get a traditional credit card. However, you may be able to get a secured credit card. Secured credit cards require a cash deposit and that generally acts as the available balance for the card. For instance, if you deposit $1,000, your credit limit on the card would be $1,000. After a period of time, you may be eligible for a higher credit limit or an unsecured, traditional credit card.

Know what to look for in a secured credit card.

Many credit unions and banks offer secured credit cards. When looking for a secured card, compare fees and interest rates. Most secured credit cards require an annual fee; however, it can vary wildly from card to card. Building or rebuilding your credit history is an important benefit of getting a secured credit card. Before signing up with a particular card issuer, ensure that they report to the three major credit reporting agencies. Additionally, ask the issuer how long they will keep your deposit after the account is closed. It is common practice for the issuer to hold the deposit for a few billing cycles to ensure there are no latent charges.

Check your credit card bills for errors.

In 1986, Congress passed the Fair Credit Billing Act (FCBA) to help consumers resolve disputes with creditors over errors which appear on bills for “open end” credit arrangements, which include credit cards, revolving charge accounts (such as department store accounts) and overdraft checking.

The Act applies only to “billing errors” on the periodic bills or statements you receive (usually monthly) for your “open end” credit. The term "billing errors" includes unauthorized charges, charges for goods or services that were never delivered, computational errors and more.

Call and write the company to resolve errors.

Sometimes a phone call is all it takes to correct the problem. Make sure you keep a record of the date, person contacted and subject matter of each telephone contact you have with the company. A phone call, however, does not trigger the protection to which you are entitled under the FCBA. You must send a written billing error notice to the company which must reach the creditor within 60 days after the first bill containing the error was mailed to you. The letter you send must include your name and account number, a statement that you believe the bill contains an error, the dollar amount involved and the reasons you think the error exists. Your written notice should be sent to the address provided on your billing statement for billing error notices.

The FCBA provides that the creditor must acknowledge your notice in writing within 30 days after it has received it, unless the problem is resolved within that time period. In any case, within two billing cycles (but not more than 90 days) from the date the creditor received your billing error notice, it must conduct an investigation and either correct the error or explain why the bill is believed to be correct.

What happens if there is continued disagreement?

If you still dispute the amount owed after the procedure set forth above has been followed, write the creditor within 10 days after receiving the company's explanation and state that you still refuse to pay. At this point, the creditor may begin collection procedures. The FCBA allows consumers to sue a creditor who violates the Act and provides for certain restrictions on creditors that don't follow its procedures.

File a complaint.

If you wish to file a complaint against a creditor or credit reporting agency, you may do so with the Attorney General’s Office online at www.myfloridalegal.com or by phone toll-free at 1-866-9-NO-SCAM. Additionally, you may contact the Consumer Financial Protection Bureau (CFPB), a federal agency tasked with reviewing complaints about credit cards and other consumer financial products and services. File a complaint online at www.consumerfinance.gov or by phone toll-free at 1-855-411-CFPB.

You may also file a complaint with the Florida Department of Agriculture and Consumer Services, which acts as the State's consumer complaint clearinghouse, at www.floridaconsumerhelp.com.