Consumer Pamphlet: Your Rights and Responsibilities Applying for Credit or Loans
When you apply for credit, you will be asked for information about yourself that covers several different areas. The company, business, bank or store granting or extending credit will want to know your past credit record and whether you have enough income to meet all your expenses.
Information that may be requested will include:
- Your income and if your income is steady.
- How long you have been at your job.
- If you have shown signs of poor money management in the past by not paying your bills.
- How long you have been living in the community and in your present home and whether you are renting or buying.
- Information on your assets – such as home, furniture, automobile – and your obligations -such as outstanding loans, credit card debts, final judgments, support obligations and medical bills.
- Possibly personal references – good references do matter.
These are the most important things a company, business, bank, or store granting or extending credit will need to know about you before it will lend you money. Some of the information above is obtained by the creditor from your credit report and your credit score.
Your age is not usually important unless you have just turned 18 and do not have any employment or credit history. If you are under 18, you cannot get credit or a loan unless someone who is 18 or older meets the qualifications and signs for you. You may have some difficulty if you are a retired senior citizen who has limited income.
Usually, however, even people in these categories can get credit if they meet all the other requirements. You should be aware that it is unlawful to be denied credit for a loan based solely upon your race, religion, national origin, sex, marital status, age, receipt of public assistance income or the good-faith exercise of rights under some federal consumer protection laws.
Beware of companies offering ‘advanced fee’ or ‘guaranteed’ loans. They will ask you to send a ‘handling fee’ with your initial application. Often you find, after you pay the requested fee, the loan is denied or the company disappears. Advanced fees for loans are illegal. Call the Florida Office of Financial Regulation (FLOIR) at 850-487-9687, or go to the FLOIR website, to check on the company before you send any money or to file a complaint.
Before you decide to buy or borrow from anyone, become a comparison shopper – look around for the best deal in goods and for loans. Deal only with recognized companies or agencies, and if you are in doubt about a company, contact the Florida Office of Financial Regulation, ask for information at your local Better Business Bureau or from your attorney or area legal aid office.
When you get a loan, make sure you understand your responsibilities. Read the entire contract, and read it carefully. Make sure all the details are spelled out for you and all blanks are filled in. Do not ever sign a contract that you do not understand. Consult an attorney if necessary. Always keep a copy of every contract you sign and a record of all of the payments you make.
Each company that denies your application for credit based on your credit report must notify you in writing. You also must be informed in writing of the name and address of the credit reporting agency that prepared the report used to deny you credit. That credit reporting agency must provide, in writing, the nature, substance and, in most cases, sources of the information on the report – in other words, just exactly what has been said about you and who said it.
If there is information on your report that is incomplete or incorrect, you can write to the credit reporting agency stating that you disagree with the information and giving an explanation as to why you believe it is incomplete or incorrect. Based upon federal credit reporting laws, the credit reporting agencies must investigate your request, and, if the information is found to be false, it must be removed from your report. If, after all this, you still are not satisfied with the accuracy of the report, you can have a statement of your side of the story included in the report.
If the company that reported the disputed information in the credit report proves the information to be accurate and you still dispute the information, it cannot continue to report that information unless the information is accompanied by a statement that it is disputed.
In all cases, the credit reporting agency must give you the results of its investigation. If your report was changed, the agency must give you a revised credit report. If you request, the agency also must provide you with a description of the procedure used to determine the accuracy and completeness of your credit report, including the business names, addresses and telephone numbers (if available) of its data sources. Also, at your request, the agency may send a copy of your revised credit report to previous report recipients.
You can find out who has received a credit report on you within the last six months. You may have your credit report withheld from any business that does not legitimately need it, and you may sue a creditor that used a report dishonestly. If you sue and your suit is successful, you may collect your own attorney’s fees from the company.
You are entitled to one free credit report per year from each of the three major credit reporting companies, Experian, TransUnion and Equifax. You do not have to order all three at one time, so you can space them out over the year. There are many scams relating to the free credit report option. The legitimate website to use to order your free copy is Annual Credit Report.com. Other credit report sites will offer you other products, which are not free, but you are not required to buy any products to get your free annual credit report.
Finally, there can be no unfavorable information about you reported after seven years. There are several exceptions to this rule; for example, a bankruptcy case filing will stay on your credit report for 10 years. You should ask the credit reporting agency to delete any information if seven years have passed since there have been any payments made on the account. If you need more information, you can contact an attorney who specializes in this area of law.
Loan rate and credit score
You are entitled to written notification whenever your loan application is denied based on a “risk-based pricing” system, which uses your electronic credit files to come up with your rate quote. The risk-based pricing software systems used by most mortgage companies assume your records are correct, and rate you as a credit risk accordingly. Higher-risk borrowers pay more. As a result, most mortgage applicants have no idea when they are quoted slightly more – say one-quarter of a percentage point to one-half a point above what they deserve – because of erroneous or incomplete information in their credit files.
If you are applying for a credit card, there are several things to watch. A credit card usually does not have the conditions, interest rates and fees written on the card itself, so before signing and using a credit card, you should read carefully all the information that comes with it. Be aware of finance charges, late charges, over-the-limit fees, annual fees and extra charges such as for insurance and the expected monthly payments.
Notify, by phone and in writing, the credit card company at once if your card is lost or stolen. If someone else is using your card, even if they do not have your permission, you still can be held responsible for up to $500 or more charged on your card if the company is not notified promptly. Keep a list of your credit cards by name and number. Also, include in your list the number to call if your card is lost or stolen.
Credit cards are often stolen, so take care of your cards just as you would take care of your money. Remember, credit has responsibilities and rights. Make sure you always know your responsibilities and rights so you get the most for your money.
If you think you need legal advice, call your attorney. If you do not have an attorney, call The Florida Bar Lawyer Referral Service (LRS) at 800-342-8011, visit the LRS webpage, or contact a local lawyer referral service or legal aid office.
NOTE: Further helpful information on consumer rights and responsibilities is contained in the Credit Repair Fraud pamphlet.