Full text of Federal Reserve Bank of New York Circulars : 8725. New Consumer Credit Information Pamphlet

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FEDERAL RESERVE BANK
OF NEW YORK

C ircu lar No. 8725
Janu ary 3, 1979

NEW CONSUMER CREDIT INFORMATION PAMPHLET
“Credit-ability”

T o A ll F in a n c ia l In s titu tio n s , a n d

O th ers C o n c e rn e d ,

i n th e S e c o n d F e d e r a l R e s e r v e D i s t r i c t :

E n closed is a pam ph let, entitled “ C red it-ab ility ,” produced by this B an k in conjunction with its
C onsum er C redit In form ation (CCI) p ro g ram .
The pam p h let o ffers a cre d it quiz on variou s con sum er cred it regu latio n s and is design ed to
enchance cred it u se rs’ know ledge of b asic rig h ts and resp o n sib ilities under F e d e ra l law . The
p am ph let could be helpful to bank cu sto m ers and useful for in tern al bank tra in in g p ro g ra m s for
those involved with retail credit.
Copies of the p am ph let are av ailab le, free of ch arge, from our P ublic In form ation D ep artm en t
(Tel. No. 212-791-6134). R eq u ests for m ore than 500 copies should be m ade in w ritin g to th at
d ep artm en t.
CCI m a te ria ls are intended as a resource to help both cred ito rs and borrow ers. C om m ents are
alw ay s welcom e and m ay be directed to P eter B a k stan sk y , V ice President.




Thomas M. Timlen ,
First Vice President.




Credit Cards
Consumer credit is a powerful financial tool
which, in today’s marketplace, is easy to get
and easy to use. But, using credit effectively
requires a grasp of basic credit facts and an
understanding of consumer rights and re­
sponsibilities under federal law. To see if
you qualify as a smart credit user, try your
hand at this credit quiz. In case you don’t
score as well as you think you should, addi­
tional information about credit is available
from the Public Information Department of
the Federal Reserve Bank of New York, 33
^ U b e r t^ S tr e e t ^ J e ^ fo r k ^ J e

Truth in Lending
1. Before you sign a revolving credit agree­
ment, the Truth in Lending Act says a
lender must give you certain information
in writing. The law specifically refers to:
a. the lender’s scoring system.
b. annual percentage rate.
c. your credit bureau file.
d. the date the contract matures.
2. Ceilings on credit charges legally may be
set by:
a. state law.
b. the Federal Trade Commission.
c. credit unions.
d. the Supreme Court.
3. The prominent display of the annual per­
centage rate allows you to obtain the best
credit terms by:
a. comparison shopping.
b. buying from a local merchant.
c. paying bills promptly.
d. bargaining.
4. When you pledge your home as collateral
under a mortgage (except one to finance
the purchase of a home) the right of re­
scission permits you to:
a. cancel within three business days.
b. have the property assessed.
c. keep the property in your name.
d. request insurance on the property.
If you chose the wrong answer on any of the above,
request our pamphlet, “What Truth in Lending Means
To You” . . . pronto!

1. Credit
a.
b.
c.
d.

cards are a form of:
installment loans.
open-end credit.
money.
conditional sales contracts.

2. Your risk on lost or stolen credit cards is
limited if you:
a. hold cards jointly with your spouse.
b. have never used the card.
c. notify the issuer of loss or theft.
d. pay the outstanding balance im­
mediately.
3. You may withhold payment on defective
merchandise purchased with a credit
card only if:
a. the lender acknowledges the de­
fect.
b. the card is issued by the merchant
you bought from.
c. you’ve attempted to contact the
merchant.
d. the purchase price was under $50.
4. Merchants offering discounts to custom­
ers who pay cash:
a. are violating federal consumer
protection laws.
b. may not add an extra fee for
charge customers.
c. must state this policy in all adver­
tising.
d. must issue receipts reflecting the
discount.
More than one wrong answer means you need to read,
“If You Use a Credit Card.”

Credit Know-how
1. One way of building your credit history
is by:
a. using a friend’s charge account.
b. paying for all purchases in cash.
c. asking a relative to cosign a loan.
d. personally meeting local mer­
chants.

2. When deciding whether you can afford to
use credit, look at your discretionary in­
come, which is:
a. the money in your savings account.
b. after-tax income.
c. take-home pay minus essential
living costs.
d. the limit on your credit card.
3. If you can’t meet your credit obligations
because of unforeseen events, such as
loss of a job:
a. don’t worry, you have a good ex­
cuse.
b. borrow all the money you can lay
your hands on.
c. work out an arrangement with your
creditors.
d. file immediately for personal bank­
ruptcy.
4. If you have a complaint against a lender,
the first thing to do is:
a. contact a lawyer.
b. contact the lender.
c. contact the attorney general’s
office.
d. contact the appropriate regulatory
agency.
5. Consumers should review their credit
bureau files periodically in order to:
a. extend credit limits on existing
credit accounts.
b. remove damaging information.
c. eliminate
information
obtained
from court records.
d. correct false information.
6. You can easily locate a credit bureau
(credit reporting agency) maintaining a
file on you by:
a. contacting a federal regulator.
b. asking a lender who extended
credit to you.
c. looking in the yellow pages of your
local telephone directory.
d. writing to the financial editor of
your local newspaper.
The answers are available in these pamphlets: “On
Using Credit,” “ How to Establish and Use Credit,”
“Your Credit Rating” and “How to File a Consumer
Credit Complaint.”




Fair Debt Collection Practices
1. The Fair Debt Collection Practices Act
says collectors may:
a. publicize a borrower’s debt.
b. charge fees unauthorized by law
or the terms of the debt contract.
c. use threat of violence or harm to
reputation or property.
d. communicate with the borrower at
times which are not inconvenient
to the borrower.
2. The federal law covering collection prac­
tices does not apply to:
a. businesses collecting on their own
accounts.
b. persons in the business of collect­
ing debts owed to others.
c. creditors who use names other
than their own when collecting
debts.
d. anyone who collects debt for
others.
3. Within five days after contacting a bor­
rower, a collector must send written noti­
fication to the borrower. Which of the
following need not be included in this
written statement?
a. the amount of the debt.
b. the name of the creditor.
c. the consequence of nonpayment.
d. notice of 30 days to dispute the
validity of the claim.
We also have a pamphlet on fair debt collection prac­
tices, listing prohibited tactics.

Equal Credit Opportunity
1. Legally, you may not be denied credit on
the basis of:
a. insufficient income.
b. receiving income from public as­
sistance.
c. being financially overextended.
d. negative information in your credit
bureau file.

2. The law says lenders must notify credit
applicants of lending decisions:
a. within 30 days after receiving com­
pleted applications.
b. after checking credit bureau files.
c. on the basis of applicants’ needs.
d. on the basis of community needs.
3. Under the Equal Credit Opportunity Act,
a merchant honoring your bank credit
card:
a. is not defined as a lender.
b. cannot ask for identification.
c. must check your credit bureau
file.
d. cannot require your address.
4. The law also restricts the use of informa­
tion about an applicant’s age to:
a. arbitrary decisions about decreas­
ing lines of credit upon retirement.
b. credit interviews.
c. mortgage applications.
d. the bearing it has upon a person’s
ability and willingness to repay.
There are a number of pamphlets available on this
topic: “ How the New Equal Credit Opportunity Act
Affects You,” “ECO and Women,” “ECO and Age” and
“ECO and Incidental Credit.”

Credit and Stocks
1. When using credit to purchase stocks,
investors must put up, in cash, the amount
established by the Federal Reserve’s:
a. margin requirements.
b. discount rate.
c. federal funds rate.
d. reserve requirements.
2. Direct controls on the use of credit in
the securities market were designed to
eliminate:
a. excessive commissions by brokers
and dealers.
b. excessive speculation in the stock
market.
c. individual wealth.
d. monopolies.
“If You Borrow To Buy Stock,” discusses rules bor­
rowers must follow when purchasing securities with
credit.

Billing Errors
1. When a bill is in dispute, a creditor may
not:
a. sell you additional merchandise.
b. apply that amount against your
credit limit.
c. notify you of special sales.
d. report you as delinquent on your
account.
2. Which of the following is not legally de­
fined as an error on a billing statement?
a. failure to credit a payment.
b. a charge for something not ac­
cepted upon delivery.
c. an arithmetic mistake.
d. misspelling your name.
3. To correct an error on a billing statement:
a. telephone the lender within 48
hours after receipt of the bill.
b. write to the lender within 60 days
after the bill was mailed.
c. request a documented statement
from the lender.
d. alert the attorney general’s office.
Why have a hassle with a computer? Ask for, “Fair
Credit Billing.”

Miscellany for Borrowers
1. If you repay a loan in half the time agreed
to in the lending contract, you will:
a. save half the interest.
b. improve your credit rating.
c. get a rebate from the lender.
d. be reimbursed for insurance costs
incurred by the loan.
2. When considering an application for a
housing loan, lenders may:
a. ask about your childbearing plans.
b. review your expenses and debts.
c. rely on property appraisals giving
weight to the racial composition of
a neighborhood.
d. refuse to consider retirement in­
come.
“The Rule of 78’s,” will show you how to calculate re­
bates when paying off loans before maturity . . . and,
“Credit Rights In Housing,” will give you a head start
in the housing loan market.

\

answers
Truth in Lending
1. b 2. a 3. a

4. a

Credit Cards
1. b 2. c 3. c

4. b

Credit Know-how
1. c 2. c 3. c

4. b

5. d

6. c

Fair Debt Collection Practices
1. d 2. a 3. c
Equal Credit Opportunity
1. b 2. a 3. a 4. d
Credit and Stocks
1. a 2. b
Billing Errors
1. d 2. d 3. b
Miscellany for Borrowers
1. c 2. b

FEDERAL RESERVE BANK OF NEW YORK
New York, N.Y. 10045

12/79