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Do You Know




Federal Reserve Bank of Philadelphia


redit can play an important role
in your daily life. For example,
you may use a credit card to
make purchases, or you may obtain
a loan from your bank to finance the
purchase of a car or house. The importance of credit in your life, however, is
not limited to loans. If you apply for a
job, a potential employer can obtain a
copy of your credit report to verify your
employment history. If you want to lease
an apartment, the landlord can obtain
your credit report to determine whether
you will be a reliable tenant. Therefore,
it is important that you understand how
credit applications are approved or denied and what your legal rights are if you
are treated unfairly. The major federal
laws that regulate credit are summarized
in this brochure.
Regulates the accuracy, fairness, and privacy
of consumer credit information.
Most of your creditors file reports once
a month with the three major credit
bureaus — Equifax, Experian, and TransUnion — to let them know the status of
your loan repayments. Creditors report
the amount of credit originally extended,
the amount of your most recent payment, whether the payment was late, the
current balance owed, and the date you
applied for the credit. If your loan has
a credit limit, creditors also report the
amount of the credit limit and whether
you have exceeded it. The credit bureaus
also collect negative information about
you from public records, such as bankruptcy filings, tax liens, and court judgments. All of this information is included
in your credit report. When you apply
for credit, the information in your credit
report is reviewed to determine whether
you are a good credit risk.

Privacy of Credit Reports
Credit reports contain sensitive, private
financial information about you. To
protect your privacy, the FCRA states
that credit reports can be obtained only
when there is a permissible purpose. This
includes obtaining your credit report
when you apply for credit, a job, a lease,
insurance, or a license or benefit from a
government agency.
Credit Report Errors
You should review your three major
credit reports at least once a year to
ensure that they are accurate and do not
contain any errors. Under federal law,
you are entitled to one free credit report
each year from Equifax, Experian, and
TransUnion. If you find an error in any
of your reports, you should contact the
credit bureau immediately. The FCRA
requires credit bureaus to investigate
a consumer dispute within 30 days. If
your dispute is validated, the inaccurate
information will be removed. The source
of the error must then notify all credit
bureaus to which the information was
sent. If you are not satisfied with the correction, you have the right to add a brief
statement to your credit report about the
nature of the dispute.
Denial of Credit
If you apply for credit, such as a car loan,
and your credit application is denied
because of negative information in your
credit report, the lender is required to
provide the name, address, and telephone number of the credit bureau that
issued the report. You then have 60 days
to request a free copy of the report from
the credit bureau, which must disclose all
information in the report, its source, and
who recently received the report. In addition, you are entitled to receive a copy
of your credit score whenever you apply

for credit, insurance, employment, or a
government benefit and the application is
denied because of your credit score.
You have the right to have the credit bureau reissue corrected reports to lenders
who received an erroneous report within
the past six months or to employers who
received one in the past two years.
Limiting Access
You may exclude your name and address
from credit bureau lists used by creditors
and insurers to make unsolicited offers
of credit and insurance. Requests made
by telephone are good for two years. For
permanent exclusion from such lists, you
must complete a form available from
each credit bureau. To request exclusion
from Equifax, Experian, and TransUnion,
call 1-888-567-8688 or fill out a form online at
If your rights under the FCRA are violated, you can file a lawsuit in state or
federal court against the person who
violated your rights. Under the FCRA, if
you win the lawsuit, you are entitled to
have your attorney’s fees paid.
Combats identity theft, protects privacy, and
improves consumer access to (and the overall
accuracy of) credit reports. It is an amendment to the FCRA.
Free Credit Reports
Since September 1, 2005, consumers have
been entitled to obtain a copy of their
credit reports free of charge from each of
the three main credit bureaus once every
12 months. The reports allow consumers to monitor the number of accounts
and the amount of credit outstanding,
so they can discover and correct errors

in their credit records and make sure
that accounts have not been fraudulently
opened in their names.
You can order all three reports at the same
time, or you can request these reports at
various times throughout the year. Some
financial advisors suggest that you review
one of your three credit reports every four
months. This scheduled review will help
you detect errors and monitor changes in
your credit profile.
However, a report generated by one of
the three main agencies may not contain
all of the information pertaining to your
credit history. If you want a complete
view of your credit record at a particular
moment, you must examine your report
from each of the three agencies.
You can get your free credit reports
under the FACTA by going to www. You can also
obtain your reports by calling 1-877-3228228.
Fraud Alerts
Consumers who reasonably suspect that
they are victims of identity theft or are
military personnel on active duty away
from home can place an alert on their
credit files. The alert will put potential
creditors on notice that they must proceed with caution when granting credit.
Information Available to Victims
Several provisions are aimed at preventing the spread of erroneous credit information and helping consumers recover
their credit reputations after they have
been victims of identity theft:

Credit bureaus must stop reporting
allegedly fraudulent account infor-

mation when a consumer establishes
that he or she has been the victim of
identity theft.

Creditors or businesses are required
to provide copies of business records
of fraudulent accounts or transactions related to them.


Consumers are permitted to report
accounts affected by identity theft
directly to creditors (in addition to
credit bureaus) to prevent the spread
of erroneous credit information.

Credit Scores
Each of the three credit bureaus calculates a credit score for you based on
information in your credit report. Credit
scores measure your creditworthiness.
Your credit score is presented as a number that can fall within a range — usually
from 300 to 850. However, some credit
scoring products use different ranges —
such as 501 to 990. If you obtain multiple
credit scores and the same range was
not used, you cannot directly compare
the scores. For example, a credit score of
720 within the 300 to 850 range is not the
same as a credit score of 720 using the
501 to 990 range.
Creditors rely on credit scores when you
apply for credit. Applicants with high
credit scores are more likely to be approved for credit and obtain good interest rates, whereas borrowers with low
credit scores are more likely to be denied
credit or pay higher rates. It is important
to note that your credit report does not
contain your credit score. If you obtain
a free credit report by calling 1-877-3228228 or through www.annualcredit, you will be offered the
option of obtaining your credit score. The
charge varies depending on the credit

bureau and the credit scoring model
used. However, you are not obligated
to purchase your credit score in order to
receive your free credit report. If you do
not need to obtain your credit report but
are interested in obtaining your credit
score, you can contact the credit bureaus
to purchase your credit score. Contact
information for the bureaus is listed at
the end of this brochure.
Direct Dispute with Creditors
The FACTA allows you to file a direct
dispute with any source that furnishes
inaccurate information about you to the
credit bureaus. You can also file a dispute
with the credit bureaus. The advantage
of the direct dispute is that it speeds up
the process of investigation because you
directly notify the entity furnishing the
disputed information. If you file a direct
dispute, the furnisher must investigate
and notify you of the results of its investigation. If the furnisher determines that
the information it furnished was inaccurate, it must promptly file corrected
information with all three credit bureaus.
Prevents discrimination with respect to
consumers and businesses applying for credit.
It does not require creditors to have the same
standards, nor does it guarantee approval of
loan applications.
The ECOA prohibits lenders from discriminating against consumers and
businesses in all aspects of credit on the
basis of sex, marital status, color, race,
religion, national origin, age, reliance on
income from a public assistance program,
or exercise of rights under the Consumer
Credit Protection Act. Your ability and
intent to repay borrowed funds are the
only acceptable criteria.

Prohibited Information
Credit applications cannot ask about
your sex, race or national origin, marital
status, or age unless you are applying
for the purchase or refinance of your
principal residence. You cannot be asked
your marital status if you are applying
for individual unsecured credit, such as a
credit card. Creditors are also prohibited
from asking about childbearing plans.
Credit for Couples
Spouses have the right to have their
credit histories listed separately, including the accounts they use jointly. Married people have the option of using
their birth name or married name. In the
case of couples who jointly established
credit but whose credit appears in the
name of only one spouse, the other partner has the right to rely on that credit
history as well.
Divorced Individuals
You do not have to reveal income from
alimony, child support, or separate
maintenance unless you want the creditor to consider it in the review of your
Creditors may ask how old you are, to be
certain you have reached legal age to enter
into contracts, and may consider your age
in estimating how long you will continue
to work. However, age may not be used to
deny credit to those 62 or older or because
the applicant’s age exceeds that required
for credit insurance.
Changed Circumstances
The terms of your credit cannot be
changed simply because your life circumstances change. That is, the length,
interest, or other features of loans cannot be changed; you cannot be forced to

reapply; and you may not be terminated
because you change your name or marital status, reach a certain age, or retire.
Applicant Notification
Lenders must notify credit applicants of
their decision within 30 days of receiving a completed application. If credit
is denied, the creditor must provide a
written statement of the action taken, the
reason for denial (or how to request it),
the applicant’s rights under the ECOA,
the name and address of the enforcing
federal agency, and the name and address of the creditor. If you believe that
discrimination has taken place, you have
the right to file suit. Creditors found to
have discriminated unfairly can be held
liable for actual damages and punitive
damages up to $10,000.
Provides for the prompt correction of errors
on open-end credit accounts (department
store credit card accounts, for example) and
protects consumers’ credit ratings while they
are settling disputes.
Creditors are prohibited from reporting an account as delinquent when a
consumer disputes a charge under this
law, which applies to open-end credit
accounts such as credit cards. Consumers
who question the accuracy of an item on
a periodic statement are responsible for
notifying the creditor in writing within
60 days of receiving the bill. The creditor is then obligated to mail or deliver
written acknowledgment within 30 days
and may not do anything to damage the
consumer’s credit rating while the item
is in dispute. The creditor must resolve
the dispute within two billing cycles (but
not later than 90 days) after receiving a
billing-error notice from the consumer.

In addition, under the FCBA, if you use
your credit card to purchase property
or services and have a dispute, you can
notify the credit card issuer about the
dispute and withhold payment for the
property or service to the card issuer as
well as any finance charges that accrue
while the dispute is being investigated.
Also, while the dispute is being investigated, the FCBA prohibits the card issuer
from reporting you as delinquent to the
credit bureaus.
To invoke this right under the FCBA, you
must first make a good-faith attempt to
resolve the dispute with the merchant before notifying the card issuer. In addition,
the amount in dispute must exceed $50,
and the disputed transaction must have
occurred in the same state as your designated address with the credit card issuer
or within 100 miles from that address.
Promotes the fair treatment of consumers by
prohibiting debt collectors from engaging in
unfair, deceptive, or abusive practices.
This act applies to professional debt collectors who attempt to collect on delinquent payments to creditors. The law
does not apply to the original creditor.
Debt collectors are:

permitted to contact persons other
than the debtor only to locate the
debtor or make a reasonable effort to
communicate with the debtor about
the debt.


required to send written notice after
making contact, informing the debtor
of the amount of the debt, the name
of the creditor, and the fact that the

debt will be considered valid unless
disputed within 30 days.

prohibited from harassing, oppressing, or being abusive in collecting
a debt; using threats or obscene
language; publicizing the debt; and
making annoying or anonymous
telephone calls. Debt collectors may
not misrepresent the identity of the
collector, the status of the debt, and
the consequences if it is not paid unless those consequences are lawful
and intended to be taken.

The FDCPA allows you to request debt
collectors to stop contacting you. Although this will not eliminate your debt,
it forces the debt collector to stop contacting and harassing you. To invoke this
right, you must notify the debt collector
in writing that you want him or her to
cease further communication with you.
If you invoke this right, the only permissible way for the debt collector to contact
you is to file a lawsuit to collect the debt.
Consumers can sue in federal or state
court for actual and punitive damages
against debt collectors who violate the
FDCPA. Additional information about
this law and your rights under this law
is available on the Federal Trade Commission’s website at www.consumer.ftc.


The credit reporting agencies (Equifax,
Experian, and TransUnion) have established a single website and toll-free
telephone number for requesting a free
credit report once every 12 months:
Toll-free number: 1-877-322-8228
Annual Credit Report
Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

Equifax —
Equifax Credit Information
Services, Inc.
P.O. Box 740241
Atlanta, GA 30374
Equifax Fraud Division
P.O. Box 740256
Atlanta, GA 30374
To place a fraud alert on your
credit report, call 1-888-766-0008.
Experian —
Experian National
Consumer Assistance Center
TransUnion —
TransUnion Consumer Solutions
2 Baldwin Place
P.O. Box 1000
Chester, PA 19022


Obtain a free TransUnion credit
report under the FACTA:
Dispute information in your
TransUnion credit report:
TransUnion Fraud Victim Assistance
P.O. Box 2000
Chester, PA 19022-2000

Federal Trade Commission
Federal Trade Commission
Consumer Response Center
600 Pennsylvania Avenue, NW
Washington, DC 20580
1-877-FTC-HELP (382-4357)


The Federal Reserve Bank of
Philadelphia has other brochures on
credit topics.
To obtain copies of these brochures, or
for additional copies of this one, please
Federal Reserve Bank of Philadelphia
Public Affairs – Publications
P.O. Box 66
Philadelphia, PA 19105-0066


To view this and other
consumer publications
produced by the Federal
Reserve Bank of Philadelphia,
scan this code with your

Ten Independence Mall, Philadelphia, PA 19106