Your credit has a lot of influence on your financial well-being.

With good credit, you have a better chance of qualifying for loans, credit cards, and more. The higher your credit, the less you’ll generally pay in interest charges and deposits.

On the other hand, bad credit can make your life much more difficult. When you are struggling with credit issues, it can be difficult to qualify for financing, find housing, or even get a job. Bad credit also complicates financial matters, as the cost of many things – from car insurance premiums to interest rates on mortgages, loans, and other financing – tend to be much higher.

Because of the huge influence that credit has on your life, it is really important that the credit reporting agencies and the data providers that provide them with information get your information correct. It’s bad enough when a legitimate mistake damages your credit, but it can be extremely frustrating when your credit is damaged without you being responsible for it.

Legal protections

Fortunately, there are many laws that have been written to protect you from unfair consumer credit and debt abuse practices. There are so many federal and state laws that it can be difficult for the average person to keep them all straight and figure out how they come together to work for you.

While you will probably never memorize all the protections you are entitled to regarding your credit, you can familiarize yourself with your rights under two of the most important federal consumer protection laws – the Fair Credit Reporting Act and the Fair Debt Collection Practices Act.

Here are some highlights on how each law works to protect you.

The Fair Credit Reporting Act (FCRA)

The FCRA was originally adopted in 1970 to ensure that the information in your credit reports is accurate, fair and private. Anyone who creates consumer reports (such as credit bureaus, tenant screening companies, LexisNexis, etc.) and anyone who provides information to a consumer reporting agency (eg lenders, creditors, collection agencies, etc.) must follow the rules in force. set out in the FCRA.

According to the FCRA, you are entitled to the following rights:

1. Whenever information in a consumer report is used against you – to deny an application for credit, employment, or insurance or to charge you higher fees or premiums – you need to let you know. This is called a notice of adverse action.
2. You can request a copy of any information a consumer news agency has about you (often free of charge).
3. You have the right to request a free copy of your credit report once every 12 months from each of the credit reporting agencies and each special consumer reporting agency.
4. You are allowed to claim your credit score, but you may need to pay for it.
5. If you find incomplete or incorrect information on a credit report or consumer report, you can dispute it and the consumer reporting agency should investigate your complaint.
6. Any incorrect, incomplete, or unverifiable information should be corrected or deleted from your consumption report (including credit reports) if you dispute an item and it is not verified – usually within 30 days.
7. Negative information typically can’t stay on your credit report for more than seven to 10 years, depending on the item.
8. Only someone with an “authorized purpose” is allowed to access your credit report – such as a business reviewing your credit application, an insurance provider, a homeowner, or an employer to whom you have given written permission.
9. Credit bureaus may sell your credit information to card issuers and insurers for “prequalified” marketing purposes, unless you opt out.
10. You can sue a consumer reporting agency, credit bureaus, or data provider if they violate any of your rights.

Fair Debt Collection Practices Act (FDCPA)

The FDCPA was originally passed in 1977 to prevent debt collectors from being unfair, abusive or deceptive when attempting to collect consumer debts. The law, enforced by the Federal Trade Commission, applies to third-party debt collectors, such as collection agencies or debt buyers, but generally not to original creditors.

According to the FDCPA, you have the right to the following rights:

1. Debt collectors can only call you between 8 a.m. and 9 p.m. – based on your local time zone, not where the collector is located.
2. If you tell a collection agent that you are not authorized to receive calls at work, they cannot call you there.
3. You can send a letter (certified by a “return receipt” is preferable) asking a debt collector to stop contacting you. Be careful, this could trigger a debt collection pursuit if that’s the only way to leave a collection agency to collect the debt.
4. Debt collectors are not allowed to discuss your debt with anyone other than you, your spouse, or your lawyer. But a debt collector may contact other people, usually just once, to ask for your contact details.
5. You should receive written notice from a debt collector stating how much you owe, the name of the creditor you owe, and instructions on what you can do if you don’t think debt consolidation is yours.
6. If you are contacted about a debt and think you don’t owe it, you can request that the debt be verified.
7. Debt collectors cannot:
   • Threaten you
   • Curse or use obscene language
   • Pestering you with repeated phone calls
   • Lie about what you owe
   • Falsely claiming to be a lawyer or working for the government
   • Say you’ll be arrested if you don’t pay
   • Threatening legal action (unless they really intend to sue you)
   • Charge interest or fees unless the original contract and / or state law permits
   • Deposit a post-dated check early
   • Threatening to take (or take) your property without legal authorization to do so
   • Take money from your paycheck without a court order (aka garnishment)
   • Seize money in your bank account without a court order
8. You can sue a debt collector if they violate any of your rights.

What can you do if you think your rights have been violated?

The FCRA and FDCPA both give you the right to take legal action against companies that you believe violate your rights. This can include the credit bureaus themselves, your creditors, and third party debt collectors.

But how common is it for people to sue debt collectors or credit bureaus? This can happen more often than you think. According to WebRecon, more than 4,400 FCRA and FDCPA lawsuits were filed from January to April 2019 alone. In 2018, a total of 13539 prosecutions have been filed in the United States, alleging violations of the FCRA or the FDCPA.

If you are having trouble with incorrect credit reports or an abusive debt collector and are unable to resolve the situation on your own, you may consider contacting a consumer protection attorney for advice. Depending on your situation, an FCRA or FDCPA lawyer may be willing to represent you and help you sue a creditor or a credit bureau if the company appears to be breaking the law.

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