7 Credit Protection Laws To Help You Improve Your Credit Scores And Handle Debt Collection Companies

As the economic downturn has progressed, credit repair companies (as well as credit repair scams) have proliferated. Given that the credit information industry is a multi-billion dollar annual business, it has become more important that you understand the laws that protect you in your transactions with corporate interests.

There are quite a few credit protection laws in place to shield consumers from abuses of credit reporting agencies, debt collectors and creditors. One of the biggest mistakes consumers make when seeking credit repair is to overlook the legal credit repair options they have based upon established consumer protection laws. Here are 7 credit protection laws to help guide your credit improvement decision-making.

The Fair Credit Reporting Act of 1970 (FCRA)
The fair credit reporting act is a federal law, originally passed in 1970, that governs how consumer information (and consumer credit information) is collected, distributed and used. It is this law that specifies the responsibilities consumer reporting agencies (CRAs) have toward consumers, as well as the responsibilities "data furnishers" (creditors) have towards the people whose information they share. The FCRA also set the time frames for which reporting agencies can hold consumer information.

Fair And Accurate Credit Transactions Act of 2003 (FACTA)
The Fair and Accurate Credit Transactions Act of 2003 introduced some big changes to the Fair Credit Reporting Act. Under the Fair Credit Reporting Act (FCRA), you are entitled to receive one free annual credit report as a credit consumer. Among the many consumer protections enacted in FACTA is the requirement that merchants truncate credit card, debit card, and social security numbers so that receipts would not include more than the last five digits of the card number.

Fair Debt Collection Practices Act of 1977 (FDCPA)
Questionable practices by debt collectors can range from making harassing phone calls to overstepping their bounds in how they collect information about you (like your contact phone numbers) to using deceptive debt collection letters and forms. The Fair Debt Collection Practices Act was enacted to protect you from false, deceptive, and misleading collection tactics as well as harassment and abuse. Section 807 of the FDCPA actually outlines 17 false or misleading tactics that are prohibited by law.

The Credit Card Act of 2009
This law issued in the most dramatic changes to consumer credit cards in decades and created extensive new protections that gave credit card customers more options for dealing with the banks. Ironically, they may also result in raising the threshold of difficulty for many lower-income families and people with bad credit to obtain credit. It significantly limits lenders' flexibility in issuing interest rate hikes, gave consumers the right to opt-out (with up to a 5 year repayment period on balances), and limited the practice of "universal default"; the practice of raising interest rates on customers based on their dealings with other unrelated credit issuers.

The Fair Credit Billing Act of 1974 (FCBA)
This law governs the conduct of credit issuers when inaccuracies are reported on billing documents. Credit card companies are required to promptly credit payments and correct mistakes without adversely affecting your credit score. It also empowers consumers to withhold payments for damaged goods and to dispute billing errors.

The Real Estate Settlement Procedures Act of 1974 (RESPA)
The Real Estate Settlement Procedures Act was enacted in 1974 to help consumers better clarify settlement costs and to eliminate hidden referrals and kickbacks that could skew the settlement process in ways that harm consumers.

One of our favorite strategies for helping people improve credit scores is to identify scenarios when mortgages have been re-sold to other lenders and to look for RESPA violations (or RESPA-required documentation trails) that give us a leg to stand on in demanding the removal of negative mortgage entries from client credit reports.

The Credit Repair Organizations Act of 1986 (CROA)
This governs the conduct of credit repair organizations in their dealings with you. It was designed to put the clamps on credit repair scams and requires credit repair organizations to provide you with a disclosure statement titled, "Consumer Credit File Rights Under State and Federal Law", and prohibits credit repair organizations from making "a variety of false and misleading statements".

It also requires credit repair organizations to provide their customers with a contract providing detailed description of services and the length contract time. This law has made it easier for legal credit repair companies to deliver services to consumers in greater and greater numbers.