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Know Your Credit Application Rights

Q:  When I apply for credit, are there any laws or rules about how credit card companies have to handle my application?
A:
 Yes. When you apply for credit, federal laws govern how your application must be handled and processed by the lending institution to prevent discrimination in lending practices. These federal credit protection laws exist to make sure you get fair treatment when you apply for credit.


Q:  What does the law say and how does it get enforced?
A:
 Basically, these laws require all businesses to give you a fair and equal opportunity to get good credit and to keep your credit good. Most credit rights laws put you in charge of enforcement. That means that if the law is violated, you generally must handle the issue yourself or consult a local attorney for help. Most credit rights laws also say that, if you win, then you have the right to try to make the creditor pay your attorney fees.

Q:  What is a credit card company allowed to ask me before giving me credit?
A:
 The Equal Credit Opportunity Act makes it illegal for someone to “credit discriminate” in a credit application. Such discrimination can be based on sex, race, marital status, religion, national origin, age, or receipt of public assistance. Creditors can ask about these things in most circumstances, but they may not use that information to discriminate against you when they are deciding whether or not to grant you credit.

Q:  Who is covered by the Equal Credit Opportunity Act?
A:
 The Act protects people who deal with companies that extend credit on a regular basis, including banks, finance companies, loan companies, retail charge account companies, credit card companies, and credit unions, just to name a few. All of these institutions have to follow and comply with the Equal Credit Opportunity Act. This law also protects businesses that are applying for credit.

Q:  Does a credit card company have to give me credit?
A:
 No, not if there is a legitimate reason for denying you credit. Under the Equal Credit Opportunity Act, you cannot be denied credit because of your race, sex, national origin, marital status, age, religion, or the fact that you receive welfare or public assistance. In fact, in considering your credit application, credit card companies must treat “reliable" public assistance income the same as income from a job.

Q:  If my credit application is turned down, does the company have to tell me why?
A:
 Yes. If you are denied credit from any credit provider, then you have the right to know why they refused you credit and they have to tell you. In most cases you will get what is called an “adverse action notice” in the mail that explains why credit was denied. If the “turn down” was because of something on your credit record, then you have the right to get a free copy of it and make sure that it is accurate. If it is not accurate, you can make a correction on your credit record.

Q:  What can I do if my credit was turned down because of discrimination?
A:  
If your credit application was denied in violation of the law, you may be entitled to compensation, but you will have to enforce the law yourself. You should contact a private attorney who handles credit rights cases.

Q: Where can I get more information?
A:
 You can visit the Federal Reserve Board’s website at www.federalreserve.gov or the Federal Trade Commission’s website at www.ftc.gov . You can also get a copy of your credit record report at www.annualcreditreport.com.

2/3/2013

This “Law You Can Use” column was provided by the Ohio State Bar Association. It was prepared by Dayton attorney Ronald L Burdge of Burdge Law Office Co., LPA.​​

Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

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