As granting of credit became more widespread, it was determined that some lenders were taking advantage of the consumer's lack of understanding about exactly what rules and consequences were attached to the credit and loans which they received.
Beginning in 1968, the U.S. Congress has passed a series of credit related laws, intended to protect consumers from lending practices which are deemed to be unfair. It is important that consumers understand these laws to avoid unneeded worries and to prevent costs.
The Truth in Lending legislation which has been passed is designed to make information on your potential credit or loan available and available in a standardized format so you can see exactly what you are borrowing and for how long. According to the law, lenders must state the charges associated with the loan in a clear and uniform format so that it is easy for you to compare and contrast prices from various lenders.
Two figures which must appear on any lending offer include the finance charge and the annual percentage rate.
The finance charge is the total amount which the credit will cost you, expressed in dollars. The figure encompasses interest, service charges and carrying charges, if any.
The annual percentage rate is the amount your credit will cost you expressed as an annual rate.
These two figures will allow you to compare prices on loans, but you should also consider other factors when comparing loans, such as the down payment amount and the time period for repayment.
It's important to remember that the Truth in Lending Act doesn't determine how much can be charged by the lender, simply that it must be expressed in a way that is uniform and understandable.
Another important piece of legislation is the Equal Credit Opportunity Act which states that you cannot be denied credit because of such reasons as age, national origin, religion, marital status, sex, color or race. You are also not to be denied credit because of receiving public or private assistance money or because you have exercised your consumer credit rights under the law.
The law provides for written notification within 30 days if you are denied credit, along with the specific reasons or of your right for an explanation of the reasons. You must be told the reporting agency on which the denial was based and how to contact them.
This agency must then provide you with a copy of your credit file at no charge.
The Fair Credit Reporting Act specifies how the credit reports can be used and limits the retention time for negative information in your file.
It also establishes the method for correcting errors which appear in your file. Procedures to follow when a dispute occurs over your credit are included in the Act.
With this legislation in place, consumers can be assured of their rights to information and fair credit practices.
Gus Taperman holds a Bachelor's degree in Commerce and completed his master's in Business Administration . He is working as writer and financial consultant to find a Personal loans, Debt consolidation, home equity loans at cheap rates visit www.taperman.com