Consumer Credit

Today, there is a wide variety of credit options available to consumers in order to keep up with their financial demands and necessities. These options can range from credit cards to open credit accounts like utilities or cell phone bills.

Some of the most common types of credit that you may be eligible for include:

• Credit cards: Most consumers are already familiar with the type of credit associated with a credit card account. Credit cards, also classified as a revolving credit account, allow a consumer to borrow a line of credit that can be used to pay for various items up to a certain amount. The balance then carries over to the next month and will eventually start to accrue interest until the cardholder has paid off their debt in full.
• Charge cards: Charge cards operate in almost the same manner as credit cards. The main difference between the two is that unlike a credit card, the balance on a charge card must be paid in full each month or else the cardholder will be subject to penalty fees.
• Mortgage loans: Although mortgage loans are generally provided by banks and other lenders when someone decides to purchase a house or other real property, a mortgage loan is a great way to build up a credit history; just so long as it is paid in full and on time each month.
• Open credit accounts: As mentioned, open credit accounts refer to recurring monthly bills from services like your cell phone or for utilities (e.g., power and gas). While such payments will not always appear on a consumer's credit report, they can be counted against you if you are late or default on payments.

Why Can't I Get a Credit Card? Do I Have Bad Credit?

Aside from having a bad credit score, there are many other reasons why a bank or credit card company may reject a consumer's application for a credit card. While having a bad credit history is the most standard reason, some other common reasons as to why a consumer may not be able to obtain a credit card include the following:

• A consumer has either closed too many credit card accounts in a short period or has too many credit card accounts open at this time;
• The consumer has a history of constantly defaulting, missing, or making late payments;
• A consumer has recently submitted several credit applications within the span of a year;
• The amount that a consumer owes in debt on their current accounts are too high; or
• A limit offered by a specific credit card is higher than a consumer's income.

It should be noted that private companies known as “credit reporting agencies” are responsible for keeping track of such records. These agencies compile all of the above reasons into a document called a “credit report”, which then gets distributed to banks and other financial institutions. Thus, if a person's credit report or credit history displays one of the above factors, then this will often cause a bank to reject their credit application.

How Can I Request a Copy of My Credit Report?

In 1970, Congress passed a federal law known as the Fair Credit Reporting Act (“FCRA”). Among many of the consumer rights that this Act provides for, one of the most important is that it enables a consumer to obtain a free copy of their credit report from one of the three following nationwide credit reporting agencies:

• Experian;
• Equifax; and
• TransUnion.

In order to request a copy of a credit report, a consumer may visit the website for any of these three credit reporting agencies where they will be able to find more information regarding this process. In most instances, a consumer will simply be directed to submit their request either through an online submission portal, by calling a toll-free number provided on any of their websites, or by sending a request through the mail.

The three credit agencies have since joined together to create a single website where consumers can submit up to six requests for a copy of their credit report per year. The website can be accessed through a link entitled, annualcreditreport.com.

What Can I Do to Improve My Credit Rating?

Improving a credit score or rating is not always as simple as clicking a button. An agency will need to open an investigation to ensure that what a consumer is claiming can be verified. For example, a consumer who submits a complaint stating that their credit report contains an error, will need to wait until the relevant agency finishes investigating the error before their credit score or rating can be fixed.

Therefore, any agency or other business that claims to be able to fix a consumer's credit score in little to no time, is most likely either running a scam or at the very least untrustworthy. Some other more reliable methods that a consumer can use to try and improve their credit rating include the following:

• Schedule payment reminders: One of the easiest solutions to avoiding a bad credit rating is by scheduling payment reminders. Being able to make payments towards a credit card balance on time and not missing monthly payments is one of the biggest contributing factors to a consumer's overall credit score. Thus, it may be worth scheduling payment reminders or enrolling in automatic payment systems.
• Decrease the amount of debt owed: If at all possible, a consumer should start decreasing the amount of debt they owe on their credit card balance. Reducing credit card debt will gradually increase a credit score rating over time and can help to establish a solid credit history.
• Alert a credit bureau to good behavior: In cases where a credit score is on the lower end of the rating spectrum, it might be helpful to notify a credit bureau about accounts where a consumer has consistently paid on time, but are not listed on their credit report.
• Review a credit report for errors: A consumer who discovers an error on their credit report should contact a credit bureau immediately and request that they correct the error. Such errors can have a drastic impact on a person's credit rating. Therefore, the sooner it is fixed, the better their chances are of regaining an accurate credit score.
• Continue to use a credit card: Again, if possible, a consumer should strive to make their monthly credit card payments on time. A consumer should also continue to use a credit card, even when they have no real need for it. This will demonstrate to credit bureaus that they are responsible and capable of managing their own finances.

Unlike some countries, which are cash-based, the United States is a credit-based society. Briefly, a credit-based society is a society in which credit dictates what an individual can and cannot do based on their ability to secure credit.

For instance, credit enables individuals to purchase homes, attend post-secondary educational programs, and operate businesses. These are all activities that make it possible for people to support themselves as well as their loved ones.

The ability to secure credit or a loan typically depends on one's credit score and financial history. In the past, many lender decisions were contingent on factors that had no bearing on a person's financial history. Instead, some lenders engaged in credit discrimination practices that made it difficult for certain groups of people to access lines of credit, which in turn, prevented them from gaining opportunities like buying a home or attending college.

In reaction to these practices, Congress passed the Equal Credit Opportunity Act (“ECOA”) in 1974, which makes it illegal for a creditor to discriminate against a person during any aspect of a credit transaction due to their race, national origin, sex, gender, age, religion, color, or because they receive public assistance benefits.

Some common examples of situations that might signify that a creditor is partaking in credit discrimination may include:

• Asking if you are divorced or widowed (note that creditors must use specific language to refer to either of these statuses);
• Imposing different conditions or terms, such as a higher interest rate for a loan, simply because of your sex, religion, color, and so forth;
• Discouraging you from applying for credit or rejecting an application based on your marital status, national origin, age, and so on;
• Evaluating the race of persons living in the neighborhood where you intend to purchase, refinance, or renovate a home with the money you are being loaned;
• Refusing to let you borrow money or receive a line of credit, even if you have a perfect credit history and there is no genuine reason that would make you ineligible; and
• Ignoring consistent streams of income from alimony, public assistance benefits, pensions, part-time jobs, and so on to reject your credit application or to deny your request for a loan.

It is important that consumers keep this information in mind when applying for or participating in a credit transaction. The more alert you are to such wrongful conduct, the better equipped you will be to spot warning signs that may indicate a creditor is making decisions based on discriminatory motives. This will not only help you to avoid becoming a victim of credit discrimination, but reporting an incident can also assist in protecting others from these practices.

In addition, it should be noted that some applications may be rejected for legitimate reasons, such as if your credit report contains an error. Thus, if you suspect that this may have been the reason that your credit application was rejected, then you have a right to obtain a free copy of your credit report under the Fair Credit Reporting Act (“FCRA”).

To learn more about illegal credit discrimination practices or to find out whether your application was denied for a legally permissible reason, you should contact a local credit lawyer for further legal advice on the matter.

How Can I Protect Myself from Credit Discrimination?

There are a number of ways that a consumer can protect themselves from credit discrimination. First and foremost, a consumer can educate themselves about illegal credit discrimination practices and look out for any warning signs, even the ones that may seem insignificant.

Basically, if a consumer is being pre-judged because of their national origin, sex, age, race, or any other basis that includes the protected groups of people mentioned above, then a claim for credit discrimination may exist. If a consumer is not sure whether an incident would qualify as credit discrimination, they should consult a local credit lawyer immediately for further legal advice.

If a consumer is not prepared to hire a lawyer yet, they may also visit the websites of multiple federal and state agencies where they can find free materials on credit discrimination and the different steps they can take to help resolve their issue. Some government agencies that handle credit discrimination claims include the U.S. Federal Trade Commission (“FTC”), the U.S. Consumer Financial Protection Bureau (“CFPB”), and a state Attorney General's office.

A consumer may also be able to raise the issue with a creditor directly. In some instances, a creditor may be willing to review an application a second time and can clear up an error or misunderstanding. Other issues may require the assistance of an agency, investigator, and/or a court.

For instance, when an investigation has been opened against a creditor, the investigating agency will typically seek out a pattern of discrimination against a protected class of persons over a period of time.

If the investigator finds solid evidence that a large portion of applicants included in a protected class of persons have been denied at a greater rate when compared to applicants of other classes who are similarly situated financially, then this may be a sign of discrimination.

A consumer can also report suspected violations to their state Attorney General's office or another government agency. All creditors must provide the name and address of the relevant government agency to contact when an applicant has been denied a line of credit. In addition, creditors must also provide specific reasons as to why they denied a person's application. Some acceptable reasons for denying an application for a line of credit or a loan include:

• Having too low of an income or salary;
• Having a high amount of credit card debt;
• Submitting an incomplete application;
• Having a low credit score;
• Having a short employment history; and/or
• Having a history of defaulting on, missing, or continuously making late payments.

On the other hand, creditors who offer vague or ambiguous reasons as to why they denied an application, will fail to meet the requisite legal standards. Thus, a consumer may be able to report the creditor for a violation or file a lawsuit against them in a federal district court. If a particular creditor's actions have impacted enough applicants, then that pool of applicants may also be able to bring a class action lawsuit against the offending creditor. 

Do I Need an Attorney to Help Me with My Credit Problems?

It is essential that you maintain a good credit score. Otherwise, you could have trouble securing a loan, getting an extension on a line of credit, or even renting an apartment. In other words, credit problems can make navigating daily life a lot more difficult if you fail to resolve them. Therefore, you may want to seriously consider consulting a local credit lawyer if you are experiencing issues with your credit report or are involved in a dispute concerning a credit problem. A lawyer who has experience in handling matters related to credit issues can review your credit report for mistakes and will be able to use their findings to determine whether a credit agency or other financial institution potentially violated a credit regulation. Your lawyer can recommend different options of legal recourse, such as submitting a claim to the appropriate credit bureau, bringing a lawsuit against a credit agency, and/or filing for bankruptcy, and can assist you in navigating the legal procedures for whichever option you decide to pursue. Your lawyer can also discuss how the outcome of each option may affect the rest of your life and can explain the various rights you have as a consumer under the relevant laws. Alternatively, your lawyer can also negotiate with creditors on your behalf to find an easier solution and can offer advice on various ways that you may be able to increase your current credit rating. If you are having trouble with obtaining a copy of your credit report, your lawyer will be able to assist with this type of credit problem as well. Additionally, should you need to appear in court for any of the above matters, your lawyer can also provide legal representation in court or at a meeting with your creditors.

Proving that a creditor is engaging in discriminatory credit practices can often be very difficult to prove. Credit discrimination cases are largely fact-based and thus usually require lots of evidence to support such claims. There are also a number of complicated legal procedures and laws to comply with in order to properly file such claims. In some instances, a consumer may even need to consider violations of state laws, as opposed to only federal statutes. Accordingly, it may be in your best interest to hire a local credit lawyer if you believe that a creditor has rejected or denied your credit application solely based on discriminatory reasons. An experienced credit lawyer can assist you in investigating your claim and gathering evidence. Your lawyer can also discuss the various options you may have for legal recourse and can advise you on whether it may be worth pursuing damages or initiating a class action lawsuit. In addition, your lawyer can help you navigate the different legal procedures associated with credit discrimination claims and can provide legal representation in court if necessary. Your lawyer can also communicate with a creditor on your behalf to further inquire about the reasons as to why your credit application may have been