Credit Cards
What is a credit card?
Credit is a contract between a consumer and a credit issuer. A credit issuer may be a bank, a credit card company or other lender. A credit card is an indication to merchants that the person holding the card has a satisfactory credit rating and that, if credit is extended by the merchant, the credit issuer will pay or insure that the merchant will receive payment for his or her merchandise.
By using a credit card, a cardholder is making an implied representation that he or she intends to pay the credit issuer for the charges made.
Who is a cardholder?
The Truth in Lending Act defines "cardholder" as "any person to whom a credit card is issued or any person who has agreed with the card issuer to pay obligations arising from the issuance of a credit card to another person."
What is authorized use of a credit card?
Authorized use of a credit card is when a cardholder freely allows someone else to use his or her credit card. There is no fraud, theft or duress involved. In this situation, the cardholder is liable for the charges, even if the person charges more than they were told they could.
What is unauthorized use of a credit card?
Unauthorized use of a credit card is use of the card by any person other than the cardholder who does not have actual, implied or apparent authority for its use.
I bought something with a credit card and I am not satisfied. What do I do?
The Fair Credit Billing Act allows you to withhold payment for inferior or damaged goods or poor quality services. However, you must first make a real attempt to solve the problem with the merchant or service provider. You should then notify the card issuer of your claim.
TIP: If you made the purchase with a bank credit card as opposed to a store card, your right to withhold payment is limited to purchases that are more than $50 and that were made in your home state or within 100 miles of your home address.
If you refuse to pay for defective goods or services, the creditor may sue you for payment. If the court finds that the goods or services were defective, you will not have to pay for them.
I have been receiving bills for a credit card that I do not own. What do I do?
Under the Truth in Lending Act, a cardholder is liable for the unauthorized use of a credit card only if:
- the card is an accepted credit card;
- the liability is not in excess of $50;
- the card issuer gives adequate notice to the cardholder of the potential liability;
- the issuer provided the cardholder with a description of means by which the issuer may be notified of the loss or theft of the card;
- the unauthorized use occurs before the card issuer has been notified that an unauthorized use of the credit card has occurred or may occur as the result of loss, theft or otherwise; and
- the card issuer has provided a method through which the user of the card can be identified as the person authorized to use it.
Should I notify the credit card company that my card has been lost?
Yes, if someone steals, borrows or otherwise uses your credit card without permission, you should immediately make a report to your credit card company. You do not have to pay any unauthorized charges made after you notify the credit issuer. Under the Truth in Lending Act, the most you will have to pay for charges made before you notify the credit issuer is $50 on each card.
What do I do if I think there is a mistake in charges on my credit card?
To dispute the amount you owe on you credit card, look at the back of your bill. It contains information about how to go about raising a dispute, including the proper address to use. You must raise a dispute in writing within 60 days of the first bill with the improper charge and include your name and account number, the dollar amount in dispute and the reason for the dispute.
Once you raise a dispute, the credit card company must investigate and report back to you in writing. Until the dispute is resolved, you do not need to pay the disputed portion of the bill.
What does a credit repair company do?
A credit repair company charges anywhere from $50 to $1,000 to "fix" your credit report. Often, these companies take your money and do nothing to improve your credit.
Should I use a credit repair company?
Probably not. The FTC and a number of state attorneys general have sued credit repair companies for falsely promising to remove bad information from credit reports.
Keep in mind the following:
- Your credit history is maintained by private companies called credit bureaus that collect information reported to them by banks, mortgage companies, department stores and other creditors.
- These credit bureaus can legally report accurate negative credit information for 7 years and bankruptcy information for 10 years.
- Accurate items that are within the 7-year (or 10- year) reporting period cannot be erased from your credit record by companies advertising "credit repair" services.
- The only information in your credit report that can be changed are items that are actually wrong or beyond the 7-year (or 10-year) reporting period.
TIP: The only things that a credit repair company can legitimately do-remove genuine mistakes or outdated items in your credit report-you can do yourself for free.
What is in my credit report?
A standard credit report contains personal information, account information and public record data, as well as a listing of credit inquiries and credit scoring. Credit scoring is the credit bureau's numerical assessment of you as a credit risk.
Companies examine your credit report before deciding whether to give you credit. When a company denies your request for credit because of your credit report, it must tell you so and identify the credit bureau that supplied the report.
Where can I get my credit report?
To receive a copy of your credit report, contact the following credit bureaus:
- Equifax: 800.685.1111
- Experian: 888.397.3742
- Trans Union: 800.916.8800
I got a copy of my credit report. Now what do I do?
Once you receive your credit report, carefully analyze it, checking for these common problems:
- inquiries made without your approval;
- errors in personal information listed on the report;
- credit or collection accounts you did not create;
- negative ratings on accounts which do belong to you;
- information more than 7 years old (10 years for bankruptcy); and
- public records information which is erroneous.
If there is information in your credit report more than 7 (or 10 for bankruptcy) years old, contact the credit bureau and ask them to delete it.
If there are mistakes, notify the credit bureau of the problem. The bureau must reinvestigate the disputed information at no charge to you. It then must correct any mistake or delete any information it cannot verify. Request that the bureau send a corrected copy of your report to anyone who received the incorrect version within the past 6 months.
You should also contact the creditor directly to notify them of the mistake and ask them to correct their records.
If you are unable to resolve the problem, you can file a written statement of up to 100 words with the credit bureau explaining your side of the story. This explanation will be included in your credit report.
TIP: If you do not understand something in your credit report, ask. The credit bureau is required by law to explain your report to you.