Chapter 17 Two Truths and a Lie

Question #1 Your credit history is the complete record of your borrowing and repayment performance. Before granting you credit, a creditor will inquire about your past credit performance. A credit history is a company that gathers, stores, and sells credit information to business subscribers.

Question #2 When you have credit accounts, the creditors report your status to the credit bureaus on a monthly basis. You are allowed 3 free credit reports from each credit bureau each year. When you sign up for a free credit report from www.freecreditreport.com, you are enrolled in a monitoring program trial where you will have to pay if you do not cancel within one week.

Question #3 Types of information that can be on your credit report: Public records Credit account details Your cosigner’s credit information

Question #4 Character is a responsible attitude toward living up to your agreements. Capacity is having the financial ability to repay a loan based on your current income. Capital is property pledged to assure repayment of a loan.

Question #5 Creditors will look to see if you meet all of the types of criteria to ensure you are creditworthy. Creditors will look only to see if you have enough money to pay off the debt before granting you credit. The state of the economy can affect your ability to repay a debt.

Question #6 When starting out with credit, Opening a store credit account is a good step because the interest rates are lower. You should have a savings and checking account to prove you are responsible with money and are able to pay bills. You may need a cosigner when you open your first credit account.

Question #7 The Consumer Credit Protection Act: Is also known as the Truth in Lending Law Requires lenders to fully inform consumers about all costs of a credit purchase before an agreement is signed. Limits the consumer’s liability to $500 after the consumer reports a credit card lost or stolen.

Question #8 The Fair Credit Reporting Act: Allows you to see your credit report for a fee within 30 days of being denied credit. Requires that a listing of requests made for your file for credit purposes in the last 6 months should be made available to you. Allows you the right to have inaccurate information in your credit report investigated, corrected, and deleted from your file and have a new report furnished to creditors.

Question #9 The Fair Credit Billing Act: Ensures you that creditors must resolve billing errors within a specified time period. Requires creditors to have a written policy for correcting billing errors. Requires that the creditor must acknowledge your complaint within 60 days.

Question #10 The Fair Credit Billing Act: Requires you (if you have an error) to inform your creditor in writing within 60 days of receiving the statement. The creditor must either correct it or show why the bill is correct. Allows the customer to not be liable for other charges while the investigation is taking place.

Question #11 In the Equal Credit Opportunity Act: Credit cannot be denied solely because you are a woman, single, married, divorced, separated, or widowed. Credit can be denied because of religion, national origin, or age. Credit applications can be oral or written.

Question #12 In the Equal Credit Opportunity Act: Creditors must notify you of any action taken on your credit application within 2 days of submission. If you are denied credit, it must be in writing. If you are denied credit, it must list a specific reason for the denial.

Question #13 In the Fair Debt Collections Practices Act Creditors are allowed to threaten and make false or misleading statements to intimidate the customer into paying. Debt collectors can only contact you during certain times of the day. Debt collectors are required to verify the accuracy of the bill and give the consumer the opportunity to clarify and dispute it.

Question #14 Experian is a major credit bureau. Equifax is a major credit bureau. Transcredit is a major credit bureau.

Question #15 The higher your credit score, the better interest rates you can get on a loan. By using credit responsibly, you can establish and build a good credit rating. Late fees, missed payments, etc. will not stay on your credit report for long.