What is the Lending Act and Fair Credit Reporting Act?

Understand The Truth in Lending Act

The government passed the Truth in Lending Act back in 1968. It was intended to make sure that you the consumer are fairly treated by lending businesses. You must be correctly informed on the real cost of the credit. The TILA makes lenders reveal all credit terms in a manner that is easy to understand so that you can knowingly comparison shop interest rate terms and conditions. 

This act requires that they furnish you with Truth in Lending disclosure statements. These must include your loan’s amount, its annual percentage rate, payment schedule, repayment time for the life of the loan, and finance charges (to include late charges, application fees, and prepayment penalties). 

These rules only apply to closed end credit accounts, like car loans or mortgages, or open ended accounts such as credit cards. 

The act does not restrict the amount of interest a bank charges or if they must approve a given loan. Instead, it makes them reveal in easy to understand terms all costs and fees that come with the loan. This act is also called Regulation Z for short. 

Issuing a Consumer Statement

In case you have derogatory information contained on your credit report, you possess the rights from the Fair Credit Reporting Act to get a consumer statement attached to your own credit report. The idea behind the statement is to permit you to explain why you got behind on your bills or would not pay a certain bill that you owed. Your reasons could range from a creditor not having kept their arrangement as agreed to having unexpectedly lost your job. 

The purpose to such a statement on your credit report is for damage control. It is possible that potential lenders might read the statement and then opt to approve you for credit even with a poor credit rating. After the statement has been attached to your credit report, the bureaus are made to furnish your consumer statement to any individual or organization that requests futures copies of your credit reports. 

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