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Maintaining your Credit Rating |
The best way to maintain your credit standing is to repay all credit card debts on time.
But there may be complications. To protect your credit rating, you should learn
how to correct mistakes and resolve misunderstandings.
When there’s a problem, first try to deal directly with the bank. Credit
laws can help you settle your complaints without hassle.
What Laws Do Apply?
THE FAIR CREDIT BILLING ACT establishes procedures
requiring banks to
promptly credit your payments and correct billing mistakes and allows you to
withhold payments on defective goods.
TRUTH IN LENDING ACT gives you three days to change your
mind about certain
credit transactions that use your home as collateral; it also limits your risk
on lost or stolen credit cards.
Billing Errors
The Fair Credit Billing Act requires banks to quickly correct errors
without damage to your credit rating.
A Case of Error? The law defines a billing error as any charge:
- for something you didn’t buy or for a purchase by someone not authorized to
use your account
- that is not properly identified on your bill or is for an amount different
from the actual purchase price, or was entered on a date different from the
purchase date
- for something that you did not accept on delivery or that was not delivered
according to agreement. Billing errors also include
- computational errors
- failure to show a payment or other credit to your account
- failure to mail the bill to your current address, provided you told the
bank about an address change at least 20 days before the end of the billing
period
- an item on your bill for which you need more information
In Case of Error. If you think your bill is incorrect, or you want more details,
follow these steps:
1. Notify the bank in writing within 60 days after the first
bill was
mailed that showed the error. Be sure to write to the address the bank lists
for billing inquiries and to inform the bank of:
- your name and account number
- your believe that the bill contains an error and why
- the date and suspected amount of the error or the item that you want
explained
2. Pay all transactions of the bill that are not in dispute.
But while waiting
for an answer, you do not have to pay the amount in question (the “disputed
amount”) or any minimum payments or finance charges that apply to it.
The bank must acknowledge your letter within 30 days unless the problem
can be resolved within that time. Within two billing periods, but in no case
longer than 90 days, either your account must be corrected, or you must be told
why the bank believes that the bill has no errors.
If the bank made a mistake, you do not pay any finance charges on the
disputed amount. Your account must be corrected, and you must be sent an
explanation of any amount you still owe.
If no error is found, the bank must send you the reasons for that finding and
promptly send a statement of what you owe, which
may include any finance charges that have accumulated and any minimum payments
you missed while you were questioning the bill. You then have the time usually
given on your type of account to pay any balance.
3. If you still are not satisfied, you should notify the bank in
writing within the time allowed to pay your bill.
Maintaining Your Credit Rating.
A bank may not
threaten your credit rating while you’re resolving a billing dispute.
Once you have written about a possible error, a bank must not release
information to other banks or credit bureaus that would hurt your credit
rating. And, until your complaint is resolved, the bank also cannot take
any action to collect the disputed amount.
After the bank has explained the bill, if you do not pay in the time
allowed, you may be reported as delinquent on the amount in dispute, and the
bank may take action to collect. Even so, you can still disagree in writing.
Then the bank must report that you have challenged your bill and give you
the name and address of each person who has received information about your
account. When the matter is settled, the bank must report the outcome to
each person who has received that information. Remember that you may tell your
own side in your credit record - to the credit bureaus - with a 100-word explanation.
Defective Goods or Services
Your new sofa arrives with only three legs. You try to return it; no luck.
You ask the merchant to repair or replace it; still no luck. The Fair Credit
Billing Act allows you to withhold payment on any damaged or poor-quality goods
or services purchased with a credit card, as long as you have made a real
attempt to solve the problem with the merchant.
This right may be limited if the card was a bank or travel and entertainment
card or any card not issued by the store where you made your purchase. In such
cases, the sale must have been for more than $50 and must have taken place in
your home state or within 100 miles of your home address.
Prompt Credit for Payments and Refunds for Credit Balances
Banks generally will not charge a finance charge if you pay your account
within a certain period of time, called a grace period. In this case, it
is especially important that you get your bills, and get credit for paying them,
promptly. Check your statements to ensure that your bank follows these
rules:
Prompt Billing. Look at the date on the postmark. If your account is
one on which no finance or other charge is added before a certain due date, then
banks must mail their statements at least 14 days before payment is due.
Prompt Crediting. Look at the payment date entered on the statement.
Banks must credit payments on the day they arrive, as long as you pay
according to payment instructions, for example, sending your payment to the
address listed on the bill.
Credit Balances. If a credit balance results on your account (for
example, because you pay more than the amount you owe or you return a purchase
and the purchase price is credited to your account), the bank must make a
refund to you. The refund must be made within 7 business days after your
written request or automatically if the credit balance still in exists after six
months.
Lost or Stolen Credit Cards
If your wallet is stolen, your greatest cost may be inconvenience because
your liability on lost or stolen cards is limited under Truth in Lending. You do
not have to pay for any unauthorized charges made after you notify the card
company of loss or theft of your card. So keep a list of your credit card
numbers and notify card issuers immediately if your card is lost or stolen. The
most you will have to pay for unauthorized charges is $50 on each card even if
someone runs up several hundred dollars worth of charges before you report a
card missing.
Cards you did not Request
It is not legal for card issuers to send you a credit card unless you ask for
or agree to receive one. However, a card issuer may send, without your request,
a new card to replace an expiring one.
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