Credit is an established part of American life. It can be a valuable tool permitting you to purchase a home or a car, finance an education, or take advantage of special sales and offers. Unwise use of credit, however, will lead to financial problems. Knowing your legal rights and remedies is a first step to resolving those problems.

Your Credit Report

Your credit report is an essential element for a sound fiscal future. Employers, insurance agencies, and future creditors use the report to obtain information about you. Your credit report is such an important document that the law gives you certain protections against the reporting of incorrect information.

How To Obtain a Copy of Your Credit Report:

If you were denied credit, you should obtain a copy of your report to verify that the information is correct. You have the right to know which credit reporting agency prepared the report that was used to deny you credit. Under state law, you have the right to a free copy of your credit report within sixty days of being denied credit.

You also are entitled to one free copy of your credit report per calendar year, even if you were not denied credit. Consider requesting a copy every year to ensure your report is without errors. ( M.G.L. c.93, § 59)

Correcting Your Credit Report:

If there is incorrect information in your credit report, you may ask the credit reporting agency to investigate. The agency must investigate your claim within 30 business days by asking the creditor in question to review its records, unless the agency believes that the dispute is "frivolous or irrelevant." The credit reporting agency must correct, complete, or delete any information that is erroneous, incomplete, or unverified ( M.G.L. c.93, §58).

Additionally, negative information that is more than seven years old cannot be included in your credit report. There are several exceptions to this rule; the main one is bankruptcy, which may be reported for up to ten years ( M.G.L. c. 93, §52).

If you disagree with the results of the credit bureau's investigation, you have the right to prepare a brief statement that explains your version of the dispute. The credit reporting agency will then include this statement with your credit report each time it sends out the report ( M.G.L. c.93, §58).
 

If You Have Credit Problems:

If there is legitimate negative information in your credit report, there is nothing you can do to change it. Negative information includes late payments, bankruptcy, liens, and accounts given to a collection agency.

Negative information in your files does not necessarily mean that you will be denied additional credit. Different creditors review your credit history in different ways.

Credit repair clinics offer to "fix" your credit record for a certain fee. These clinics cannot remove or change correct information on your credit record. You can do at little or no cost anything that a credit repair clinic can do. (See Credit Problems: What to Do.)
 

Getting Off Credit Card Mailing Lists

Credit reporting agencies allow businesses to prescreen your credit report to determine whether they want to send you a credit card offer. For example, offers from credit card companies that say, "You've been pre-approved," use a prescreening process. If you do not want to allow your credit report to be prescreened, you can now "opt out" of the process by calling
1-888-5-OPT-OUT.

There is no way to stop all junk mail, but this step can eliminate offers from companies that use the credit reporting agencies.

Debt Collection

If you are having credit problems, it is important to know what creditors and collection agencies may and may not do to collect debts.

The state Consumer Protection Act prohibits some debt collection practices. ( M.G.L. c. 93A, §2(c), 940 CMR 7.00) When dealing directly with you, creditors and collection agencies may not:

  • Call you more than twice for each debt in each 7 day period at home, or call you more than twice for each debt in each 30 day period at someplace other than your home.
  • Call you without identifying both the name of the creditor and the name of the person calling.
  • Call you at times other than your normal waking hours. If your waking hours are unknown, then the creditor or collector may only call between 8:00 a.m. and 9:00 p.m.
  • Visit your home at times other than those mentioned above. A collector cannot visit more than once in any 30 day period for each debt, unless you give permission for additional visits.
  • Cause you to be charged for long distance calls (or other similar costs).
  • Call you at work if you requested that they not call. Your oral request is valid for only 10 days, unless you confirm it in writing within 7 days of making the request. Written request are valid until you write to the collector removing the restriction.
  • Contact you directly, if you have told the creditor or collection agency to only contact your attorney.
  • Falsely threaten to take legal action.
  • Use profane or obscene language.

Additionally, creditors and collection agencies may not

  • Tell anyone (including friends, neighbors, relatives, or employers) about your debt.
  • Send collection notices in a way that openly indicates or implies that you owe a debt (for example, using postcards or descriptive return addresses.)

Federal law provides some additional protections against debt collection agencies. (This law does not apply to creditors):

  • Collectors must verify your debt. Collectors must stop calling you if, within 30 days after you are first contacted, you send the agency a letter indicating that you do not owe the debt. They can only renew their collection activities if you are sent proof of the debt.
  • You may stop a debt collector from contacting you. Write a letter to the collector telling them to stop contacting you. Once the collection agency receives your letter, they may not contact you again except to say there will be no further contact. They also may contact you to inform you if they are going to take some specific action, such as suing you.

Credit Problems: What to Do:

Here are some basic steps to take if you have credit problems. For more detailed information, see "Sources of Help."

If you are having trouble paying your bills, you should first attempt to work out a budget that details your income and expenses. After you have identified where your money is going, identify your spending priorities. Your public library has information on how to draw up a sound budget. Many local community organizations sponsor counseling programs as well.

You should immediately contact creditors if you are having trouble making payments. Many creditors will try to work out a more suitable payment schedule if they believe you are acting in good faith.

If you are still having serious problems after attempting these steps, another option is to contact a credit counseling services to create a debt repayment plan. In these plans, you work out a payment agreement with a counselor, and the service distributes your payments to the creditors.

Other methods of dealing with debt include consolidating debt through loans and bankruptcy. These are steps with serious consequences, and should be taken only after consultation with an attorney.

If you are unable to obtain credit on your own, you can try to obtain a credit card or consolidated loan with a low credit limit from a local bank. If you pay promptly and that creditor reports this to a credit reporting agency, this information could improve your credit record. Another option is to obtain a secured credit card. With this type of card, you place a certain amount of money in a bank to guarantee your credit, and the credit grantor gives you a small credit line.
 

Sources Of Help

Complaints about collection agencies:
Division of Banks
1000 Washington St, 10th Floor
Boston, Massachusetts 02118
(617) 956-1501

Complaints about creditors:
The Office of the Attorney General
(617) 727-8400

Credit Reports:

To opt out of marketing lists: toll free (888) 567-8688

Experian
P.O. Box 2104
Allen, TX 75013-2104
(888) 397-3742

To Report Fraud:
(888) 397-3742

Trans Union
P.O. Box 1000
Chester, PA 19022
(800) 888-4213

To Report Fraud:
(800) 680-7289

Equifax
P.O. Box 740241
Atlanta, GA 30374

(800) 685-1111

To Report Fraud:
(800) 525-6285

Credit Counseling:
Consumer Credit Counseling Service
8 Winter Street, 10th Floor
Boston, MA 02108
(617) 426-6644
or, for the one nearest you, call: (800) 388-2227

American Consumer Credit Counseling
130 Rumford Avenue, Suite 202
Newton, MA 02466-1316
(800) 769-3571