OTHER ASPECTS OF USING CREDIT

OTHER ASPECTS OF USING CREDIT



The best way to keep up your credit standing is to repay
all debts on time. But there may be complications. To protect
your credit rating, you should learn how to correct mistakes
and misunderstandings that can tangle up your credit accounts.

When there's a snag, first try to deal directly with the
creditor. The credit laws can help you settle your complaints
without a hassle.


What Laws Apply?


FAIR CREDIT BILLING ACT sets up procedures requiring
creditors to promptly correct billing mistakes; allowing you to
withhold payments on defective goods; and requiring creditors
to promptly credit your payments.

IN LENDING 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


Month after month John Jones was billed for a lawn mower
he never ordered and never got. Finally, he tore up his bill
and mailed back the pieces--just to try to explain things to a
person instead of a computer.

There's a more effective, easier way to straighten out
these errors. The Fair Credit Billing Act requires creditors to
correct errors promptly and 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 made 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; or

-- for something that you did not accept on delivery or that
was not delivered according to agreement.

Billing errors also include:

-- errors in arithmetic;

-- failure to show a payment or other credit to your account;

-- failure to mail the bill to your current address, if you
told the creditor about an address change at least 20 days
before the end of the billing period; or

-- a questionable item, or an item for which you need more
information.

In Case of Error: If you think your bill is wrong, or want
more information about it, follow these steps:

1. Notify the creditor in writing within 60 days after the
first bill was mailed that showed the error. Be sure to write
to the address the creditor lists for billing inquiries and to
tell the creditor:

-- your name and account number;

-- that you believe the bill contains an error and why you
believe it is wrong; and

-- the date and suspected amount of the error or the item you
want explained.

2. Pay all parts 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 creditor 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
creditor believes the bill is correct.

If the creditor 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 creditor must send you an
explanation of 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,
but not less that 10 days.

3. If you still are not satisfied, you should notify the
creditor in writing within the time allowed to pay your bill.

Maintaining Your Credit Rating. A creditor may not
threaten your credit rating while you're resolving a billing
dispute.

Once you have written about a possible error, a creditor
must not give out information to other creditors or credit
bureaus that would hurt your credit reputation. And, until your
complaint is answered, the creditor also may not take any
action to collect the disputed amount.

After the creditor 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 creditor may take action to
collect. Even so, you can still disagree in writing. Then the
creditor 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
creditor must report the outcome to each person who has
received information. Remember that you may also place your own
side of the story in your credit record.


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


Some creditors will not charge a finance charge if you pay
your account within a certain period of time. In this case, it
is especially important that you get your bills, and get credit
for paying them, promptly. Check your statements to make sure
your creditor follows these rules:

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 creditors must mail their statements at
least 14 days before payment is due.

Crediting. Look at the payment date entered on the
statement. Creditors must credit payments on the day they
arrive, as long as you pay according to payment instructions.
This means, 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 creditor must make a refund to
you. The refund must be made within seven business days after
your written request, or automatically if the credit balance is
still in existence after six months.


Cancelling a Mortgage


Truth in Lending gives you a chance to change your mind on
one important kind of transaction--when you use your home as
security for a credit transaction. For example, when you are
financing a major repair or remodeling and use your home as
security, you have three business days, usually after you sign
a contract, to think about the transaction and to cancel it if
you wish. The creditor must give you written notice of your
right to cancel, and, if you decide to cancel, you must notify
the creditor in writing within the three-day period. The
creditor must then return all fees paid and cancel the security
interest in your home. No contractor may start work on your
home, and no lender may pay you or the contractor until the
three days are up. If you must have the credit immediately to
meet a financial emergency, you may give up your right to
cancel by providing a written explanation of the circumstances.

The right to cancel (or right of rescission) was provided
to protect you against hasty decisions--or decisions made under
pressure--that might put your home at risk if you are unable to
repay the loan. The law does not apply to a mortgage to finance
the purchase of your home; for that, you commit yourself as
soon as you sign the mortgage contract. And, if you use your
home to secure an open-end credit line--a home equity line, for
instance--you have the right the cancel when you open the
account or when your security interest or credit limit is
increased. (In the case of an increase, only the increase would
be cancelled.)


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.


Unsolicited Cards


It is illegal 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.