Managing Credit and Debt + Your Rights

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

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 file 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 record. You can do at little or no cost anything that a credit repair clinic can do.

(See the section "Credit Problems: What To Do" for general information and resources on solving credit problems.)

Getting Off of Credit Card Marketing 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 have 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 writing to or calling each credit bureau. There is no way to stop all junk mail, but this step can eliminate offers from companies that use the credit reporting agencies (M.G.L. c. 93, §51A).

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

Call you more than twice for each debt in each seven- day period at home, or call you more than twice for each debt in each thirty-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 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 thirty-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 have requested that they not call. Your oral request that a collector not call you at work is valid for ten days only, unless you confirm it in writing within seven days of making the request.

Written requests 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).

Credit Problems: What to Do

Here are some basic steps to take if you have credit problems. For more detailed information, consult the

"Resource List" included in this pamphlet.

If you are having trouble paying bills, you should first is attempt to work out a budget that details your income and your 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 your 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 service 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 a trusted banker or 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 the credit reporting agency, this information would 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 the bank and the credit grantor gives you a small credit line.

Sources of Help

General Information and Complaints:

Office of Consumer Affairs and Business Regulation

One Ashburton Place, Room 1411

Boston, Massachusetts 02108

(617) 727-7780

(888) 283-3757
 

Questions and complaints about credit and collection agencies:

Division of Banks

100 Cambridge Street, 20th Floor

Boston, Massachusetts 02202

(617) 727-2102

Credit Reports

Experian
P. O. Box 949
Allen, TX 75013-0949
(800) 392-1122
Opt Out: (800) 353-0809
 

Trans Union
P.O. Box 390
Springfield, Pennsylvania 19064-0390
(800) 888-4213
Opt Out: (800) 680-7293
 

Equifax Information Service Center
P.O. Box 740241, Attn.: ICSD Disclosure
Atlanta, Georgia 30374-0241
(800) 685-1111
Opt Out: (800) 711-2130
 

Credit Counseling:

Consumer Credit Counseling Service
8 Winter Street, Suite 1210
Boston, Massachusetts 02114
(617) 426-6644

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