Financial Guides Archive - Page 10 of 11 - Private Tax Solutions

When using a credit card for a purchase, some merchants might ask you to provide a phone number, home address, or other personal information on credit card sales slips; however, consumers should always decline. This practice not only violates your privacy, but American Express, MasterCard, and Visa prohibit requiring it as a condition of sale. Furthermore, while credit card policies as well as state and federal laws vary, in California, for example, it is illegal for the merchant to record any personal information other than what is on the front of the credit card.

There is no need for merchants to obtain phone numbers or other personal information from customers. Once they have correctly processed the bank card transaction (gotten an authorization number and made sure the signatures match), they are guaranteed to receive payment.

Tip: If you don’t want to provide personal information on a credit card sales slip, you can refuse to do so. The merchant has no right to refuse you the sale (although unknowledgeable clerks may have no authority to vary from store policy).

Further, if you refuse to present identification, such as a driver’s license, the merchant may not refuse to make a credit card sale under Visa, MasterCard, and Amex rules.

Tip: If you exceed your credit limit, the card-issuing bank absorbs the loss, so there is no need for the merchant to contact you. Thus, there’s no reason to provide your personal information.

Some stores require consumers to spend at least $20 (or some other minimum) to pay for purchases by credit card. They engage in this practice because they and their banks do not want the expense of processing a credit card transaction involving a small amount of money.

This practice defeats one of the major purposes of credit cards-convenience-and may force credit card users to spend more than they want to. In addition, minimum charge requirements vary from merchant to merchant, and there are no regulations requiring disclosure of these minimum purchase levels.

Visa’s and MasterCard’s regulations prohibit minimum charge amounts. American Express’s regulations do not explicitly prohibit minimum charges, but its policy is to discourage any merchant practices that create a “barrier to acceptance.” Amex does prohibit “discrimination” against the Amex card, however, so if a merchant has no minimum charge for Visa and MasterCard, the merchant may not discriminate against Amex by imposing a minimum charge.

Tip: If a store requires a minimum purchase for Visa or MasterCard, point out to the store manager that the practice is prohibited by the card companies.

Some merchants seek to impose a service fee for all credit card purchases.

When a merchant gives a credit card slip to the credit card company or bank for processing, a percentage of each purchase-usually 1.5 to 5 percent of the purchase amount is deducted. This “merchant discount fee” helps pay for the bank’s services and for the credit card system. By charging extra for credit card use, the merchant passes the discount fee on to customers.

Visa and MasterCard prohibit surcharges, and American Express discourages them. Amex does prohibit “discrimination” against the Amex card, however, so if a merchant accepts Visa and MasterCard (and cannot impose a surcharge under those companies’ rules), the merchant may not discriminate against Amex by imposing a surcharge.

Tip: Any merchant that accepts American Express cards and also accepts Visa and/or MasterCard may not charge consumers a surcharge on Amex purchases.

Surcharges invite numerous abuses by retailers, including bait-and-switch tactics. There are no laws on how and when surcharges must be disclosed, making it difficult to figure out the total price of an item. Travelers often find it difficult to get out-of-state checks accepted, and should not be penalized for using credit cards. Further, credit card acceptance usually produces higher sales for merchants, offsetting the cost of processing credit card transactions.

Note that a cash discount is legal and permitted under all credit card companies rules. A cash discount offers a lower price for cash than credit; for example, many gasoline stations offer cash discounts. While this may merely be a loophole, it is permitted. In addition, there are a few state governmental agencies, including state tax offices and motor vehicle departments that are permitted to charge surcharges due to state laws that do not permit them to pay discount fees. However, retail merchants may not impose surcharges.

Merchants often ask for two forms of identification before accepting a personal check as payment for a purchase: a driver’s license and a major credit card. Merchants also believe consumers with credit cards are less likely to bounce checks. This is a misconception: nearly 90 percent of all bounced checks result from arithmetic error, not fraud.

When merchants write your credit card number on your personal check, they are subjecting you to possible fraud.

• Anyone who sees the check sees your name, address, telephone number, and credit card number.
• Further, several states use an individual’s Social Security number as the only identifying number on a driver’s license. Once a thief has your Social Security number, along with the other information on the check, he or she can get your credit report, and even apply for credit in your name.
• Someone can use your credit card number to order merchandise by phone or through the mail by requesting the merchandise be sent to a post office box or an address other than your own.
• Someone might use your personal information to apply for credit in your name, then run up bills on your account without paying them, of course. People who are victims of so-called application fraud do not find out until months or even years later when they begin receiving letters from creditors, by which time the damage has been done to their credit histories.

Although Visa, MasterCard and American Express do not have the authority to prohibit the practice of writing credit card numbers on checks, the three card companies do prohibit merchants from charging a credit card account to cover a bounced check.

Tip: If a merchant asks for your credit card number, ask why he or she needs to record it, since, due to the above prohibition, nothing can be done with it.

Tip: There is probably no harm in allowing a merchant to see that you carry a major credit card, and even to note on the check whether it is Visa, MasterCard, or American Express. For your own safety, this is the only credit card-related information you should allow to be recorded. You should not allow the merchant to record the credit card number.

If the sale is refused, ask to speak with the store manager. Explain the risks of fraud, and point out that the rules of the three major credit card companies prohibit charging a credit card to cover a bounced check. You might also point out that, if there is a problem, merchants usually have all the information they need to locate the customer written right on the check: name, address, phone number and driver’s license number. Also, merchants will not be able to use the credit card number to locate the consumer.

Many store clerks are simply unaware of the potential crimes associated with the use of personal information written on checks.

Other cards may not provide cardholders with any of the protections described above. However, purchases made with other cards are covered in all states that have laws prohibiting the practices described here.

Tip: Cardholders who experience the practices discussed here should complain to store managers and encourage the card company to change its policies.

When merchants violate the policies described here, report them to Visa, MasterCard, and American Express.

• Visa USA
  Consumer Relations
  P.O. Box 8999
  San Francisco, CA 94128
  +1-800-VISA-911 (customer assistance)
• MasterCard Worldwide
  Public Relations
  2000 Purchase Street
  Purchase, NY 10577
  Call collect from anywhere globally: +1-636-722-7111 or toll-free from the United States: +1-800-627-8372 (+1 800 MASTERCARD)
• American Express
  Customer Service
  PO Box 297812
  Ft. Lauderdale, FL 33329-7812
  1-800-528-4800 (US) or 1-336-393-1111 (International Collect)

In your letter, give the name and location of the merchant and a copy of a credit card sales slip. The sales slip is needed by Visa and MasterCard to track down the offending merchant. American Express provides cardmembers with a toll-free number to call if they have difficulty with a merchant. Make sure you have the complete details about the merchant and the problem before you call.

If a merchant is uncooperative, take your business elsewhere.

The following states prohibit merchants from recording certain personal information in connection with credit card transactions:

• California
• Delaware
• Georgia
• Kansas
• Maryland
• Massachusetts
• Minnesota
• Nevada
• New Jersey
• New York
• Oregon
• Pennsylvania
• Rhode Island
• Washington, DC
• Wisconsin

The following states prohibit merchants from adding surcharges to credit card transactions

• California
• Colorado
• Connecticut
• Florida
• Kansas
• Maine
• Massachusetts
• New York
• Oklahoma
• Texas

The following states prohibit merchants from recording your credit card number on your check:

• California
• Delaware
• Florida
• Georgia
• Illinois
• Iowa
• Kansas
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Nevada
• New Hampshire
• New Jersey
• New York
• North Dakota
• Ohio
• Oregon
• Pennsylvania
• Rhode Island
• Tennessee
• Virginia
• Washington, DC
• Washington
• Wisconsin

The following agencies are responsible for enforcing federal laws that govern credit card transactions. Questions concerning a particular card issuer should be directed to the enforcement agency responsible for that issuer.

State Member Banks of the Reserve System:
Consumer & Community Affairs
Board of Governors of the Federal Reserve System
20th & Constitution Avenue, N.W.
Washington, D.C. 20551

National Banks:
Comptroller of the Currency
Customer Assistance Group
1301 McKinney Street
Suite 3450
Houston, TX 77010
Tel. (800) 613-6743

Federal Credit Unions:
National Credit Union Administration
1775 Duke St # 4206
Alexandria, VA 22314-6115

Non-Member Federally Insured Banks:
Federal Deposit Insurance Corporation
Consumer Response Center
1100 Walnut St, Box #11
Kansas City, MO 64106

Federally Insured Savings and Loans, and Federally Chartered State Banks:
Comptroller of the Currency
Customer Assistance Group
1301 McKinney Street
Suite 3450
Houston, TX 77010
Tel. (800) 613-6743

Other Credit Card Issuers (includes retail gasoline companies):
Bureau of Consumer Protection
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, D.C. 20580

The U.S. Postal Inspection Service:
This office covers mail fraud, sexually offensive materials, solicitations that look like government materials but are not. If you suspect such violations, contact your local Postmaster or Postal Inspector or:

Criminal Investigations Service Center
Attn: Mail Fraud
222 S. Riverside Plaza Ste. 1250
Chicago Il 60606-6100
Tel. 877-876-2455

The Federal Trade Commission:
Does not handle individual complaints, but reporting failure to deliver, late delivery, unordered merchandise, misrepresentation or fraud helps uncover widespread abuses that the FTC might take action to stop.

Division of Enforcement
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
Tel. (202) 326-2222

National Do Not Call Registry:
If you wish to have your name removed from telephone lists of marketing companies.

National Do Not Call Registry
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
website: www.donotcall.gov

Direct Marketing Mail Opt-Out:
Consumers who do not wish to receive promotional mail at home

Direct Marketing Association
1120 Avenue of the Americas
NY, NY New York, NY 10036-6700
Tel. 212.768.7277
website: www.DMAChoice.org

Low or No-Cost Credit Cards:
Bankrate.com lists banks charging no fees and low interest rates for credit cards. Visit the website: www.bankrate.com

When you apply for a loan, how is your application processed? In some cases, such as applying for a loan from your bank, it may be as simple as going to the bank, giving brief information about why you need a loan, signing a loan contract and getting a check immediately. Other banks use loan committees – a group of bank employees who decide which applications to approve. Still others use sophisticated, complex computer analysis to evaluate applications.

Many creditors use credit scoring, in which point values are assigned to various credit characteristics. Those who get enough “points” get credit. Credit scoring can vary in complexity, according to the creditor’s policy.

Most creditors also have certain minimum requirements before they will consider an application. For instance, anyone who does not have a minimum annual income (perhaps $15,000) or who has been through bankruptcy may be summarily rejected.

Most credit-scoring systems are more complicated than the example used here, with ten to thirty or more pieces of data to be analyzed for each applicant. With a more complex scoring system, a clerk enters information from both the credit application and the credit report onto a computer system, and the system evaluates it and produces an acceptance or rejection letter. Smaller creditors using simpler credit scoring have loans evaluated by a loan officer who makes the decision.

By explaining what you need to make full use of your credit report, to determine your credit standing, and to maximize your chances for credit approval this Guide will help you to:

• Better understand your credit report,
• Know the meaning of jargon used in the credit industry, and
• Find out exactly what you can do to improve your credit standing.

Age

If a lender’s credit experience shows that people in a certain age group have a better record of paying their bills than people of other ages, the lender may – legally – give a higher score to the better-paying age group.

However, the Equal Credit Opportunity Act (ECOA), a federal law intended to prevent discrimination in lending, does not allow lenders to discriminate against people age 62 or over. The ECOA requires creditors using a scoring system to give those aged 62 and older an age-factor score at least as high as that given to anyone under age 62.

A lender gives the following age scores to applicants:

To prevent discrimination against older people, the lender must give anyone age 62 or older at least 6 points for age, since 6 points is the highest score available to anyone under 62 (i.e., those aged 25-35).

Residence

Many creditors give a higher score to those who have lived at the same address for at least two years. Some lenders just give extra points for living in the same area for two years or more.

Creditors may take into account your geographic location in scoring your length of time at one address. If you live in a city, where people move more often, the length of time at your address will probably count less than if you live in the country.

If your address is a post office box, you may find yourself turned down for credit. Also, to fight fraud, some creditors screen out applicants whose addresses indicate commercial offices, mail drops, or prisons. Since post office boxes or rural delivery boxes are commonplace in rural areas, however, a lender may issue a card to that address while rejecting applicants with a P.O. Box in a large city.

People who own their homes earn a higher score than renters.

“Authorized User” Payment History

An authorized user is someone who has permission to use a credit card but is not legally liable for the bills. If you are an authorized user on someone’s account, the payment history will likely be reported in your credit file, but you will not be able to rely on it to help you build your own credit rating. Usually, it will neither help you nor hurt you when you apply for a loan.

Bank Card History

One of the best things you can have on a credit report is a bankcard (e.g., a Visa, MasterCard or Discover card) that has been paid on time over a period. In a scoring system, a good bankcard reference usually carries more weight than a department store card or American Express card. Department store charge cards have lower credit limits and if used will typically have a higher debt to limit ratio, which has a negative impact on credit scores. In addition, American Express is a charge card. As such users must pay in full, the amount due when the monthly statement arrives. There is no minimum payment, interest rate, or spending limit, and while American Express reports the high balance to credit bureaus, it doesn’t impact FICO credit scores.

The reason a bankcard is a strong reference is that it shows a bank has trusted you with hundreds or even thousands of dollars on the basis of just your signature. Also, bankcards are more difficult to get than department store cards or travel and entertainment cards, so your qualifications must have been closely scrutinized when you applied.

Checking And Savings Accounts

People who have checking and savings accounts usually score better than those who do not. Some banks give you extra points if you have checking or savings accounts with them. Some banks also give discounts on loan rates when you hold other accounts with them.

Debt/Income Ratios

Some creditors look at your debt/income ratio how much you pay out each month compared to how much income you earn to determine whether you qualify for additional credit.

To find your debt/income ratio, total up your monthly payments on all bills. Do not include mortgage, utilities, doctor bills or other accounts that do not appear on your credit report: The creditor will not look at these. Then, divide your total payments by your monthly gross (before tax) income. What results is your debt to income ratio. If it is less than 28 percent, you should have no trouble getting a loan. If it falls between 28 and 35 percent, you have what is considered high debt, and you may find it difficult to obtain some loans.

If your debt/income ratio is 35 percent or more, you will probably not be able to get additional credit. More importantly, you are potentially in financial jeopardy. If you should incur unexpected expenses, get ill, lose your job, or get divorced, you could find yourself unable to meet your obligations. Consider seeking credit counseling through a local non-profit consumer credit counseling service. (Please see the listing at the end of this Guide.)

This summary provides general guidelines. Some large card issuers will accept debt ratios as high as 40-45 percent. Others compare your net (after-tax) income to your debts to determine your debt ratio.

If you keep your debt ratio below 28 percent, you can consider yourself successful at managing your debt and maintaining a good credit rating.

Department Store Accounts

Department store cards do not provide as strong a reference on credit reports as bankcards. Not only are they easier to obtain, but the credit limits are low, and the “high credit” (the most you have ever charged) are low. Furthermore, you can use them only at the issuing store. Nevertheless, a timely paid department store card can help you develop a good credit history.

Disputing Errors In Your Credit File

The Fair Credit Reporting Act (FCRA) protects consumers in the case of inaccurate or incomplete information in credit files. The FCRA requires credit bureaus to investigate and correct any errors in your file.

If you find any incorrect or incomplete information in your file, write to the credit bureau and ask them to investigate the information. Under the FCRA, they have about thirty days to contact the creditor and find out whether the information is correct. If not, it will be deleted.

Be aware that credit bureaus are not obligated to include all of your credit accounts in your report. If, for example, the credit union that holds your credit card account is not a paying subscriber of the credit bureau, the bureau is not obligated to add that reference to your file. Some may do so, however, for a small fee.

Bankruptcy

Most lenders automatically reject anyone whose application or credit file indicates a bankruptcy. Chapter 13 in which (a debt reorganization plan under which all debts are eventually repaid) stays on credit reports until the debt is repaid plus an additional seven years. Chapter 7 (straight bankruptcy and partial or full liquidation of debts) remains on your credit files for ten years. Few creditors, however, draw any distinction between the two types, so you don’t get any “credit” for having repaid your bills using Chapter 13.

In addition to the bankruptcy itself remaining on your report for ten years, each separate account that was discharged through bankruptcy can be reported on your file for up to seven years.

Child Support

Delinquent child support frequently appears on credit reports. In 1984, Congress amended the federal Child Support Enforcement (CSE) legislation to require more routine reporting of delinquent payments. State child support enforcement agencies must report overdue child support to a credit bureau that requests such information, as long as the amount exceeds $1,000. CSE agencies can also report delinquencies of any amount on a voluntary basis.

Before a CSE agency reports your delinquent child support debts to a credit bureau, it must tell you that it is going to do so and provide you with information on how to dispute the delinquency.

Closed Accounts And Inactive Accounts

You may be surprised to find you are turned down for a loan because you have too much credit available. Accounts you no longer use, or have paid off, can count against you if they are listed as “open” on a credit report.

The act of paying off a revolving account does not, in itself, result in it’s being “closed” in the eyes of lenders. Further, some creditors do not report to credit bureaus the fact that accounts are closed.

If a closed account appears on your credit report as open, dispute the entry with the credit bureau. The Fair Reporting Act gives consumers the right to dispute any information in their credit file they believe inaccurate or incomplete. Explain to the credit bureau that you would like the report to reflect the account as closed. It is also a good idea to send a certified letter to the creditor requesting that the entry is corrected with all the credit bureaus to which it has been reported.

Every time you close an account, ask the creditor to report it as “closed by consumer” to all Credit Bureaus to which the account has previously been reported. Make this request in writing, and ask for written confirmation that it has been done. If you have trouble getting confirmation from customer service representatives, ask to speak with a credit manager. Be sure to comply with the lender’s procedures for closing the account, such as returning credit cards or unused credit line checks. Your cardholder agreement will have those instructions.

Employment

Lenders generally give more “points” to applicants who have been at the same job for two years or more. Self-employed people, who often have a hard time getting credit, might try contacting the lender before applying to find out what additional information can improve your chances. Some lenders ask for copies of your business license, tax returns for the past years, or checking account statements to verify your cash flow.

If you have changed jobs recently, indicate on your application whether you have stayed in the same field, since some lenders will consider the length of time in your field if the length of time in your job is not sufficient.

Collection Accounts And Charge-Offs

Collection accounts are those that have been sent to collections by the creditor – either to the creditor’s own collection department or an outside agency. Profit-and-loss accounts (also called charge-offs) are those the creditor decided could not be collected, and that were written off as a loss. Once a charge-off is sent to a collection agency or department, it turns into a collection account for reporting purposes. Collection accounts and profit-and-loss accounts are negative marks on credit reports.

Should you pay a collection account? On the one hand, unpaid collection accounts can prevent you from getting other credit. On the other hand, some creditors reject anyone whose credit files list collection accounts or charge-offs-whether or not they have been paid.

Collection accounts can legally remain on a report for seven years. They are reported to credit bureaus beginning on the date the collection agency received them from the creditor.

Charge-offs, also called profit-and-loss accounts, are accounts that have been written off lenders’ books as “uncollectible.” If a charge-off account is not due to bankruptcy, the lender will usually turn it over to a collection agency, which will then attempt to collect. It then becomes a “collection account” (discussed below) for reporting purposes. Charge-offs are reported from the date they were charged off – the date the creditor decided the account was too far past due to get payment through normal channels and decided to close the account.

Charge-off or collection accounts on a credit report are extremely negative. If you pay the charge-off via the collection agency, make sure the lender updates the account as a “paid charge-off.”

The fact that delinquency (paying late) began before the account was placed for collection (or charged off) does not require the reporting date (the date the seven-year reporting begins) to be moved back, and the fact that payment was made after the account was placed for collection does not allow the date to be moved forward.

If you do not pay a collection account, the lender may sue you. If the lender gets a legal judgment against you, the judgment can remain on your credit report seven years or more from the date the case was decided.

In exchange for paying off a collection account, you may be able to negotiate with the creditor or collection agency the permanent removal of the negative information from your credit bureau files. Lenders are under no obligation to make such an agreement, however.

Late Payments

Recent late payments – within the past six months or one year – are especially damaging to your credit record. Just one payment more than thirty days late in the past year can hurt your chances of getting credit. Late payments on bankcard accounts are usually the most damaging since bankcards are such an important reference.

Be sure to get the minimum payment in the mail on time each month. As far as your payment rating (R-l, R-2 or I-l, I-2, etc.), it makes no difference whether your monthly payment is the minimum or a large payment. Just the minimum on time will keep your rating in good shape.

There’s one exception: If you are near your credit limits on most or all of your accounts, you may be considered a poor credit risk whether or not you pay on time. See the section on “Credit Limits for further discussion.

Length Of Credit History

Many people with no credit history find it nearly impossible to get a major credit card or, to a lesser extent, other credit. Scoring systems are not designed with the first-time credit user in mind.

Bankcard issuers generally want to see at least a year’s worth of timely payments on other accounts before issuing a card.

If you do not have a credit record, you may have to smart small. You may want to start by getting a gasoline card. Chevron reports payments to the credit bureau monthly, while most other oil company cards do not. And get a few department store cards.

Your best option for establishing a positive credit history may be a secured Visa or MasterCard. These credit cards are offered through bankcard issuers who have customers put up several hundred dollars in collateral in exchange for a card with a small credit limit. As you use the card, your bill-paying behavior is reported to a credit bureau and your credit history improves.

Military Service People

Those in the military may find it difficult to get credit because they have a low income, move frequently, or do not have sufficient credit history. In addition, the fact that their wages cannot be garnished makes some creditors hesitate.

One of the main reasons people in the military cannot get credit cards is the fraud associated with APO boxes. If you are in the military, live overseas, and are applying for a credit card, list your stateside address, your parents’ address, or a P.O. box, instead of an APO.

If you are having trouble getting a credit card because of a lack of credit history, you may want to try a secured credit card.

Mortgages

Most mortgages that are 90 days or more delinquent must now be reported to credit bureaus. Some mortgage companies elect to report all mortgages to credit bureaus. This policy is a plus for homeowners since a mortgage can be a sign of stability to a lender.

Never pay your mortgage late. If your mortgage has a grace period (e.g., “Payment due January 1. After January 10, late charges will be assessed.”), do not take this to mean you can pay between January 1 and January 10. If you pay after the first due date, your payment will probably be considered late, and the late payment will appear on your credit report.

Negative Information

Negative information on a credit report is any information that may cause you to be turned down for credit or reduce your chances for loan approval. Negative information includes late payments, legal judgments, collection accounts, liens, and charge-offs.

There is no way to remove negative information that is correct. If you paid any accounts that were charged-off, sent to collections, or for which the lender obtained a judgment against you, make sure these accounts are noted as paid. If any of these accounts remains unpaid, you are almost certain to be rejected for other loans. An unpaid collection account or judgment sends up a red flag to other creditors that the company to whom you owe the money could take further legal action against you, endangering your ability to pay other bills. Please see the section on “Collection Accounts” for further information.

Do not be taken in by companies that, for a fee, offer to “fix bad credit” or “remove negative information” from credit reports. If it is possible to fix your bad credit, you can do it yourself, as long as you have the right information. You do not need to pay a fee to one of these companies to fix your credit problems.

Number Of Credit Accounts

Creditors want to see that you are able to handle credit over a period of time, and good credit references on your credit report help prove this ability. However, do not carry too much credit. Generally, if you have four or more bankcards, you are risking being turned down for “too many bankcards.”

Over The Limit

Going over the limit on your credit cards will often count against you.

Payments

It does not matter if you pay your balance in full each month or just make minimum payments, as far as your payment rating is concerned, as long as you make at least your minimum monthly payment on time each month.

While making only the minimum payments does not affect your payment record, you may have trouble getting credit if you are carrying high balances on most of your accounts.

Previous Company Experience

Having had a previous loan with the lender to which you are applying can improve your chances of getting another loan there.

Recent Loans

Just as creditors do not want to see too many recent inquiries on a credit file, they do not want to see a number of recently opened loans, especially if you are new to credit.

Revolving Credit

Revolving credit means a line of credit. You are approved to borrow up to a certain limit, and you can draw upon all or part of that credit line whenever you choose. Your payments vary depending on the amount you have borrowed.

Installment credit is a fixed amount of credit you borrow and agree to pay back on a fixed schedule. Your payments are the same each month.

Revolving credit is a better reference than installment credit because applications for revolving credit are often scrutinized more carefully.

Buy Now, Pay Later (BNPL)

Starting in 2022, the three major credit bureaus (Equifax, Experian, and TransUnion) will add information to consumer credit reports from companies such as Affirm, Klarna, and Afterpay that offer buy now, pay later (BNPL) loans. Missing payments or taking on too many of these “short-term” loans could cause your credit score to drop.

Income/Income Per Dependent

Be sure to list gross (before tax), not net (after tax), income on your loan application, unless the application asks for net income. Include income from a part-time job, public assistance or child support. The lender cannot discriminate against individuals with these sources of income in scoring an application. A creditor is permitted to determine whether that source of income is reliable.

Some banks may approve loans for incomes as low as $10,000 per year. Others require higher income for some loans. Some banks will divide your income by the number of your dependents to determine your “income per dependent.” If so, the application will ask how many dependents you have.

Inquiries

Inquiries, which appear at the end of your credit report, tell you who has seen it recently. They are very important when you apply for credit. Lenders almost always look at how many inquiries you have when evaluating your application. Consumers with “too many inquiries” are often turned down, due to a concern that they are applying for too much credit at one time, that they are on a spending spree, or that there is potential fraud.

Generally, a bankcard issuer wants no more than six inquiries in the past six months on an applicant’s file. However, there is no set number for excessive inquiries, and every lender sets its own policy.

Apply only for credit you really want, and wait for a response on each application before applying elsewhere.

Lenders generally do not look at the sources of inquiries in counting them against the applicant. Thus, if you are applying for a car loan, you may think that only inquiries from car dealers will count against you, but in actuality all inquiries reported by credit bureaus are counted. If you have been shopping for a car loan and have several inquiries from auto dealers on your file, those inquiries could hurt your chances of getting a credit card. Or, if you have been trying to get a mortgage, you could find yourself unable to get a major credit card for several months because your credit report lists a number of inquiries from mortgage lenders

Auto dealers often look at customers’ credit files without their knowledge or permission. If you go to a dealership to test drive a car, the salesperson will often pull up your credit file, and use the information in deciding how to “sell” you. It is important to tell the salesperson that you do not want your credit file accessed unless you give permission.

The consumer credit laws do not cover inquiries, so once they are on your file there is nothing you can do to have them removed. It is always worth trying to challenge inquiries with the credit bureau, but be aware that many credit bureaus refuse to investigate them. If you have too many inquiries, you may simply have to wait six months before applying for more credit. Inquiries generally stay on credit reports for two years.

Some credit bureaus list inquiries by code, rather than by the name of the company. The Fair Credit Reporting Act requires that a credit bureau explains all information on your report that you do not understand, so request names for all the coded companies listed under the inquiries section.

If an inquiry is coded “PRM” or “PSC,” or has the word “promotional” next to it, then a lender has paid the credit bureau to screen suitable prospects for a “preapproved” mailing. The lender supplies the bureau with a list of names and addresses and a set of credit criteria and asks the bureau to determine which candidates meet their criteria. The lender then receives from the credit bureau a list of the names that meet the qualifications, and those consumers receive a “prescreened” or “preapproved” credit offer.

Inquiries noted as “csmr” or “consumer” indicate you have seen your own credit file.

It is the policy of the major credit bureaus not to include promotional or consumer inquiries when transmitting the file to a lender, so review of your own file or prescreening will not hurt your chances of getting credit.

You may be asked to cosign an account to allow someone else to obtain a loan. With cosigning, your payment history and assets are used to qualify the cosigner for the loan.

We recommend that you do not cosign a loan, whether for a family member, friend, or employee. Many have found that cosigning a loan only leads to trouble.

Bear in mind that cosigning a loan bears all the financial and legal consequences of taking out the loan yourself. When you cosign, you are signing a contract that makes you responsible for the entire debt. If the other cosigner does not pay or makes late payments, it will probably show up on your credit record. If the person for whom you cosigned does not pay the loan, the collection company will be entitled to try to collect from you.

If the cosigned loan is reported on your credit report, another lender will view the cosigned account as if it were your own debt. Further, if the information is correct, it will remain on your credit report for up to seven years.

If someone asks you to cosign a loan, suggest other alternatives such as a secured credit card by which they can build a credit history. If you are asked to cosign for someone whose income is not high enough to qualify for a loan, you are actually doing them a favor by refusing-they will be less likely to be overwhelmed by too-high debts. At any rate, consult with your lawyer before cosigning, since state laws regarding a cosigner’s liability vary.

If you have already cosigned for someone, and he or she is not making payments on time, consider making the payments yourself and asking the cosigner to pay you directly in order to protect your credit rating.

A credit limit is the maximum amount available to you from a certain lender. For example, a credit card issuer may grant you a credit limit of $1,000, meaning that once you charge $1,000, you will not be allowed to incur additional charges until you pay off some of your debt.

When creditors evaluate your application for credit, they ascertain whether, if you were to use all your available credit, you would be over your head. They usually consider these factors:

• How close you are to your credit limits
• The total credit you have available
• The number of accounts you hold

Creditors may consider not only how much you currently owe, but also how much credit you have available. Having too much credit available can count against you. Also, being at or near the limit on your credit cards can count against you.

Credit reports are records of consumers’ bill-paying habits collected, stored and sold by credit bureaus. Credit reports are also called credit records, credit files, and credit histories.

The Fair Credit Reporting Act (FCRA) entitles each consumer to one free disclosure every 12 months. In addition, residents of California, colorado, Connecticut, Georgia, Maine, Maryland, Massachusetts, Minnesota, Montana, New Jersey, Puerto Rico, Vermont, or the US Virgin Islands, may be entitled to a second personal credit report at free or reduced price from each of the three major credit bureaus:

• Experian Credit Bureau: 888-397-3742
• Equifax Credit Bureau: 866-349-5191
• TransUnion: 877-322-8228

If you have been denied credit, employment, or insurance you can request that the credit bureau involved provide you with a free copy of your credit report, but you must request it promptly within 60 days. Request a copy through their websites or call the toll free telephone numbers provided.

The Equal Credit Opportunity Act (ECOA) requires creditors who report information about accounts to report it in the names of all people with a relationship to the account, including cosigners or authorized users. To help lenders identify your legal liability on all your credit accounts, credit bureaus add a code to each account, termed the ECOA code.

Each credit bureau lists ECOA codes differently, but these are the basic categories:

• Individual: You alone are legally responsible. This designation gives you a strong credit reference, assuming a good history.
• Joint: You and someone else – often a spouse – are both legally liable. A joint account is equal to an individual account for building your credit history.
• Co-signer, secondarily liable: You signed loan documents for someone else to help them qualify for a loan.
• Co-signer, primarily liable: You took out an account for yourself, but someone else co-signed for the loan to ensure payment.
• Authorized user: You can use the account and may have a card in your name, but you did not sign the application and are not legally responsible. Because you have no legal obligation, this designation does not help you get your own credit history.
• Undesignated: No status was reported by the creditor reporting the account information.

The Fair and Accurate Credit Transactions Act of 2003 (FACT or FACT Act) is an amendment to the Fair Credit Reporting Act (FCRA) of 1970 and went into effect in December 2003. It was amended most recently in 2010 to include the provisions of the Consumer Financial Protection Act of 2010 (CFPA), which became effective on July 21, 2011, and the Red Flag Program Clarification Act of 2010.

Consumers can now request and obtain a free credit report once every twelve months from each of the three nationwide consumer credit reporting companies (Equifax, Experian and TransUnion). In addition, the act also contains provisions relating to identity theft and fraud alerts, truncated credit and debit card numbers on non-manual receipts, and securely disposing of records containing consumer credit card information.

Fair Credit Reporting Act (FCRA) of 1970 gave consumers easier access to, and more information about, their credit files. Consumers also have the right to find out the information in your credit file, to dispute information you believe inaccurate or incomplete, and to find out who has seen your credit report in the past six months.

Many systems actually score against people with one or more finance company accounts on their credit reports, since it appears to them that you had a hard time getting credit from traditional sources.

There is a difference between “captive” finance tradelines and “regular” finance trade-lines. Captive finance tradelines are offered through auto financing sources such as GMAC or Ford Credit and are generally not considered negative.

“Application fraud” is when a thief uses your credit information to apply for credit in your name. Wrongdoers use your name, Social Security number, address and, perhaps, credit references to apply for credit. They can get much of this information from public sources (e.g., Who’s Who Directories), from someone who has access to credit files (e.g., employees of car dealerships, department stores, or credit bureaus), from personal checks, or from stolen wallets. Credit thieves may be aided by “credit doctors” who are paid hundreds of dollars for finding a good credit record for the thief to use.

Another form of application fraud involves the interception of pre-approved credit card offers in the mail. The thief fills out the application and either changes the address or steals the credit card out of your mailbox when it arrives at your address.

You won’t find out about application fraud until months after it occurs-usually only after you get dunning notices from collection agencies, or when you get a copy of your credit report and see the debts run up by the thief.

If you find a bill that you do not believe belongs to you on your credit report, check it out immediately. First, contact the creditor to find out if they have an account in your name. Ask to see a copy of the original application if they say you do.

Joint accounts are those in which two or more people-usually spouses or members of a family have equal responsibility for paying the bills. A joint account helps each person on the account build a credit history, but also has its pitfalls. If one person on a joint account does not pay the bills on time (and that payment history is reported to a credit bureau), the other party will likely find his or her credit history damaged.

Joint accounts can be a problem in a divorce. Responsibility for paying off joint accounts is often assigned in the divorce decree or agreement. But regardless of how the judge allocates those bills, both spouses are legally responsible in the eyes of creditors.

If any joint accounts remain open during or after the divorce and one spouse runs up bills and doesn’t pay them, both spouses’ credit histories will be harmed, since both are legally liable under the credit contract (spelled out in the card agreement or other papers). In addition, creditors have the right to try to collect from either spouse.

Close out all joint accounts as soon as possible after you know a divorce will occur. Do not wait for a final decree.

If you have a common name, or are a Jr. or Sr., you may find other people’s information on your credit report. The credit bureaus say that there is not much they can do to prevent this mistake from occurring, so if you find this to be a problem, monitor your credit report carefully. Certainly, you should check it before you apply for a major loan or mortgage.

An alias is another name for you on your credit report. It may be another name under which you have applied for credit (a nickname, or a variation of your name, for example) or it may be a name of someone else. It is possible, if an alias appears on your credit report, that actual fraud was involved. Someone else may have applied for credit using your qualifications and the name they used may have been entered as an alias.

If you find an alias on your credit report, and it does not belong to you, contact the credit bureau immediately to have it removed.

The Fair Credit Reporting Act states that if you dispute information on your credit file that you believe to be inaccurate or incomplete, you can ask the credit bureau to investigate the problem. If the credit bureau’s investigation does not resolve the dispute, you can file a brief statement explaining the nature of the dispute. Your statement becomes a permanent part of your file and will remain on the report as long as the negative information is reported. The credit bureau may limit your statement to one hundred words or less, but must help you summarize it if you ask them to do so.

Some credit bureaus also allow you to add a statement to your file explaining circumstances that led to the reporting of negative information to your file. For instance, if you fell behind on your bills for several months due to illness or a job lay-off, you may be able to add a short 100-word statement explaining the problem. If you do add a statement to your file, make it brief and factual. In general, if you provide a consumer statement that contains medical information related to service providers or medical procedures, then you expressly consent to include this information in every credit report issued for you.

Credit reports contain symbols and codes that are abstract to the average consumer. Every credit bureau report also includes a key that explains each code. Some of these keys decipher the information while others just cause more confusion.

Read your report carefully, making a note of anything you do not understand. The credit bureau is required by law to provide trained personnel to explain it to you. If accounts are identified by code number, or if there is a creditor listed on the report that you do not recognize, ask the credit bureau to supply you with the name and location of the creditor so you can ascertain if you do indeed hold an account with that creditor.

If the report includes accounts that you do not believe are yours, it is extremely important to find out why they are listed on your report. It is possible they are the accounts of a relative or someone with a name similar to yours. Less likely, but more importantly, someone may have used your credit information to apply for credit in your name. This type of fraud can cause a great deal of damage to your credit report, so investigate the unknown account as thoroughly as possible.

It is vital that you understand every piece of information on your credit report in order that you be able to identify possible errors or omissions.

The following agencies are responsible for enforcing federal laws that govern credit card transactions and may be a good resource in the event you believe that there is incorrect information on your credit report. Questions concerning a particular card issuer should be directed to the enforcement agency responsible for that particular credit card issuer.

State Member Banks of the Reserve System:
Consumer & Community Affairs
Board of Governors of the Federal Reserve System
20th & Constitution Avenue, N.W.
Washington, D.C. 20551

National Banks:
Comptroller of the Currency
Customer Assistance Group
1301 McKinney Street
Suite 3450
Houston, TX 77010
Tel. (800) 613-6743

Federal Credit Unions:
National Credit Union Administration
1775 Duke St # 4206
Alexandria, VA 22314-6115

Non-Member Federally Insured Banks:
Federal Deposit Insurance Corporation
Consumer Response Center
1100 Walnut St, Box #11
Kansas City, MO 64106

Federally Insured Savings and Loans, and Federally Chartered State Banks:
Comptroller of the Currency
Customer Assistance Group
1301 McKinney Street
Suite 3450
Houston, TX 77010
Tel. (800) 613-6743

Other Credit Card Issuers (includes retail gasoline companies):
Bureau of Consumer Protection
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, D.C. 20580

The U.S. Postal Inspection Service:
This office covers mail fraud, sexually offensive materials, solicitations that look like government materials but are not. If you suspect such violations, contact your local Postmaster or Postal Inspector or:

Criminal Investigations Service Center
Attn: Mail Fraud
222 S. Riverside Plaza Ste. 1250
Chicago Il 60606-6100
Tel. 877-876-2455

The Federal Trade Commission:
Does not handle individual complaints, but reporting failure to deliver, late delivery, unordered merchandise, misrepresentation or fraud helps uncover widespread abuses that the FTC might take action to stop.

Division of Enforcement
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
Tel. (202) 326-2222

National Do Not Call Registry:
If you wish to have your name removed from telephone lists of marketing companies.

National Do Not Call Registry
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
website: www.donotcall.gov

Direct Marketing Mail Opt-Out:
Consumers who do not wish to receive promotional mail at home

Direct Marketing Association
1120 Avenue of the Americas
NY, NY New York, NY 10036-6700
Tel. 212.768.7277
website: www.DMAChoice.org

Low or No-Cost Credit Cards:
Bankrate.com lists banks charging no fees and low interest rates for credit cards. Visit the website: www.bankrate.com

Known as the Credit CARD Act of 2009, the Credit Card Accountability Responsibility and Disclosure Act of 2009 went into effect on February 22, 2010. The legislation strengthens consumer protection in the credit card market and is a comprehensive reform measure to protect credit card holders in the US against unfair interest rate hikes and hidden fees. Specifically, the legislation addresses:

• Unfair Rate Increases
• Unfair Fee Traps
• Plain Sight /Plain Language Disclosures
• Accountability of Credit Card Issuers
• Protections for Students and Young People

Even with the new law in place, consumers should still be wary and shop around for the credit card that’s best for them.

To choose a credit card wisely, you must first review and understand the terms and features of the various cards. This can add up to very respectable savings over a period of time. In addition, you should also know how to use your cards wisely to keep your costs to a minimum. The Financial Guide explains how to achieve these goals.

Chances are you have received offers in the mail asking if you would like to open credit card accounts. Frequently, these offers say that you have been “preapproved” for the card, often with a very attractive interest rate (usually, a short-term “low-ball” rate) and with a line of credit purportedly set aside for your use (although few people ultimately qualify for the credit line in the promotional literature). Typically, these offers urge you to accept quickly, “before the offer expires.” However, before accepting a credit card offer, understand the card’s credit terms and compare costs of similar cards to get the terms and features you want.

Making an informed decision about a credit card is largely a matter of finding out what the actual cost of credit is under that card. Credit cards involve not only a “finance charge” – a charge for the convenience of borrowing – but usually other, less obvious charges as well.

Learn which credit terms and conditions apply. Each affects the overall cost of the credit you will be using. Due to the provisions of the Fair Credit and Charge Card Disclosure Act (1998), you can compare terms and fees before you agree to open a credit card or charge card (no interest) account. Be sure to consider and compare the terms listed below, which both direct-mail applications and preapproved solicitations must reveal.

Which card is best for you may depend on how you plan to use it. If you plan to pay bills in full each month, the size of the annual fee or other fees, and not the periodic and annual percentage rate, may be more important. If you expect to use credit cards to pay for purchases over time, the APR and the balance computation method are important terms to consider. In either case, keep in mind that your costs will also be affected by the grace period.

Annual Percentage Rate

The “annual percentage rate,” or APR, is disclosed to you when you apply for a card, again when you open the account, and on each bill you receive. It is a measure of the cost of credit, expressed as a yearly rate.

The card issuer also must disclose the “periodic rate,” the rate the card issuer applies to your outstanding account balance to figure the finance charge for each billing period.

Variable Rates

Some credit card plans allow the card issuer to change the annual percentage rate on your account when interest rates or other economic indicators (called indexes) change. Because the rate change is linked to the performance of the index, which may rise or fall, these plans are commonly called “variable rate” plans. Rate changes raise or lower the amount of the finance charge you pay on your account. If the credit card you are considering has a variable rate feature, the card issuer must tell you that the rate may vary and how the rate is determined, including which index is used and what additional amount (the “margin”) is added to the index to determine your new rate. You also must be told how much and how often your rate may change.

Related Guide: If you find yourself in financial trouble, please see the Financial Guide: GETTING OUT OF FINANCIAL TROUBLE: Steps You Can Take.

Grace Period

A grace period allows you to avoid the finance charge by paying your current balance in full before the due date shown on your statement. Knowing whether a credit card plan gives you a grace period and the length of this period is especially important if you plan to pay your account in full each month.

If there is no grace period, the card issuer will impose a finance charge from the date you use your credit card or from the date each credit card transaction is posted to your account. If your credit card allows a grace period, the card issuer must mail your bill at least 14 days before your payment is due. This policy ensures that you have enough time to make your payment by the due date.

The grace period is generally misleading. The period does not start when the statement is mailed and end when your check is received, as many consumers believe. In fact, it usually starts a few days before the statement is mailed and ends a few days after the payment is received, based on certain accounting dates adopted by the credit card company. Consequently, a 25-day grace period (a fairly common period) for paying the statement may water down to a much shorter period.

Annual Fees

An annual fee is a fee that is automatically charged to your credit card account once a year. Fees typically range from $25 to $500, depending on your credit card. The fee is for benefits that come with a particular credit card. In general, the more benefits associated with the card, the higher the fee; however, many credit cards have no annual fee so it pays to shop around.

Transaction Fees and Other Charges

A credit card also may involve other types of fees. For example, some card issuers charge a fee when you use the card to obtain a cash advance, when you fail to make a payment on time (late fees), or when you go over your credit limit (over-limit fees). The Credit CARD Act of 2009 also addresses

The Credit CARD Act of 2009 specifically addresses late fees and over-limit fees in that card holders must be given at least 21 days from the time of mailing to pay their bill and all late fee traps such as weekend deadlines and due dates that change each month are eliminated. In addition, the law helps consumers avoid over-limit fees because issuing institutions must now obtain a consumer’s permission to process transactions that would place the account over the limit.

Balance transfer fees are incurred when balances are transferred from high-interest credit cards to lower interest cards. Fees for balance transfers are typically based on a percentage of the amount being transferred (typically 3% or 5%), with limits on minimum or maximum fee amounts. Many credit card issuers offer zero percent interest on balance transfers for the first six to 12 months that revert to regular interests rates at the end of the promotion period.

Other types of fees can include foreign transaction fees, fees for receiving a copy of monthly statements, replacing lost cards, or for using the credit card as a source of funds for overdraft protection.

Balance Computation Method for the Finance Charge

If your plan has no grace period or if you expect to pay for purchases over time, it is important to know how the card issuer will calculate your finance charge. This charge will vary depending upon the method the card issuer uses to figure your balance. The method used can make a difference, sometimes a big difference, in how much finance charge you will pay even when the APR is identical to that charged by another card issuer and the pattern of purchases and payments is the same.

Thanks to the Credit CARD Act of 2009, credit card issuers are now required to show consumers on their periodic statements how long it would take to pay off the existing balance and the total interest cost if the consumer paid only the minimum due, as well as the payment amount and total interest cost to pay off the existing balance in 36 months.

Average Daily Balance

The average daily balance method (including or excluding new purchases) gives you credit for your payment from the day the card issuer receives it. To compute the balance due, the card issuer totals the beginning balance for each day in the billing period and deducts any payments credited to your account that day. New purchases may or may not be added to the balance, depending on the plan, but cash advances typically are added. The resulting daily balances are added up for the billing cycle and the total is then divided by the number of days in the billing period to arrive at the “average daily balance.” This is the most common method used by credit card issuers.

Adjusted Balance

This balance is computed by subtracting the payments you made and any credits you received during the present billing period from the balance you owed at the end of the previous billing period. New purchases that you made during the billing period are not included. Under the adjusted balance method, you have until the end of the billing cycle to pay part of your balance and you avoid the interest charges on that portion. Some creditors exclude prior, unpaid finance charges from the previous balance. The adjusted balance method usually is the most advantageous to card users.

Previous Balance

As the name suggests, this balance is simply the amount that you owed at the end of the previous billing period. Payments, credits, or new purchases made during the current billing period are not taken into account. Some creditors also exclude unpaid finance charges in computing this balance. If you do not understand how the balance on your account is computed, ask the card issuer. (An explanation of how the balance was determined must appear on the billing statements the card issuer provides you and on applications and preapproved solicitations the card issuer may send you.)

When shopping for a credit card, you probably will want to look at other factors besides cost, such as whether the credit limit is high enough to meet your needs, how widely the card is accepted, and what services and features are available under the plan. You may be interested, for example, in “affinity cards,” all-purpose credit cards that are sponsored by professional organizations, college alumni associations, and some members of the travel industry. Frequently, an affinity card issuer donates a portion of the annual fees or transaction charges to the sponsoring organization or allows you to qualify for free travel or other bonuses.

“While the interest rate is a major factor in determining your interest cost, the method of computing the balance to which the interest rate is applied can also be significant. The following table shows how your interest cost can vary when the Average Daily Balance, Adjusted Balance and Previous Balance methods are used.”

* To figure average daily balance (including new purchases):

($400 x 15 days) + ($100 x 3 days) + ($150 x 12 days) divided by 30 days = $270

** To figure average daily balance (excluding new purchases):

($400 x 15 days) + ($100 x 15 days) divided by 30 days = $250

As you can see, the finance charge varies based upon which balance is used and whether new purchases are included or excluded.

The use of rebate and rewards cards has grown rapidly. Costco, for example, sponsors a credit card (Costco Cash Rebate card) that give rebates on the cost of merchandise you buy with the card once you spend a certain amount. You usually get larger rebates on the sponsoring company’s products and lower rebates on other card charges. Credit card solicitations promise cash, frequent-flier miles or points that will buy everything from hotel rooms to gas.

You will get a good deal from a rebate card if you spend a lot, and if you pay your bill in full each month. If you carry a balance on the card, what you gain in rebates you will lose in the excessive interest charged by credit cards.

Here are five suggestions for anyone planning to use credit cards:

1. Pay bills promptly to keep finance charges as low as possible.
2. Keep copies of sales slips and promptly compare charges when your bills arrive.2. Keep a list of your credit card account numbers, telephone numbers of each card issuer, and login information (if you pay your credit cards online) in a safe place in case your cards are lost or stolen.
3. Protect your credit cards and account numbers to prevent unauthorized use. Draw a line through blank spaces above the total when you sign receipts. Rip up or retain carbons.
4. Deal only with reliable firms. Check with your local consumer protection agency or the Better Business Bureau (BBB) closest to where the business is located. Study the advertising offer carefully. Ask the company about its warranty, refund and exchange policies. If you cannot get the answers to your questions, or there are any doubtful claims, don’t buy.
5. Never Send Cash. Never give out your credit, debit charge card, or bank account number unless you have checked out the company or have done business with them before. Try to pay by charge or credit card, so that you have record in the event of a dispute with the merchant.

If there is a problem with your order, for instance, if you were billed for the wrong amount, you never got the product, the goods arrived in damaged condition, or the merchandise or services were misrepresented, then try to resolve it by following these steps:

When you have charged your purchase, you are entitled to a response to your complaint within 30 days, and the problem must be resolved within two billing cycles (but not more than 90 days). If you used a debit card, you are entitled to a response within 10 days. However, if the financial institution that issued the card needs more time, it may take up to 45 days, provided it credits your account with the disputed amount until the dispute is resolved.

Related Guide: For a listing of what merchants are allowed to ask, please see the Financial Guide: MERCHANT CREDIT CARD ABUSES: What They Cannot Ask You To Do

Write immediately to the company from whom you ordered, explaining the problem and asking for a specific resolution. Be sure to include your name, address, and daytime phone number, your order or invoice number, a copy of a canceled check, or any other helpful information about your purchase. You generally have 60 days after receiving a bill to dispute charges. Pay any other charges on your bill that you are not disputing.

If you charged your purchase to a charge or credit card account, or you arranged for the payment to be automatically withdrawn from a bank account, send a copy of your letter to the card issuer or bank.

Related Guide: For a more in-depth discussion of your rights in the event of a dispute with a merchant, please see the Financial Guide: YOUR CREDIT CARD RIGHTS: What To Do If You Have A Problem.

The following agencies are responsible for enforcing federal laws that govern credit card transactions. Questions concerning a particular card issuer should be directed to the enforcement agency responsible for that issuer.

State Member Banks of the Reserve System:
Consumer & Community Affairs
Board of Governors of the Federal Reserve System
20th & Constitution Avenue, N.W.
Washington, D.C. 20551

National Banks:
Comptroller of the Currency
Customer Assistance Group
1301 McKinney Street
Suite 3450
Houston, TX 77010
Tel. (800) 613-6743

Federal Credit Unions:
National Credit Union Administration
1775 Duke St # 4206
Alexandria, VA 22314-6115

Non-Member Federally Insured Banks:
Federal Deposit Insurance Corporation
Consumer Response Center
1100 Walnut St, Box #11
Kansas City, MO 64106

Federally Insured Savings and Loans, and Federally Chartered State Banks:
Comptroller of the Currency
Customer Assistance Group
1301 McKinney Street
Suite 3450
Houston, TX 77010
Tel. (800) 613-6743

Other Credit Card Issuers (includes retail gasoline companies):
Bureau of Consumer Protection
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, D.C. 20580

The U.S. Postal Inspection Service:
This office covers mail fraud, sexually offensive materials, solicitations that look like government materials but are not. If you suspect such violations, contact your local Postmaster or Postal Inspector or:

Criminal Investigations Service Center
Attn: Mail Fraud
222 S. Riverside Plaza Ste. 1250
Chicago Il 60606-6100
Tel. 877-876-2455

The Federal Trade Commission:
Does not handle individual complaints, but reporting failure to deliver, late delivery, unordered merchandise, misrepresentation or fraud helps uncover widespread abuses that the FTC might take action to stop.

Division of Enforcement
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
Tel. (202) 326-2222

National Do Not Call Registry:
If you wish to have your name removed from telephone lists of marketing companies.

National Do Not Call Registry
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
website: www.donotcall.gov

Direct Marketing Mail Opt-Out:
Consumers who do not wish to receive promotional mail at home

Direct Marketing Association
1120 Avenue of the Americas
NY, NY New York, NY 10036-6700
Tel. 212.768.7277
website: www.DMAChoice.org

Low or No-Cost Credit Cards:
Bankrate.com lists banks charging no fees and low interest rates for credit cards. Visit the website: www.bankrate.com