OTHER ASPECTS OF USING CREDIT...Credit Errors

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 credit errors

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 Credit 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.