Lending Act

The Truth In Lending Act

Dear Fix Your Credit Consulting community, today I wanted to tell you all about a very important law that grants you protections in regards to credit cards and credit card billing. In fact you might have benefited from this already, without ever realizing it.

It is called the Truth In Lending Act (TILA). Originally enacted in 1968 via a series of regulations put in place by the Federal Reserve Board, this often overlooked government measure makes it so that lenders are required to provide you with accurate loan cost information BEFORE you sign or agree to anything so that you can compare rates and prices across various lenders when you shop for certain types of loans, helping insure that you are making an informed and financially prudent decision.

Judge signing credit approval - Leading Act

The Truth In Lending Act covers most types of loans that fall under the consumer credit umbrella, including closed-end credit, such as car loans and home mortgages, and open-end credit, such as a credit card or home equity lines of credit. 

Another benefit of this law is is that it protects what is known as a right of rescission, which means if you take out a loan that is covered by the Truth In Lending Act, then you have the right to reconsider your decision and back out of the loan process without losing any money within three days of beginning the process. Let me just repeat that again: you can back out of ANY loan covered by the Truth In Lending Act for up to THREE DAYS after taking out the loan without losing ANY additional money. This right helps protect you against sleazy sales tactics used by shady lenders.

An example of this is if a customer was to ask a lender about taking out an adjustable-rate mortgage. The lender would be required to tell the customer about how their monthly payments might change in regards to possible future interest rate scenarios.

person receiving credit contract to sign - Lending Act

The Truth In Lending Act also prevents lenders from pushing customers towards loans that would result in more money for them if it is not in the best interest of the customer themselves. It also prevents credit card companies from charging exorbitant fees to customers that might be late on their payments–this is probably one of the most important parts of the law for a lot of people.

Some states have their own version of the Truth In Lending Act that has slight variations on what exactly it enforces, but the core components and goal of ensuring that borrowers are afforded all the information they need to make the correct decision when shopping for a loan remain the same.

It should be noted that the Truth In Lending Act does not regulate interest on loans or specify any regulations in regards to who can or cannot be given a loan, but that does not make it any less meaningful. The protections it does offer, while specific, are incredibly important to make sure you are not being cheated or given misleading information that could lead you to financial ruin.

On that note, if a lender runs up extra, unwanted inquiries on your credit report, please reach out to us so we can help you dispute them. Each inquiry can bring your credit score down 2 to 4 points and can look bad to future creditors.Give us a call at 877-212-2450 so we can see what inquiries we can help you remove!

person receiving credit - Lending Act

If you have any questions, feel free to give us a call at 877-212-2450!

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