The Consumer Credit Protection Act of 1968--which launched Truth in Lending disclosures--was landmark legislation. For the first time, creditors had to state the cost of borrowing in a common language so that you--the consumer--could figure out what the charges are, compare costs, and shop for the best credit deal.

Since 1968, credit protections have multiplied rapidly. The concepts of "fair" and "equal" credit have been written into laws that bar unfair discrimination in credit transactions, require that consumers be told the reason when credit is denied, let borrowers find out about their credit records, and set up a way for consumers to settle billing disputes.

Each law was meant to reduce the problems and confusion about consumer credit, which as it became more widely used in our economy, also grew more complex. Together, these laws set a standard for how individuals are to be treated in their financial dealings.

The laws say, for instance,

• that you cannot be denied a credit card just because you're a single woman
• that you can limit your risk if a credit card is lost or stolen
• that you can resolve errors in your monthly bill without damage to your credit rating and
• that you cannot have credit shut off just because you've reached age 62.

But let the buyer be aware! It is important to know your rights and how to use them. This handbook explains how the consumer credit laws can help you shop for credit, apply for it, maintain your credit standing, and, if need be, complain about an unfair deal. This handbook also explains what you should look for when using credit, details what creditors look for before extending credit, and reviews the laws' solutions to discriminatory practices that have made it difficult for women and minorities to get credit.

Read Consumer Handbook to Credit Protection Laws Online

GLOSSARY

Annual Percentage Rate (APR) -- The cost of credit as a yearly rate.

Appraisal Fee -- The charge for estimating the value of property offered as security.

Asset -- Property that can be used to repay debt, such as stocks and bonds or a car.

Automated Teller Machines (ATMs) -- Electronic terminals located on bank premises or elsewhere, through which customers of financial institutions may make deposits, withdrawals, or other transactions as they would through a bank teller.

Balloon Payment -- A large extra payment that may be charged at the end of a loan or lease.

Billing Error -- Any mistake in your monthly statement as defined by the Fair Credit Billing Act.

Business Days -- Check with your institution to find out what days it counts as business days under the Truth in Lending and Electronic Fund Transfer Acts.

Collateral -- Property offered to support a loan and subject to seizure if you default.

Cosigner -- Another person who signs your loan and assumes equal responsibility for it.

Credit -- The right granted by a creditor to pay in the future in order to buy or borrow in the present; a sum of money due a person or business.

Credit Bureau -- An agency that keeps your credit record.

Credit Card -- Any card, plate, or coupon book used from time to time or over and over again to borrow money or buy goods or services on credit. Credit History -- The record of how you've borrowed and repaid debts.

Creditor -- A person or business from whom you borrow or to whom you owe money.

Credit-related Insurance -- Health, life, or accident insurance designed to pay the outstanding balance of debt.

Credit Scoring System -- A statistical system used to rate credit applicants according to various characteristics relevant to creditworthiness.

Creditworthiness -- Past and future ability to repay debts.

Debit Card (EFT Card) -- A plastic card, looks similar to a credit card, that consumers may use to make purchases, withdrawals, or other types of electronic fund transfers.

Default -- Failure to repay a loan or otherwise meet the terms of your credit agreement.

Disclosures -- Information that must be given to consumers about their financial dealings.

Elderly Applicant -- As defined in the Equal Credit Opportunity Act, a person 62 or older.

Electronic Fund Transfer (EFT) Systems -- A variety of systems and technologies for transferring funds electronically rather than by check.

Finance Charge -- The total dollar amount credit will cost.

Home Equity Line of Credit -- A form of openend credit in which the home serves as collateral.

Joint Account -- A credit account held by two or more people so that all can use the account and all assume legal responsibility to repay.

Late Payment -- A payment made later than agreed upon in a credit contract and on which additional charges may be imposed.

Lessee -- A person who signs a lease to get temporary use of property.

Lessor -- A company that provides temporary use of property usually in return for periodic payment.

Liability on an Account -- Legal responsibility to repay debt.

Open-End Credit -- A line of credit that may be used over and over again, including credit cards, overdraft credit accounts, and home equity lines.

Open-End Lease -- A lease which may involve a balloon payment based on the value of the property when it is returned.

Overdraft Checking -- A line of credit that allows you to write checks or draw funds by means of an EFT card for more than your actual balance, with an interest charge on the overdraft.

Point-of-Sale (POS) -- A method by which consumers can pay for purchases by having their deposit accounts debited electronically without the use of checks.

Points and Origination Fees -- Points are finance charges paid at the beginning of a mortgage in addition to monthly interest. One point equals one percent of the loan amount. An origination fee covers the lender's work in preparing your mortgage loan.

Punitive Damages -- Damages awarded by a court above actual damages as punishment for a violation of law.

Rescission -- The cancellation or "unwinding" of a contract.

Security -- Property pledged to the creditor in case of a default on a loan; see collateral.

Security Interest -- The creditor's right to take property or a portion of property offered as security.

Service Charge -- A component of some finance charges, such as the fee for triggering an overdraft checking account into use.

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