Fair Credit Billing Act
Definition and meaning of Fair Credit Billing Act in real estate.
The Fair Credit Billing Act is a federal law designed to protect consumers from unfair billing practices on open-end credit accounts, such as credit cards. This legislation establishes a clear procedure for consumers to dispute billing errors, including unauthorized charges and incorrect amounts.
In more detail
While the law applies primarily to credit cards and other revolving lines of credit, it is highly relevant for home buyers preparing for a mortgage. Mortgage lenders scrutinize credit reports and billing history to assess creditworthiness, making error resolution vital. Under this act, consumers must write to the creditor within sixty days of receiving the bill containing the error.
The creditor must acknowledge the dispute and investigate, during which time they cannot report the disputed amount as delinquent to credit bureaus. Resolving these errors quickly helps buyers maintain a strong credit score to qualify for favorable mortgage rates.
Key facts
| Category | Mortgages & Financing |
|---|---|
| Time limit to dispute | Within 60 days of statement receipt |
| Applies to | Credit cards and revolving credit accounts |
| Protects against | Unauthorized charges and billing errors |
A buyer notices an unauthorized charge on their credit card statement and utilizes the Fair Credit Billing Act to dispute the fee, keeping their credit history clear during the mortgage underwriting process.
Frequently asked questions
How do I dispute a billing error under the Fair Credit Billing Act?
You must send a written notice to the creditor's designated address for billing inquiries within sixty days of the statement date.
Can a creditor report a disputed debt to credit bureaus?
Creditors cannot report the disputed amount as delinquent or threaten your credit rating while the investigation is ongoing.