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Credit Truth in Lending

Credit is money granted by a creditor or lender to a debtor or borrower, who defers payment of the debt. In exchange for the credit, the lender gets back the money, usually paid on a monthly basis, plus finance charges or interest. Entities within the credit industry, including banks, mortgage lenders, and credit card companies, earn billions of dollars per year from these charges and the interest received from outstanding balances.

The government regulates the credit industry due the potential for abuse by those who issue credit. Without government regulation, creditors could attempt to confuse debtors regarding the terms of credit or could deny credit on improper grounds, such as the race or gender of the potential debtor. Identity theft, which occurs when one person uses another’s personal identification to commit fraud or other crimes, has become a major problem in the United States due to the continually increasing use of the Internet. Legislatures, including Congress, have enacted statutes in recent years that are designed to protect the credit histories of those who may be the victims of identity theft.

Inside Credit Truth in Lending