Buying on credit is something most of us do these days, even if we have the cash to pay for things we want.

The Consumer Credit Act is the main piece of legislation that governs how credit providers must treat consumers.

It contains important provisions, including your rights in relation to your credit files, and the extra protection you get when you pay for something with a credit card.
Extra shopping rights when you pay with a credit card

If you buy something that’s faulty, doesn’t do what it is supposed to, or is not what you ordered, you have rights to a refund, repair or replacement.

You have similar kinds of rights if a service (such as work on your home) is not carried out properly. In these cases, your legal rights are against the retailer you bought the item from, or the trader you contracted to do the work.
‘Jointly and severally liable’

However, if you paid on credit card, the card company is ‘jointly and severally liable’ under Section 75 of the Consumer Credit Act, which means it is equally responsible, along with the retailer or trader, for the quality of the goods or service. This can be particularly useful if the company you bought from has gone bust or you can’t contact them for another reason.

A credit provider is only liable for goods or services costing between £100 and £30,000, and if the amount of credit is no more than £25,000.

However, a credit provider is still liable even if you made only part of the payment (a deposit, say) on your card.

But the law applies only to credit cards and not to debit cards (such as Visa Delta) or charge cards (where all charges must be settled at the end of the month).
Goods purchased overseas

In a landmark ruling, the House of Lords has confirmed that Section 75 does apply to foreign transactions. In 2004 the High Court said the act didn’t apply when people made purchases abroad. But that has since been overturned by the Court of Appeal.

The House of Lords has confirmed the protection also applies if you buy goods for delivery to the UK from overseas by telephone, mail order or over the internet.

Which? has always believed section 75 applied whether a card is being used in the UK or overseas.
Your right to cancel a loan

When you sign up for credit or take out a loan, you may be entitled to a ‘cooling-off’ period during which you can cancel the agreement without penalty.

If you sign the agreement in your home or anywhere else that is away from the credit company’s office, you get a five-day cooling-off period.

When you sign up for credit, you must be given a written credit agreement, including information about your rights to cancel, and your cooling-off period starts when you receive these.
Be careful where you sign

However, if you sign the credit agreement at the company’s offices, you do not get this cooling-off period, so you should be certain you want the credit, and be sure of its terms, before you sign.
Your rights to your credit files

When you apply for a loan or a credit card, the card company or credit provider may apply to a credit reference agency to check your credit history, and other details, for example, where you have lived in recent years. It will use this information when it decides whether to give you a card or a loan.
Checking you file

If you believe that you have been unfairly denied credit, you can ask the credit provider which credit reference agency or agencies they used.

You can then contact the agency or agencies to get a copy of your credit file, which they must provide for £2. There are three credit reference agencies: Equifax, Experian and CallCredit.

If you believe your file contains inaccurate or out-of-date information, you can ask for it to be amended, under the Consumer Credit (Credit Reference Agency) Regulations 2000.
Your right to pay less interest if you pay off a loan early

If you decide to pay off a loan or other credit agreement earlier than the full term, you should not have to pay the full amount of interest in the agreement, under the Consumer Credit Act.

If you want to pay off a loan early, you should write asking the credit provider how much you must pay to clear the debt.

How much interest you have to pay depends on when you took the loan out and how much of it you have already paid off.

If the credit provider hasn’t answered your letter asking how much your should pay, or if you believe they may be trying to charge you too much, you contact the Office of Fair Trading to see if will take the matter up with the creditor.