Guide to Credit Agreements

The complexities of credit agreements can often feel like a daunting task. However, understanding your rights and entitlements under the Consumer Credit Act 1974 can provide you with the necessary tools to manage your credit more effectively.

What is a Credit Agreement?

A credit agreement is essentially a contract between you and a lender, outlining the terms under which you borrow money. These agreements can come in various forms, including loans, credit cards, and hire purchase agreements. It’s crucial to understand that not all agreements are covered by the Consumer Credit Act 1974, but most agreements with individuals for personal or household purposes are included.

Your Rights to Information

Under the Consumer Credit Act 1974, you have significant rights to information both before and after entering into a credit agreement. This legislation ensures transparency and aims to protect consumers from potentially unfair practices.

Before You Sign

Before entering into a credit agreement, the lender must provide you with adequate explanations and sufficient information to understand the proposed credit agreement’s key features. This includes:

  • The total amount you must pay back;
  • The payment arrangements;
  • The rate of interest and how it’s applied;
  • Any charges for late payments.

This information is crucial as it enables you to compare different offers and make an informed decision about whether to proceed.

After You’ve Signed

After entering into an agreement, you can request a copy of your credit agreement and a statement of account at any time. This can be particularly useful if you don’t have the original documents or if you need to review the terms. There might be a small fee for requesting this information, but it’s capped at £1 for a copy of your agreement and nothing for the statement of account.

It’s important to note that if the lender fails to provide this information within 12 working days, they cannot enforce the debt against you until they do.

Handling Disputes and Unfair Relationships

If you believe your credit agreement is unfair or contains incorrect information, you have the right to challenge it. The Consumer Credit Act 1974 provides a framework for what constitutes an “unfair relationship” between lenders and borrowers. This could include excessive interest rates or misleading terms.

Should you find yourself in a dispute, it’s advisable to first raise the issue with your lender. If the dispute remains unresolved, you can take the matter to the Financial Ombudsman Service for an independent review.

Exercising Your Rights

Knowing your rights is the first step to taking control of your financial agreements. Here are a few practical steps to exercise these rights effectively:

  1. Always Request a Copy: If in doubt, request a copy of your credit agreement and statement of account. This documentation will help you understand the terms of your agreement and manage your repayments more effectively.
  2. Compare Before You Commit: Use the information lenders are required to provide to compare different credit offers. This can help you find the most favourable terms and avoid any surprises down the line.
  3. Challenge When Necessary: Don’t hesitate to challenge terms you believe are unfair or incorrect. You’re entitled to fair treatment under the law, and there are avenues available for dispute resolution.
  4. Seek Advice: If you’re unsure about your rights or how to proceed with a dispute, seeking advice from a professional or a consumer rights organisation can be invaluable.


Understanding your rights under the Consumer Credit Act 1974 is essential for anyone dealing with credit agreements. By arming yourself with this knowledge, you can make more informed decisions, protect yourself from unfair practices, and manage your finances with confidence. Always remember, information is your greatest ally in navigating the world of credit agreements.

To find out more about how Debt-Claims Solicitors can assist your business, contact us today or call us on 02475 461 042.

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