Which Act promotes the informed use of consumer credit?

• A. Fair Credit Reporting Act
• B. Truth in Lending Act
• C. Real Estate Settlement Procedures Act
• D. Equal Credit Opportunity Act

Answer: (B)

The main idea here is how lenders must present the true cost of borrowing so you can compare offers and decide wisely. The Truth in Lending Act requires lenders to disclose, in a clear and standardized way, the cost of credit—things like the annual percentage rate (APR), finance charges, amount financed, and the total payments over the loan term. It also lays out disclosure timing and formats so you can meaningfully compare different loans and understand what you’ll actually owe. In addition, it includes consumer protections such as the right of rescission on certain loans, reinforcing informed decision-making.

Other acts play related roles but don’t focus on presenting credit terms for informed comparison. The Fair Credit Reporting Act protects the accuracy and privacy of your credit reports. The Real Estate Settlement Procedures Act addresses settlement costs and closing disclosures in real estate transactions. The Equal Credit Opportunity Act prohibits discrimination in lending. None of these are primarily about informing consumers of the true cost of credit in a standardized, comparable way.