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Denied Credit? You Have Rights!
Plus, fighting illegal debt collection
Finding out you’ve been denied credit can be frustrating. Often, the explanation you receive from a potential creditor is vague, relying on highly technical language. This is due in part to the complex mathematical formulas used to determine credit eligibility. These algorithms take into account a range of factors from available data in order to arrive at a credit granting decision.
However, the Consumer Financial Protection Bureau (CFPB) has recently issued a notice that says creditors must provide a detailed explanation when issuing a denial of credit.
The ruling is due to a new interpretation of the Equal Credit Opportunity Act (ECOA). This law says that if credit is denied, a consumer must be given an explanation. In part, this is designed to protect consumers in the case of inaccurate or incomplete information on a credit report.
The consumer protection attorneys at Finn Law Group offer further explanation relative to the benefits of this new CFPB guidance.
The ECOA also requires lenders to keep you informed of their decisions and to be specific about their reasons for turning down a loan application or charging you a higher interest rate than the best one available at the time your application is accepted. The CFPB believes that black-box algorithms may make it more difficult for consumers to understand why they were denied. The federal agency is also concerned that black-box algorithms could disproportionately impact certain groups of people, such as minorities and women.
“An explanation that simply lists “secret artificial intelligence algorithm” as a main reason you were denied won’t be good enough. Companies that tell the CFPB — “I can read it to you but I can’t understand it for you” will fail. Companies will need to explain to the CFPB that they understand how their algorithm works and prove that it’s not a proxy for discrimination and, then, give consumers a clear, specific plain language reason why they were denied.”
Finn Law also offers some suggestions on how to protect your credit:
-Order a free credit report from AnnualCreditReport.com
-Educate yourself about how AI credit scoring works.
-If you’re denied credit, ask the creditor for an explanation.
-Check your credit report regularly to make sure there are no errors.
If you find an error on your credit report, dispute it with the credit bureau.
The bottom line: You have rights when it comes to your credit and credit applications.
While you may be tempted to use a credit repair company if you find errors, it is important to note that those businesses are often asking you to pay for things you do yourself for free.
If you know your rights and monitor your credit, you will be well positioned to take action to hold creditors accountable.
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When Debt Collectors Attack - Stand Up, Fight Back!
If you owe a legitimate debt, you probably want to pay it back. Unfortunately, a variety of circumstances may make paying a debt in full difficult. Most legitimate debt collectors will work with you if you’re willing to pay something and agree to a plan.
However, a number of debt collectors use shady and even illegal tactics in order to get you to pay.
The consumer protection attorneys at Finn Law Group offer some insight into the types of tactics that are illegal and what you can do to protect yourself from shady debt collectors.
Here’s an example from a recent case of a debt collector (Vantage Point) making false claims in order to attempt to get a consumer to pay a debt:
The defendants, using these deceptions, falsely claimed that consumers had committed a crime and that an arrest warrant would be issued unless they made a payment. Often, the defendants told consumers that they would spend months in jail or would need to pay thousands of dollars in bail if they didn’t pay. In some cases, the defendants falsely told third parties, including consumers’ friends and employers, that the consumers had committed a crime and that a warrant had been issued for their arrest.
As Finn Law notes, when you are faced with these claims, it can be very intimidating. You should know that collectors can’t threaten jail time and are not allowed to talk to others about the specifics of your debt. Certainly, they should not be claiming to your friends or coworkers that you may be arrested.
In this case, the collector was fined and ordered to cease these tactics.
However, if you’re facing a shady collector, you have recourse.
Here’s more on what you can do if you feel harassed, threatened, or intimidated by a collector:
The best way to protect yourself from illegal debt collection tactics is to know your rights. The FTC has published information on its website about your rights under the Fair Debt Collection Practices Act. You can also find information on debt collection scams and how to avoid them.
If you are being harassed by a debt collector, you may be able to take direct action against them. The FTC has a complaint process where you can file a complaint against a debt collector for illegal debt collection practices. You can also contact your state attorney general’s office or the Consumer Financial Protection Bureau if you think you have been a victim of illegal debt collection practices.