On the Nefarious Nature of Credit Repair
Don't believe the hype
Yes, a credit score is something you need in order to navigate the financial marketplace. Sometimes, credit scores are used in employment decisions.
You have one even if you don’t want one or don’t use much or any credit.
The credit bureaus work for the financial services industry, not for consumers.
So, what if you have bad credit — maybe an account in collections or maybe just past bad use of credit products — and now, you want to rectify that.
Along comes a company promising “credit repair” and you think it could fast track your path to better credit.
You should know that you can do most credit repair yourself for free.
The biggest factor: Time. If you have mistakes, you can have those corrected if you are vigilant in writing the credit bureaus.
However, if you have legitimate accounts that are delinquent or in collections, the only way to “repair” that is by paying the debt (or possibly settling, though that has implications for your score) and then waiting.
As time passes and you have a history of on-time payments while your delinquencies get further away, your score will improve.
There’s not a credit repair company that can make time go any faster.
That doesn’t stop some companies from trying to get your money in exchange for the promise of credit repair or debt relief, though.
A recent example comes from Burlington Financial Group.
Victims of that company’s deceptive practice are now receiving refunds from a $30 million fund set aside for compensation.
Burlington violated that Telemarketing Sales Rules by asking for upfront payments in exchange for credit repair or debt relief.
The company also failed to provide the services it claimed it was offering — in fact, consumers often saw their debts grow and their credit scores drop even as consumers were making monthly payments of $500 or more to Burlington.
The CFPB shut Burlington down.
But the case is yet another example of a credit repair/debt relief company preying on vulnerable consumers.
Excessive Overdraft Fees Sink TD/First Horizon Merger
Over at NewsBreak, I report on the collapse of the merger between TD Bank and First Horizon, two banks well-known for practices that can harm consumers like excessive overdraft fees.
“The OCC and Federal Reserve demonstrated they would not rubber stamp this merger bid without considering the public interest,” said CRL President Mike Calhoun. “Regulators deserve credit for not granting an expansion of TD Bank’s problematic operations, which includes an overdraft program that hammers financially vulnerable consumers with costly fees. This announcement presents an opportunity for TD to turn over a new leaf and treat its customers more fairly.”