You are Not the Customer: Why Fixing Your Credit Report is So Damn Difficult
Plus, Yo-Yo auto sales and more on buy now, pay later
You need a credit score for a lot of things — buying a car, getting a mortgage, renting an apartment — sometimes employers will access them before making a job offer. So, it’s important that the information on your credit report is accurate.
However, fixing errors or correcting inaccurate information on your credit report is not always easy.
The consumer protection attorneys at Finn Law Group offer some advice on how to deal with the inaction of the credit bureaus.
The bottom line: Persistence is necessary.
More than one-third of Americans found at least one error on their credit report, according to a 2021 Consumer Reports investigation.
Finn Law explains the process you should use when you detect an error — and reminds you that you can check your credit report for free.
To dispute an erroneous account with a credit reporting company, consumers should first review their credit report for any inaccuracies and submit a written dispute to the appropriate Credit Reporting Agency (CRA) describing the error in detail. It is also important to keep records of all correspondence with the CRA and continue following up until the issue has been resolved. Check your credit for free.
Here’s the deal: The credit bureaus make money from banks, credit card companies, and other entities granting credit - they have little incentive to respond to individual consumers with valid complaints.
Remember, too, that those companies claiming to repair your credit are offering more hype than hope.
How Car Dealers Keep Customers on a Yo-Yo
A coalition of consumer groups is urging the Federal Trade Commission (FTC) to take action that would prohibit so-called “Yo-Yo” auto sales. In practice, this means allowing a buyer to drive a car off the lot before a contract is fully executed with a third-party credit agency.
Here’s how the practice works:
When a consumer signs a credit contract disclosing the cost of financing and drives the car off the lot, the deal appears to be complete from the consumer’s perspective. Some dealers, however, employ a deceptive tactic where they know at the time of the sale that the deal may not actually be final. The dealer calls the consumer days, weeks or even months later to tell them that they need to pay additional costs or a higher interest rate to keep the car, or that the deal needs to be completely undone and the consumer must return the car. This process of subjecting a consumer to being “yo-yo’d” back and forth to the dealership pressures consumers to pay more than what they expected and agreed to and adds significant stress and uncertainty to an already complicated and expensive financial transaction.
“Yo-yo sales frequently harm consumers by lowering their credit scores, forcing them to forfeit their hard-earned down payments, and jeopardizing their primary means of transportation,” stated Erin Witte, Director of Consumer Protection for Consumer Federation of America.
Breaking the String
Specifically, the groups outline a course of action in their petition that asks the FTC to issue a rule that requires dealers to add language to the consumer credit contracts which states that the terms of the deal are final, even if the contract is assigned to a third party. Violations would be enforceable by the FTC.
Buy Now, Pay Later: Unregulated and Potentially Dangerous
Fast Company has a story about the perils of buy now, pay later products such as Klarna and Afterpay. The bottom line: These products CAN be useful but carry significant risks and little consumer protection.
Here’s a word of warning from Lauren Saunders of the National Consumer Law Center (NCLC):
The smaller up-front cost may make purchases look more affordable, but “just because the price is cut into four doesn’t mean it really is,” noted Lauren Saunders, associate director at the nonprofit National Consumer Law Center. And then consumers usually have just six weeks to pay the rest off. “It’s a pretty short period of time. That’s really one rent cycle,” she noted. In a recent survey, 45% of buy now, pay later users said they used the option to buy things they otherwise couldn’t afford. “If you can’t afford it today, can you really afford it in six weeks?” she asked.
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