CFPB Goes After Credit Repair Companies

They are going after credit repair companies that are misrepresenting their ability to repair someone’s credit.  In their complaint they are seeking penalties against four credit repair companies totaling $2,000,000.00.  The four companies targeted by the CFPB are Prime Credit, IMC Capital, Consumer Credit Consultants and Park View Law.

Consumer Financial Protection Bureau Per A Statement From CFPB Director Richard Cordray:

“Today, the bureau is taking action against companies that charged illegal fees and misled consumers about their ability to fix their credit. We will remain vigilant about protecting consumers from companies that mislead them to turn a dishonest profit.”  Credit repair companies are a hit or miss in terms of their usefulness.  If you’re considering using one; check their rating with the Better Business Bureau and do some research on the company before moving forward.  The CFPB has been very active in going after companies they fell are hurting consumers and/or breaking the law.  According to the complaint filed by the CFPB these companies promised to remove “virtually any negative information” from a credit report which according to the CFPB is misleading since it’s illegal to remove accurate negative information.  This is important to mortgage lenders

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Per The Complaint; The CFPB Alleges That The Companies:

  • Charged illegal advance fees. Federal law prohibits telemarketers and certain other companies from requesting or collecting fees for credit repair unless they can meet certain conditions about the delivery of that service. According to the CFPB, the four companies charged “a variety of fees” before they demonstrated that they had achieved the promised results.
  • Failed to disclose limits on “money-back guarantees.” While the companies offered money-back guarantees for some services, they didn’t disclose the “significant limits” on those guarantees – including a requirement that the customer had to pay for at least six months of service to be eligible.
  • Misled consumers about the benefits of their services. The CFPB alleges that the companies claimed that their services would result in the removal of negative information from customers’ credit reports. They also misrepresented that their services would “result in a substantial increase” to their customers’ overall credit scores, the CFPB said.

How Your Credit Score Impacts Your Mortgage Rate:

Why this action by the CFPB is so important is that your credit score is a major part of your ability to obtain a new mortgage (and auto loan). So when a homeowner is looking to boost their credit score and the results are no where near what the company promised that could have huge implications for the borrower. Your credit score is one of the three big factors in getting qualified, finding a loan program that works and the interest rate you receive. These companies took advantage of borrowers and the CFPB is doing the right thing by going after companies that over promise and underdeliver.

Your credit score directly impacts the mortgage rate. When your credit score is above 740 you typically obtain the best mortgage terms the lender has to offer (keep in mind other things impact the rate as well including your LTV, if the loan is cash out and more). When you go below a 740 credit score you start to see your terms change and the difference between a 680 credit score and a 740 credit score is significant (in terms of the terms a mortgage lender will quote).

The best thing you can do for your credit is pay your bills on time, avoid having more than four or five credit card companies check your in a two year period and keep your credit card balances below 50% of the credit limit (ideally below 35% of the limit the credit card company provides).

JB Mortgage Capital, Inc.:

We have years and years of experience looking at credit reports and from that we’ve gained a fair amount of knowledge about what it takes to repair someone’s credit.  If you would like some FREE and potentially helpful advice on how to repair your credit feel free to contact us directly at 1-800-550-5538. If you are looking for current mortgage rates we have you covered on our current mortgage rates page. We’ll not only keep you up-to-date with where mortgage rates are at but also cover important bond market information and general economic news that may influence mortgage rates.

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About Loan Officer Kevin O'Connor

About Loan Officer Kevin O'Connor

He is the founder and main contributor of koloans.com. He has over 15 years of experience as a Mortgage Loan Originator (MLO) and is a fully licensed with the state of California and the Nationwide Mortgage Licensing System (NMLS). He has a top rating with the Better Business Bureau and a top rating with Zillow. He continually delivers the results homeowners are looking for; low rates, fast closings and exceptional service: "Helping Homeowners Achieve Their Dreams"  CA DRE #01499872 and NMLS # 247447