If you are struggling with a low credit score, you already know that it results in high credit card rates and real challenges in obtaining other kinds of credit. But the problem goes beyond this. People with low credit scores pay higher interest rates on almost every type of loan. The reason given by lending institutions is that the cost of lending to people with low credit scores is higher than the cost of lending to people with high credit scores.
A recent article from SmartMoney.com reported on some of the problems faced by people with less than perfect credit. A perfect credit score is 850. Almost half of all consumers have a score below 700, with 1/3 in the 550 to 699 range. Many of these people will have problem getting credit; and if they do, it will more than likely result in a percentage rate that is higher than if your score is 725 for instance. Continue reading
The federal agency, CFPB, released its annual report in July 2012 to address that issue.
The CFPB was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act in the wake of the near financial meltdown of 2007. On its website it defines its role in the following manner: “the central mission of the Consumer Financial Protection Bureau (CFPB) is to make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.” Consumer protection, not business advocacy, is the number one goal.
The agency’s start has not been a smooth one. The head of the bureau was appointed by President Obama during a congressional recess, thereby avoiding an approval vote, which Republicans said they would block. In short, Democrats created the agency and are in favor of it, and Republicans are attempting to dismantle the agency. For now, it exists. Continue reading