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New Trade Association Aims To Improve Consumer Credit Experience

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The American Association of Consumer Credit Professionals (AACCP) recently held a press briefing to announce its new formation as a trade association dedicated to advocating for “holistic consumer credit repair.”  Despite the word “repair” missing from the trade group’s name, the association is comprised of credit repair industry experts and advocates for the credit repair industry. 

Responding to a perceived gap between the significant credit problems facing consumers and limited efforts by regulators and lawmakers to help consumers overcome those problems, the AACCP aims to educate consumers about the responsible use of credit and their legal rights and responsibilities about how furnishers and consumer reporting agencies publish information about their creditworthiness.  The group prides itself on being the only consumer advocate in the credit reporting system.  The aim is to “support consumer access to credit through accurate, fair, and substantiated credit reports.”  A short video on the group’s website also promises to protect consumers against bullying by “shadowy debt collectors.” 

The AACCP wants stakeholders in the credit ecosystem to know that they do more than just fix tradelines on consumer reports.  The group’s inaugural announcement and website explain how modern credit repair organizations offer consumers more because they:

  •  Know the industry and the laws designed to protect consumers;
  •  Understand the circumstances of individual consumers to help them raise relevant questions with creditors and other furnishers of credit report information;
  •  Operate with integrity and maintain a strong focus on compliance with applicable statutes;
  •  Help consumers review, analyze and understand their credit reports in order to identify items that may need to be challenged and, if possible, changed;
  •  Advocate on behalf of consumers to resolve potential issues on their credit report with creditors/furnishers and the Consumer Reporting Agencies (CRAs a/k/a credit bureaus); and
  •  Educate consumers on their credit reports, how to build positive credit, and encourage them to use credit responsibly.

(See, https://aaccp.org/about/)

The group describes these services as a “holistic approach to credit repair advocacy.”  A stated focus of this advocacy is to bring racial equity and fairness to the credit system.  The group’s founders are familiar players in the credit repair space, Progrexion and Lexington Law.

The credit repair industry is regulated by state and federal law.  The Credit Repair Organizations Act (15 U.S.C.S. § 1679 et seq.) is the federal law governing all credit repair services.  Like many other consumer protection laws, the CROA prohibits false and misleading behavior, requires certain consumer disclosures, empowers consumers with certain legal rights, and establishes a private right of action for consumers against credit repair organizations that do not follow the law.  Many states have implemented similar laws proscribing certain harmful behavior and mandating consumer-friendly behavior.  Despite a 5-year statute of limitations on violations of the CROA, a quick search revealed only a small number of reported cases involving this statute.  The law has been on the books since September 1996.

The collection industry and the credit repair industry share many similarities.  They are both highly regulated by state and federal laws throughout the country.  Their reputations are shaped most often, not by the law-abiding actors who bring assistance and value to consumers, but instead by the few who disregard the rules and bring harm to consumers.  They each sit on the front lines of consumer interaction, listening to stories of hardship and helping consumers triumph over their credit challenges.  Both industries have also had their share of government and civil scrutiny, with the government going after the biggest players in the marketplace:

…and courts narrowing the application of the Fair Credit Report Act to disputes received “directly” from a consumer:

But the relationship between the credit repair industry and the collection industry has not always been simpatico.  Debt collectors are the recipients of tens of millions of dispute letters from credit repair organizations annually; often perceived as frivolous and unsubstantiated.  Collectors themselves have taken action against credit repair organizations to stop this untoward behavior:

Yet, in the end, both industries pursue their stated purposes of helping consumers overcome financial challenges.  Will this new trade association change public perception?  Will lawmakers be persuaded to pass laws favorable to the credit repair industry?  Will regulators take a kinder, more gentle approach to regulating the credit repair industry?  The impact of this new association on the public, consumers, lawmakers and regulators remains to be seen.  There may be more in common between the collection industry and the credit repair industry than either is willing to admit. 



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Are Sallie Mae Student Loans Federal or Private?

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When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances

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Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit

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Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.

 

 

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