The role of the Consumer Financial Protection Bureau (CFPB) has come under scrutiny, but as of the time of this writing, it’s still a place for consumers to log complaints against financial institutions.
Massive unemployment and reduced business capacities brought on by the pandemic have triggered a recession and made it tough for everyday people to meet monthly financial obligations like mortgage payments.
Financial institutions have shown a willingness to be flexible with customers, but it appears this unprecedented situation has made a mess of the relationship between consumers, financial institutions, and credit bureaus…and consumers are suffering the most as a result.
LendEDU’s analysis saw a 44% year-over-year (YOY) increase in the number of consumer finance complaints from March 13, when President Trump declared a national emergency, to July 17.
There was also a 38% increase in complaints from March 13 to July 17 compared to the previous 127-day period ending on March 12, 2020.
Note: If you would like a raw file of any data found below, or if you would like to see if LendEDU has more data than what was included in this report, please email me at [email protected]
In 2020, 140,042 CFPB Complaints Were Filed From March 13 to July 17 Compared to 97,008 Filed Over Same Time Last Year
The CFPB consumer complaint database gives aggrieved consumers a portal to file complaints against specific financial institutions, who are then given notice of the complaint and a window to respond.
The first part of our analysis involved gathering the raw number of CFPB complaints filed from March 13, 2020, to July 17, 2020, a 127-day period. We also tallied complaints filed from March 13, 2019, to July 17, 2020, to find YOY differences, and from November 7, 2019, to March 12, 2020, to find differences from the previous 127-day period.
While both the YOY and 127-day differences jump out at you right away, the percent increases in the number of complaints really exemplify just how many consumers are dealing with financial mishaps during the coronavirus pandemic.
Where Have the Increases Taken Place?
For both the YOY and prior 127-day periods, there were notable percent increases in the number of CFPB complaints in the “credit card or prepaid card,” “credit reporting, credit repair services, or other personal consumer reports,” and “money transfer, virtual currency, or money service” categories.
Biggest Riser: Credit-Related Complaints
There was an 84% YOY increase in the number of “credit reporting, credit repair services, or other personal consumer reports” complaints, and there may be a good explanation for that.
As the coronavirus pandemic constricted budgets and depleted savings accounts, many consumers began finding it difficult to meet monthly payments. An earlier LendEDU survey found 54% of Americans were worried about making their credit card payments due to the pandemic, while 57% had the same concern over their mortgage payments.
We have had numerous clients with erroneous markings on their credit report and negatively impacted credit scores due to the pandemic and the relief programs set in place by many banking institutions and credit card companies. I would say this is most likely occurring with about 20% to 25% of all credit reports we’ve viewed in the month of June.
Most of our clients or prospective clients have proactively called their credit card companies to let them know they will not be able to make payments and requested deferment and they were still marked as delinquent to the credit bureaus. Although, there have been instances when clients haven’t actively reached out and assumed they would be reported as current due to new federal guidelines, most of the errors in reporting actually come from instances in which the creditor was made aware of hardship and deferment.
Adem Selita, co-founder of The Debt Relief Company
In addition to this recurring credit reporting issue, Selita has been seeing something else with his clients that is resulting in damaged credit health.
Many consumers have seen their limit cut down to the utilized amount of credit. We’ve had a client with a $5,382 balance (prior to the pandemic the credit limit was $10,000), and as of June, the credit limit was slashed to $5,450. Essentially, this put the individual at a near 100% utilization on that particular line of credit and significantly decreased their total credit availability, so the hit to their credit score was two-fold.
This particular individual has never missed a payment and did not actually have to put any payments into deferral during the pandemic.
Adem Selita, co-founder of The Debt Relief Company
Selita went on to explain how another client had three separate credit card companies place his respective accounts in deferral, only to find that one marked his account 30 days late and the other two marked 60 days late.
Money Transfer Scams
There was also a 77% YOY increase in complaints categorized as “money transfer, virtual currency, or money service,” and Selita has had recent client experiences that could help explain this trend as well.
We have noticed a serious uptick in customers complaining about phishing scams related to Venmo & Zelle, fake text messages from banks, and calls from individuals trying to collect on debt they do not actually owe, etc.
Adem Selita, co-founder of The Debt Relief Company
Student Loan Complaints Drop
Interestingly, there was a substantial 41% YOY decrease in the number of student loan complaints, which may be due to the Department of Education placing all federal student loans in pandemic forbearance until September 30, 2020.
With no payments required and no student loan interest accruing until that date, borrowers may have put their student loan debt on the back burner.
No Matter the Product, Credit Report Issues Consistently Increased
For starters, it was no surprise to see many of the largest percent increases pertained to credit report issues. For example, there was a 168% YOY increase for the issue “problem with a credit reporting company’s investigation into an existing problem” under the sub-product “general-purpose credit card or charge card.”
There was a 109% YOY increase for the issue “incorrect information on your report” under the sub-product “credit reporting.” And even with many student loan issues experiencing a YOY decrease in complaints, the issue “problem with a credit reporting company’s investigation into an existing problem” under the sub-product “federal student loan servicing” still saw a 104% YOY increase.
From this data and the data from the first section, the biggest consumer finance problems since the beginning of the coronavirus pandemic have pertained to credit report issues. Specifically, a lack of chemistry between consumers, financial institutions, and the credit bureaus to properly manage the added deferments and adjusted payment plans.
Problems With CARES Act Debit Cards?
One particularly noteworthy trend that surfaced after taking a more granular look at the complaint data was the massive 506% YOY increase in complaints regarding the sub-product “government benefit card.”
Moreover, there was a 1790% YOY increase in complaints around the issue “problem getting a card or closing an account” under the aforementioned sub-product.
Why might this be?
As part of the massive government stimulus package in response to the coronavirus, adult Americans making less than $99,000 received a one-time government payment of up to $1,200. Some folks received this money via check or direct deposit, while others have received debit cards.
It’s been widely reported that the distribution of these debit cards has been a mess as some consumers can’t use the cards because the wrong name is printed, while others are mistaking the inconspicuous packaging the card comes in as junk mail and tossing or shredding their one-time payment.
Huge Increases Across-the-Board For Issues Related to “Money Transfer” Product
When it came to issues related to the product “money transfer, virtual currency, or money service,” there were consistently massive YOY increases.
For example, there was a 3067% YOY increase for the issue “problem adding money” under the sub-product “mobile or digital wallet.” There was a 900% YOY increase for the issue “confusing or misleading disclosures” under the sub-product “virtual currency,” and a 777% YOY increase for the issue “other service problem” under that same sub-product.
There was also a 150% YOY increase for the issue “fraud or scam” under the sub-product “check cashing service.”
As reported, the coronavirus pandemic has brought with it a number of phishing scams related to money transfers, in addition to fraudulent texts and calls from scammers impersonating banks trying to collect on debts.
All data that can be found within this report derives from the Consumer Financial Protection Bureau’s (CFPB) consumer complaint database, which can be accessed here. The data for this report was pulled from that database on July 17, 2020.
Three separate date ranges were used when pulling the data, including from March 13, 2019, to July 17, 2019; November 7, 2019, to March 12, 2020; and March 13, 2020, to July 17, 2020. The total number of complaints in any of those date ranges might be different if the data was pulled today because the CFPB backdates complaints and adds them to the date ranges after the fact.
LendEDU did not make any edits or corrections to the CFPB database and reported it as is. For example, if a consumer mistakenly filed a complaint under the wrong sub-product, we did not correct this mistake as there was no way of verifying its accuracy.
All complaints that are filed with the CFPB are sent to the financial institution that is named in the complaint. That institution is then given a period of time to respond to the complaint.
The percent increase calculations were completed by LendEDU with the numbers provided by the CFPB, while everything else is reported as it was pulled from the CFPB. For the final two tables, only the complaint categories that experienced the largest percent increases or decreases for both time periods analyzed were included in the tables.
New York, May 11, 2021 (GLOBE NEWSWIRE) — The unpredictability of the 2020 economy had very few positives to report on. However, one ray of light across the board was that the average FICO score for U.S consumers hit a record 710 last year, with millennials leading the way, boasting an 11-point increase.
Credit scores are important for millennials. Aged between 25-34, they are the generation who grew up during a changing financial climate, where more emphasis was placed on having a good FICO score in order to be approved for the likes of mortgages, auto loans and credit cards.
Yet not all US millennials had such a good year when it came to credit. Many are still struggling to gain the financial backing they need for both their personal and business life, and as a result aren’t benefiting from lower interest rates, higher credit limits, or access to better offers.
If you’re a millennial looking for credit repair, the team at Credit Planned is helping your generation get back on track:
Credit Planned is a platform that educates users on financial literacy to help them improve their credit and better plan their financial lives. A pioneer in credit repair, personal and business credit building, and funding solutions, they offer free online advice and how-to guides, alongside free over-the-phone consultations, to help people repair, improve, and maintain great credit.
With over 1,500 happy clients, each month they secure over $50,000 in funding and boost over 100 credit scores.
2. How can Credit Planned help millennials improve credit scores and access financial funding?
Above all else, Credit Planned can provide clear, actionable consultation on a case-by-case basis. As they experts when it comes to the financial industry, you will be given help and advice that will truly make the difference.
If your credit score has become a barrier to entry and approval for the likes of mortgages and loans, there are basic things you can do to quickly improve your score. While some are achievable from your side, some will need expert knowledge of the financial industry, both of which Credit Planned can help with.
Securing funding from banks can be made more achievable with an improved credit score. However, where real gains can be made is through leveraging the relationships Credit Planned have with these banks to secure 0% interest funding (anywhere from 50-150k) for 1-3 years.
Corporate Credit Blueprint
Many business owners aren’t aware of the power of business credit, and some don’t even know how to affects your personal score directly. Credit Planned can help optimize your business credit, no matter the size of your business, and open the doors to help your business grow.
3. Put past decisions and improper financial education behind you
Credit Planned are helping millennials who didn’t receive a financial education build the knowledge to prosper once more. From debunking credit mythics to posting great tips via their Facebook page, their online resources are an invaluable addition for anybody who is looking to improve their credit score and secure funding.
Book a free consultation and get your credit score on track
A good credit score indicates that you know how to manage your budget and make good financial decisions. Woven into most key systems in our society, it’s something that needs to be addressed should it be halting your progress in any walk of life.
Book a free consultation via the website, or by calling (877) 650-5116
Credit Planned are a pioneer in credit repair, personal and business credit building, and funding solutions. Don’t be afraid to scale your business or become financially independent. Read our advice, speak to us via a free consultation, and start building your credit today. Learn more via the website: https://creditplanned.com/.
On average, one in five Americans has an unfair credit score. Mistakes on reports from bureaus are quite common. They range from misspellings to events that never happened. A false bankruptcy may tarnish your records for up to a decade! Experts may have such errors erased, so your FICO total will rise immediately. These services are not free, but what is the best value for money?
Credit repair is a highly competitive industry. As a result, the best credit agencies on Credit Fixed have to offer reasonable pricing. Customers are always charged depending on the length of the billing cycle (e.g., 30-45 days). In addition, there could be an upfront fee.
Cost vs. Duration
Repair is a lengthy process. Although professionals speed it up, you still need several months (between 2 and 6) to clean your records. The most complex cases linger for a year. Trusted companies allow you to stop using their services at any time. Still, the longer — the more expensive.
Today, monthly rates from the most popular providers range between $79 and $129.95. If the upfront fee applies, it may be equal to the monthly payment or different. For example, with Sky Blue Credit, you pay $79 upon enrollment and $79 monthly.
Compare Service Levels
As you can see from this Sky Blue Credit vs Lexington Law review, not every company divides its services between packages. The first provider offers a universal solution that is also modestly priced. The competitor has three tiers, from basic to advanced.
This second scheme is the most common in the industry. Consumers choose cheaper or more expensive bundles depending on their needs. The tiers often include different numbers of disputes. For example, you may be able to disprove five items per bureau per billing cycle.
In addition to analysis and disputes, premium clients may get identity theft insurance, score tracking tools, and personal budgeting solutions. The biggest firms provide their proprietary apps — for instance, the Lexington Law app is highly rated in both Google Play and App Store. On the other hand, almost every company will let you track the status of your case through their web portal.
What You Are Paying For
While add-ons vary, the core services are the same. Any company will collect your reports from three major bureaus — TransUnion, Equifax, and Experian. The staff will scrutinize the records in search of debatable inaccuracies. Next, they will collect evidence and send dispute letters to bureaus on your behalf. Eventually, the errors should be eliminated, which pushes the total up immediately.
This describes the mission of any repair firm. It will help you fix your status more quickly. After all, experts can identify the most damaging mistakes and collect sufficient evidence from the get-go. In the process, they may also send different types of correspondence to lenders and collectors. This includes:
debt validation letters asking the lender to prove that you owe the specified amount;
goodwill letters asking them to stop reporting particular items;
cease and desist letters to collectors, do they stop bothering you.
Repair companies may eliminate different types of mistakes. However, only some of them can delete hard inquiries. Ideally, such items are created when you apply for a loan and the lender checks your credit history. Too many hard inquiries over a short period are damaging to the total.
No company can guarantee specific results. The professionals will not promise to increase the total by a certain number of points. However, you may get your money back if the firm is inefficient. Check the conditions of its money-back guarantee (if it exists).
Most commonly, clients are paid back if no entries are deleted within the first 60 or 90 days. Removal of a single item voids this guarantee. In exceptional cases, the policy is unconditional. At the moment, it is only provided by Sky Blue Credit Repair. You may stop using the services for any reason within the first 90 days and get a refund.
As there are so many companies, choosing the right provider is not easy. Consider the BBB ratings and genuine feedback from consumers on sites like TrustPilot. Check if the firm delivers on its promises. It must provide excellent support, while the absence of a money-back guarantee is a legitimate deal breaker.
Your FICO or VantageScore status depends on the contents of your credit reports. Unfortunately, data stored by TransUnion, Equifax, or Experian may be inaccurate. Correction of mistakes will make your score rise. However, this is not an overnight process.
The duration depends on the number of false entries, the bureaus involved, and the quality of the evidence submitted. Experts from top-rated credit repair companies at https://creditrepairpartner.com/ will give a tentative evaluation. If you open disputes by yourself, resolution may take longer. It may require a couple of months or half a year. Here are the basics of credit repair in the US in 2021
Why You Need a Higher Total
Many consumers suppose their credit score only affects borrowing. The lower the total — the more difficult and expensive it is to take out a loan. In reality, the consequences are more varied. Aside from banks, your credit history is accessed by landlords, insurers, and even employers. You may fail to land your dream job because your score is far from perfect.
Causes of Deterioration
This may happen fairly or unfairly. In any case, deterioration stems from negative information on your credit reports. Items like missed payments or evictions pull the score down. Some consumers have to remove bankruptcies and judgments that never happened. Even your personal details may be flawed, although correcting the wrong spelling does not affect the total.
Both systems (FICO and VantageScore) look at similar factors for the calculation. The three most influential elements for the first method are:
history of payments (35% of the score)
how much you owe in total (30%)
length of credit history (15%)
Your credit mix (use of different types of credit) and new accounts affect 10% each. As you can see, late or missed payments, bankruptcies, and defaults are extremely damaging. Another crucial aspect is your ‘credit utilization ratio’, which applies to revolving credit — i.e., credit cards.
The lower your balance in comparison with the total amount of credit — the better. For example, if the limit is $5,000, and you have used $2,500, the ratio is too high (50%). Experts recommend keeping it below 30% or 11%, depending on who you ask.
The Fixing Process
So, what should you do if your reports contain wrong amounts or false entries? First, you are not alone. On average, every 5th consumer in the US has mistakes on their official records. Fortunately, everyone can have errors deleted to raise the total. There are two ways to go about it. You could try doing everything by yourself or hire repair experts. Either way, here is what the process involves.
1. Collection of Data
Every US citizen may get a free annual copy of their report from each of the three major bureaus. Due to the pandemic, the service is now accessible every week. Go to www.annualcreditreport.com to collect data from TransUnion, Equifax, and Experian at once.
Downloading it online is the fastest way, but you may also call the organization or send them a request by mail. If you hire a fixing company, they will collect this information for you. You may also get a free introductory consultation.
2. Identification of False Derogatories
Next, you (or the expert) will need to establish inaccuracies. Note that credit reporting agencies do not share data with one another. Any or all of your reports may be flawed, which complicates the process.
As you can see from the score breakdown above, different categories of items affect the total differently. Credit repair professionals will prioritize the mistakes to fix the score faster.
Collection of Evidence
When the report is inaccurate, it is your job to prove this. A repair firm will gather evidence on your behalf. This includes bank statements and other documents showing that the damaging entries are false. Professionals also send debt validation letters to your lenders. These ask them to prove that you owe the amount specified in the reports. As you can imagine, the duration of this stage varies. The more mistakes you want to be removed — the more evidence must be gathered.
4. Formal Disputes
Armed with the evidence, you may now send formal dispute letters to the reporting agency (or agencies) involved. The bureau will investigate the claim and reply to you within 30 days. It may accept or reject the changes. Alternatively, additional proof may be required.
The Bottom Line
As you can see, fixing the score in under 30 days is next to impossible. You need to collect the reports, analyze them and gather evidence to support your claims. It is crucial to provide conclusive proof, so there is no back and forth between you and the bureaus.
The simplest cases may be resolved and just over a month. The most complex repair may last a full year. Generally, delegating this job to professionals will accelerate the result. The key is to choose a reliable firm that delivers on its promises. Check websites like BBB and TrustPilot for customer feedback, and make sure the company has a money-back guarantee for your peace of mind.