Sunday, May 12, 2013

New York Times reports on "catch 22" for bad credit and unemployment


The New York Times is continuing to cover the “catch 22” effect of bad credit for the unemployed, with a Business Day article by Gray Rivlin, “The long shadow of bad credit”,  link here
  
Nine states prohibit employers from using credit histories to deny employment for many jobs, but they are required for others.  And employers usually fail to disclose (as often required) a bad credit report.  
Illinois is one such state.
  
  
The news story told of one sales employee who received a cell call on the way to his orientation, that his job had been turned down because of credit problems.
  
And despite the widespread occurrence of credit report errors, employers often take the “libertarian” position of “absolute personal responsibility” for maintaining clean credit, despite the wide influence of identity theft. 
  
When I worked for a debt collector in the summer of 2003, there was a general attitude among employees that the debtors were "deadbeats" or people of bad character.  One person I called blamed her problems on 9/11, and another invited me to pay his $69 small balance!  
     
Back in the late 1980s, Chilton (now Experian) required all its employees to pass credit checks, with 90-days to fix problems; but TRW got rid of the practice when it acquired Chilton.
  
The NYT has previously argued for laws prohibiting the use of adverse credit in most jobs.
   
Curiously, the story mentioned the idea that a credit report is a “lifestyle check”.  In the 1980s, back in Dallas, I remember signing release forms allowing checks into “mode of living” even though these did not happen in practice.  

Thursday, May 09, 2013

NY State goes after debt consolidation companies; CA goes after JP Morgan


The Washington Post and Associated Press are reporting that New York State will prosecute officials of “debt-fixing”  (debt consolidation) companies that opened after the financial crisis of 2008. One of the largest was Mission Settlement Company. The link to the story is here
  
Retirees are often contacted to go to work for such companies.  I encountered a few such solicitations.  It’s easy to make it sound like you’re “helping people”.   It sounds like extended hucksterism.
The federal enforcement arm is the Consumer Financial Protection Bureau, link here.   The agency says it is hiring people for “externships”.  That’s a new term for me.
   
The AP is also reporting that the state of California is suing JP Morgan for debt collection practices, which included “robo-signing” documents and filing letter lawsuits without properly serving consumers.  The San Francisco Chronicle story is here

Tuesday, May 07, 2013

Vantage credit scores try to give consumers a fairer shake on debts in collection that get paid


That “other” credit scoring company, Vantage is trying to give customers a fairer shake by discounting accounts that went into collections but ultimately got paid.  Tara Siegel Bernard has an article in the May 3 New York Times comparing the way Vantage and FICO (Fair Isaacs, which is more popular with lenders) works.  FICO does consider anything over $100 that went into collections.  The link is (website url) here

The article gives a case where a $750 medical bill left unpaid for a while because of a mix-up wound up in collections and cost a homeowner an extra $30000 in interest on her loan.

Medical collections, even relatively smaller ones, cause a disproportionate effect on many credit scores.
   
I wonder if parking tickets affect scores.  I got a ticket from another city (Ellicott City. MD) in the mail, 30 days delinquent, from a collection agency specializing in tickets,  when I had never seen the ticket placed on my car.  I don’t know what I did that was illegal.  I paid it online *$48) to clean it up. But this sounds like a touch of extortion. 

When I worked for RMA ten years ago in St. Paul, it did have a medical collections department. Since I did have health care in my background, I wonder if I might have migrated there had I stayed.
   
The Vantage credit score has nothing to do with the Vantage information system product that insurance companies use.