Narrator (00:00): Welcome to Module 4: common issues and making referrals. This module is part of a series called Helping Clients Monitor and Improve their Credit Reports and Scores from the Consumer Financial Protection Bureau. This presentation is being made by a Consumer Financial Protection Bureau representative, on behalf of the Bureau. It does not constitute legal interpretation, guidance, or advice of the Consumer Financial Protection Bureau. Any opinions or views stated by the presenter are the presenter's own and may not represent the Bureau's views. Narrator (00:33): The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. CFPB FinEx is a place where financial educators, practitioners, counselors, researchers, and others can share information and best practices, learn from one another, advance their work, and see what CFPB is doing to help consumers. Narrator (01:06): Welcome to Module 4: Common Issues and Making Referrals. This is the final module in a series designed to help you as a practitioner partner with clients to help them monitor and improve their credit reports and scores. If you haven't watched modules 1 through 3, start there. In module 4, we will learn about common issues clients may face when improving their credit histories and scores, partner with clients to make referrals and find reputable credit counselors, and explore additional resources to help you in your work. Maya (01:40): It's so nice to see you again. As I have worked with clients on their criticals, I have learned so much. When clients have a question, we go to ask CFPB together to find accurate information. Let's take a look at some common questions and situations. The client I was working with to build credit so they could find housing and a car loan referred their family member who was recently denied a car loan. They wanted to know why they were denied and what they could do. I learned that if a lender rejects an application, they have to notify the applicant. The lender must tell the applicant the specific reasons their application was rejected, or let the applicant know the reasons if they ask within 60 days. Maya (02:25): If a lender rejects an application based on a credit report, they also have to provide the applicant with the numerical credit score the lender used in taking the adverse action, such as a denial, and the key factors that affected the applicant's score. Give the applicant the name, address, and telephone number of the credit reporting company that provided the report. Tell the applicant about their right to get a free copy of their credit report from the credit reporting company that provided the lender with the information within 60 days of the adverse action notice, and explain the process for fixing mistakes on a credit report. The client did receive an adverse action notice in the mail. While it wasn't the news they were hoping for, they were happy to get the information they needed to be able to take steps to build their credit. Maya (03:16): Another client is very careful with their budget. She carefully tracks her income and expenses and categorizes her spending at the end of the month. She hasn't had a credit card before because she was concerned about getting into debt. She is a long term renter who loves the apartment where she has lived for eight years. The client applied for a credit card because she used her savings earlier this year for a medical expense. She knows she may need new tires soon and will need to use credit to replace her tires. The client received a notice saying she was denied because of an insufficient credit file. She was confused because she tries to be responsible with her money. Many people may not know that having no credit history or limited credit history can create issues similar to having negative information in a credit history. One in 10 adults in the United States do not have a credit history with one of the three nationwide credit reporting companies. Even more people don't have enough history to generate a credit score. This is called a thin credit file. Maya (04:22): The client has never used credit. She pays for items in cash and does not have a car or home loan. She wants to start building credit so she can access credit for other goals, like new tires, and eventually buying a home. I gave the client the Building Credit from Scratch handout. She can consider a product like a secured credit card to help her build credit, get and read her credit reports, and learn what matters in a credit score, like paying credit card bills on time. I remind the client about the five elements that make up a credit score, payment history, amounts owed, length of credit history, types of credit used, and new credit. After we talked, the client decided she is going to apply for a secured credit card and has a plan to pay the card on time each month to help her build a positive credit history. Narrator (05:16): Knowledge check. If a lender rejects an application, they're required to notify the applicant the specific reasons their application was rejected. True or false? Narrator (05:29): If you said true, you are correct. Federal law requires that a lender must tell the applicant the specific reasons their application was rejected, or let the applicant know the reasons if they ask within 60 days. Maya (05:44): Unfortunately, sometimes clients may be denied credit because of discrimination. The Equal Credit Opportunity act makes it illegal for a creditor to discriminate in any aspect of a credit transaction, based on certain characteristics. The Fair Housing Act also makes many discriminatory practices in home financing illegal. It is illegal to refuse a person credit if they qualify for it, discourage a person from applying for credit, offer a person credit on terms that are less favorable than terms offered to someone with similar qualifications. For example, offering someone a higher interest rate. Close a person's account on the basis of a person's race, color, religion, national origin, sex, including sexual orientation and gender identity, marital status, age, receiving money from public assistance, exercising rights under the Consumer Credit Protection Act in good faith. Maya (06:46): I wasn't sure what to help clients look for. Credit discrimination occurs when someone is treated differently on the basis of race, color, religion, national origin, sex, including sexual orientation and gender identity, age, receiving money from public assistance, or exercising their rights under the Consumer Credit Protection Act. Credit discrimination is often hidden or even unintentional, which makes it hard to spot. But I learned there are red flags to look for, like a person being treated differently in person than on the phone or online; discouraged from applying for credit; encouraged or told to apply for a type of loan that has less favorable terms, for example, a higher interest rate; hearing the lender making negative comments about race, national origin, age, sex, including sexual orientation or gender identity, or other protected statuses; refused credit, even though the person qualifies for it based on advertised requirements; offered credit with a higher rate than the person applied for, even though they qualify for a lower rate based on advertised requirements. Maya (07:58): When clients believe they've been discriminated against, they can access resources to help. A person can find legal resources list by state, at lawhelp.org. Find out about eligibility for assistance from a legal services program funded by the Legal Services Corporation at lsc.gov/what-legal-aid/find-legal-aid, or they can locate their State Attorney General's office at naag.org/find-my-ag/. Narrator (08:35): Knowledge check. Credit discrimination can occur on the basis of race, color, religion, national origin, sex, including sexual orientation and gender identity, age, being a recipient of public assistance, and or exercising rights under the Consumer Credit Protection Act. True or false? Narrator (08:59): If you said true, you are correct. Maya (09:03): I was able to share information on credit discrimination with clients and help them know what red flags to look for. Now, I am working with a client who just requested a copy of his free credit report from one of the three nationwide credit reporting companies. He reviewed his report and noticed that a credit card is listed twice. I needed to learn more because I think this could be impacting his credit scores. I learned that just as I suspected, a multiple listing is not a harmless error. It will likely lower a person's credit score. This leads lenders to give the person loan offers with higher interest rates and less favorable terms. If the same debt is listed multiple times, a person can dispute the multiple listing. The client decided to dispute the information with the credit card company that provided the information, and the credit reporting company where he got his credit report. Maya (09:59): My agency also works with young adults on housing goals. I'm working with a teenage client, and I wasn't sure if they even have a credit report. The client needs to find housing, but I need to learn more. I learned that credit is not established at a certain age. Children may have a credit report because they are authorized users, they are a joined account holder on an adult's account, they have a student loan, they have been the victim of identity theft. Experian, Equifax, and TransUnion all have different processes for checking to see if a minor has a credit report. For children in foster care, I learned that in order to become eligible for federal grants, a state child welfare agency is required to ensure that youth in foster care who are 16 and older receive a free copy of any credit reports annually, and get assistance in interpreting and resolving any inaccuracies in the reports. I already reached out to the contact person at our local child welfare agency so we can coordinate our efforts. Maya (11:04): I was working with another client with a complicated situation. I provided the client with information from consumerfinance.gov, but they were considering bankruptcy and needed more help than I could offer. I made a referral to make sure they access a professional with more training and expertise on complex credit challenges. When clients have questions that are too complicated for me to handle on my own, I make a referral, or point them in the direction of trustworthy information. I've used usa.gov to find information on topics and connect clients to benefits and grants. I also use the list of online resources from Your Money, Your Goals, for information on federal government agencies and national nonprofits that offer state and local resources. I can find information on a variety of resources from healthcare to legal help. Maya (11:58): In addition to resources like help with utilities, some clients want to work with a credit counselor. It can be hard to tell a reputable credit counselor from a credit repair scam. People can find a list of approved credit counselors on the United States Department of Justice website. Once someone has developed a list of potential credit counseling agencies, they can check with the State Attorney General's office and their local consumer protection agency to ensure they are an approved credit counseling agency. Clients can also ask the credit counseling agency for free information and what they provide. A reputable credit counseling agency should be willing to send someone free information about its services without requiring the person to provide any details about their situation. Maya (12:44): If a service doesn't do that, consider it a red flag. Other red flags are pressuring a person to pay upfront fees, promising to remove negative information from a credit report, refusing or avoiding explaining someone's rights, and telling someone not to contact credit reporting companies. It feels great to empower clients to do their own research on products and services that might meet their needs. Maya (13:11): Thanks so much for learning with me. Don't forget, you can always access resources and learn more on consumerfinance.gov. Look for the credit report scores, resources page to explore key terms, how-to guides, and videos. Narrator (13:29): Our slides featured a variety of resources. Use the links to visit sources. Narrator (13:55): Thank you for joining us for our final module in this series. To continue to learn more, join the CFPB FinEx community. You'll receive updates by email, and engage with a large network of practitioners. You can also access the LinkedIn discussion group for news, research, and best practices. Plus, stay up to date with the webinars, regional meetings, and conferences, all while meeting CFPB presenters who can work with your organization. Use the link to join today. And don't forget to share this training series with your network. 2