California Credit Law Blog

Credit repair schemes almost always require payment in advance of any results. Typically, the customer pays the money and then gets no results. To curb this abuse, the federal Credit Repair Organizations Act, 15 U.S.C. Section 1679f, prohibits anyone from offering to improve a customer's credit to charge money in advance.

This week, the 9th Circuit Court of Appeals agreed that an attorney who charged clients $599 to improve their credit had violated the credit repair act.

Consumers are well advised to never pay money to anyone who promises to improve or repair their credit reports or scores.

Today, the San Francisco Chronicle reports on the problem of homeowners who get a loan modification and who end up with a ding on their credit reports. The problem is that the banks holding the mortgages report the homeowners are late on their payments or that they are paying less than is owed. Either way, the consumers' credit scores suffer. This in turn often causes banks to increase credit card interest rates and to reduce credit limits. That in turn may impact consumers' ability to get credit. There should be a legislative fix for this problem.

The Senate passed an amendment that will allow consumers free access to their credit score if their score negatively affects them in a financial transaction or a hiring decision. The amendment was offered by Senator Mark Udall, Democrat of Colorado.

Most identity theft is for the purpose of stealing money and goods, but another type of identity theft involves theft of medical records. The thief assumes the identity of another person with medical insurance coverage in order to obtain medical services. The innocent person may lose his or her medical insurance coverage as a result or be stuck with a large bill. A study shows it can cost $20,000 on average to resolve a case of medical identity theft.

Some cases involve a friendly theft of services--one person lending his identity to an uninsured friend or relative. A study by the Ponemon Institute estimated a million Americans were victimized in this way in the last two years.

Employers are increasingly running credit checks on prospective employees. This practice will be prohibited in California with some exceptions if a bill in the California Legislature is enacted. Assemblyman Tony Mendoza (D-Norwalk)'s bill, AB 482, would restrict credit checks except for jobs that involving handling money or certain personal information.

As reported in the San Francisco Chronicle, Mendoza points out that credit checks discriminate against blacks, Latinos and lower income people who tend to have worse credit. Credit history often has nothing to do with job performance.