FICO reports that a credit gap for consumers will grow as lenders expect credit availability to fall short of consumer demand through the end of 2010.

The quarterly survey of bank risk professionals found that 73% of respondents expect the volume of credit applications to increase or remain steady over the next six months. However, 46% of respondents expect approval criteria for credit to get stricter. Furthermore, 38% of bankers surveyed expect the approval rate for credit applications to decline.

“Although the outlook isn’t as pessimistic as it was earlier this year, it’s clear we still haven’t reached a point of equilibrium between supply and demand for consumer credit,” says Dr. Andrew Jennings, chief research officer at FICO. “Banks remain concerned about loss prevention. Government data released in August indicates personal bankruptcies are at their highest levels in five years, and other recent data confirms the ongoing challenges in the employment and housing sectors. This type of economic environment makes it difficult for lenders to open up the flow of credit without taking on significant risk.”

Delinquency Report

When asked about expected delinquency rates for credit products, many bankers said they expected delinquencies to increase. This includes home mortgages (53% of respondents expected a rise in delinquencies), credit cards (42% expected an increase), small business loans (47% expected an increase) and student loans (49% expected an increase).

In a somewhat unexpected survey result, according to FICO, bank risk officers who are responsible for auto loans and credit cards had a particularly negative outlook about their sectors. Among bankers who manage auto loans, 96% expect delinquencies on auto loans to increase or remain the same. And among bankers who manage credit cards, nearly 85% expect delinquencies on credit cards to increase or remain the same.

Respondents also were asked about their overall expectations for new delinquencies (i.e., accounts that become 30-days late) and chargeoffs (i.e., older delinquencies that are written off). Respondents felt both categories of delinquencies were going to rise, and the sentiment was similar in strength for both categories, which suggests the pipeline of delinquencies isn’t going to shrink in the near future.

A credit repair operation agreed to stop making false claims and stop charging upfront fees under a settlement with the Federal Trade Commission.

The settlement agreement requires that Clean Credit Report Services Inc., Ricardo A. Miranda, Ruthy Villabona, and their son, Daniel R. Miranda give up two cars, three houses and six commercial properties.

According to the FTC, they told consumers they would help remove all negative remarks from their credit reports, as well as current debt. Clean Credit often debited $400 from consumers’ bank accounts before receiving a signed contract. They did little, if anything, to fulfill its promises.

The settlement order bars Clean Credit and its owners from making misrepresentations about any good or service, such as the ability to improve a consumer’s creditworthiness or remove negative information from a credit report. The order further prohibits Clean Credit from charging money upfront for credit repair services. The order bars the defendants from disclosing, benefitting from or failing to properly dispose of customer information.

The settlement order imposes a $14.4 million judgment that will be suspended, contingent upon the defendants surrendering their assets – including frozen funds totaling about $165,000 and any proceeds received from selling their six commercial and three residential properties and cars.

A number of the top reviewed identity theft protection services help protect your social security number from fraudulent usage, including Identity Theft Shield. This service monitor your credit report for inappropriate use of your SSN. If they see anything suspicious, they will alert you. In the unlikely circumstance you become a victim of identity theft while enrolled with the program, you have complete access to their identity theft restoration teams. These identity theft professionals will assist you in restoring your identity.

They also monitor for fraudulent use of other personal information. All-in-all, Identity Theft Shield offers a full arsenal of protection at a reasonable price.

A federal court has eight companies from selling credit repair and mortgage relief services and ordered them to pay more than $7.5 million for deceiving consumers.

The Federal Trade Commission charged seven companies with making false promises that they would improve consumers’ credit scores by removing negative information such as late payments, chargeoffs, collection information, delinquencies, judgments, and accounts discharged in bankruptcy. The companies charged consumers up to $2,000, including illegally charging an advance payment of $300, and failed to provide written contracts and other materials required by law.

Another company was later added to the case for falsely claiming they would help consumers get mortgage loan modifications or stop foreclosure in virtually all instances.

The credit repair companies are: United Credit Adjusters Inc. (also known as: United Credit Adjustors and UCA; United Counseling Association Inc. (also known as: UCA); Bankruptcy Masters Corp.; National Bankruptcy Services Corp.; Federal Debt Solutions Ltd.; and United Money Tree Inc. The loan modification companies are The Loan Modification Shop Ltd., Casey Lynn Cohen (also known as Casey Lynn Collins), and Rishty.

The federal court entered default judgments against the companies after they failed to respond to the lawsuit. The court order bars the companies from trying to collect payment from their customers and from selling or otherwise disclosing their customers’ personal or financial information. The order imposes a $7,500,334 judgment against the credit repair companies and a $32,710 judgment against the loan modification defendants.

Other details of the order include prohibiting the credit repair companies from selling credit repair services, and banning the loan modification companies from selling mortgage loan modification and foreclosure relief services. The order further prohibits the companies from misleading consumers about financial goods and services, such as loan terms or rates, how much a consumer will save by enrolling in a debt relief service and credit terms other than those a lender actually offers. Finally, the order bars the companies from misleading consumers about any good or service – such as refund terms, government affiliation and total cost.

A marketing company that solicits prospective customers for automobile dealers has agreed to settle Federal Trade Commission charges that it falsely told low-income and “credit-challenged” consumers that they were pre-approved for auto loans and improperly obtained their names from a consumer reporting agency.

According to the FTC, the company prepared sales solicitations for automobile dealers telling consumers that a specific finance company would lend them money to buy a car, but the finance companies featured in the ads lacked business licenses and didn’t actually make any loans. The marketing company obtained lists of consumers from a credit reporting agency by falsely representing that the lists would be used to make prescreened firm offers of credit to consumers.

The settlement order bars the company and its principal from telling consumers they are pre-approved for, or are likely to receive, an extension of credit or financing unless the defendants know that a lender can make good on the offer for all eligible customers.

The order also prohibits the defendants from obtaining credit reports from consumer reporting agencies without a purpose authorized by the Fair Credit Reporting Act. The order imposes a $157,000 civil penalty that is suspended based on the defendants’ inability to pay. The full judgment will be imposed if they are found to have misrepresented their financial condition.

The defendants are Direct Marketing Associates Corp. and its president and owner, John M. Rainey, Jr.

Credit repair maybe needed for many consumers. With the financial struggles that many Americans have been facing, late pays, judgments, charge offs, and even bankruptcy are now on consumers credit reports. With the need to have near perfect credit to open bank accounts, secure a loan, obtain employment, or to acquire an apartment, bogus credit repair companies are targeting desperate consumers.

Recently two companies, Successful Credit Services, and Lee Harrison Credit Restoration, have been charged with violations of the FTC Act and the Credit Repair Organizations Act. Both companies have settled the FTC charges that were brought against them for wrongly promising that they had the ability to clean up consumers credit reports if an upfront fee was paid. On one of the company’s websites and at real estate investment seminars, they boasted that they had connections and resources with creditors, collection agencies, and credit bureaus, as well as had access to public record suppliers.

The defendants falsely assured that they would be able to remove negative information from credit reports such as late payments, judgments, charge-offs, and bankruptcies. These services were advertised by the defendants by placing ads on the internet and in newspapers.

Successful Credit Services, aka Success Credit Services, was ordered to refrain from collecting additional money from any consumer who paid for services prior to October 16, 2008. For Lee Harrison Credit Restoration, aka Lee Harrison Associates Credit Restoration or Credit Restoration, they were ordered to not take any payments from consumers that purchased their services prior to August 28, 2008.

Most Americans when thinking of the status of their credit reports think about being able to obtain credit or loans. But your credit report is also being used to determine if you obtain the job you just applied for, or even to keep the employment you have currently.

Many employers are digging deeper into lives of employees or potential employees to determine if they will be a benefit or a threat to their company financially. Employers use credit reports to determine if you are responsible, reliable, and also to confirm the identity of the applicant or employee.

If an employer obtains a credit report of an applicant, or an already established employee, there are rules that need to be followed. The FCRA (Fair Credit Reporting Act) specifies that only certain information can be revealed to an employer. Employers must also prove there is a legitimate reason to acquire information from an applicant’s or employees’ credit reports. An example of a permissible purpose to obtain a credit report would be if the applicant or employee will have access to cash or assets of the company.

Employers must also provide mandatory notices to applicants they refused for employment and to employees that were terminated from employment due to their credit report. The employer must notify the applicant or employee of their rights stipulated under the Fair Credit Reporting Act. The applicant or employee must be given access of a copy of the credit report and the name of the credit reporting agency as they have the right to obtain a free copy of their credit report.

Two companies recently had to pay civil violations to settle allegations when they failed to give proper notices to employees they terminated and applicants they denied employment to. The employers violated the Fair Credit Reporting Act by failing to inform them of their rights. Between the two companies, a fine equaling $77,000 in civil penalties had to be paid for the FCRA violations.

The Federal Trade Commission announced final rules and guidelines to promote accuracy and integrity of the information provided to the credit bureaus by creditors.  The rules also allow consumers to dispute inaccurate information directly with creditors.  The effective date for the new rules is July 1, 2010.

The FTC has issued guidelines specifying the actions for creditors to take to ensure the accuracy of the information they furnish to credit reporting agencies.  For example, creditors would generally need to report a consumer’s credit limit in the information they provide to the credit bureaus.

The final rules require creditors to investigate disputes that consumers send directly to the creditor regarding the accuracy of credit reporting information.  Previously, credit reporting laws encouraged consumers to submit their disputes through the credit bureaus rather than directly to the creditor.  The new rules add an additional avenue for consumers to dispute possible credit reporting inaccuracies without removing consumers’ existing right to file a dispute through the credit reporting agencies.

A federal court has ordered a credit repair operation and its principals to stop making false claims and requiring advance payment for credit repair services. The agreed-upon court orders are a result of a settlement between the Federal Trade Commission and the “credit repair” defendants.

The Commission sued the “credit repair” defendants as part of “Operation Clean Sweep,” a crackdown on credit repair operations. The defendants represented that they could remove negative but accurate information from consumers’ credit reports, including bankruptcies and late fees. According to the FTC, the defendants charged consumers up to $59.95 initially, then $59.95 per month, to send letters to credit reporting agencies disputing information on the consumers’ credit reports. Contrary to the defendants’ representations to consumers, those dispute letters failed to remove accurate negative information from the consumers’ credit reports.

The orders bar the defendants from violating the Credit Repair Organizations Act by charging clients fees in advance and claiming that a credit repair organization can permanently remove negative information from credit reports, even when the information is accurate. They also bar the defendants from making deceptive claims when marketing any product or service, including credit repair services.

Information that auto insurance companies use in a controversial scoring method that helps them set your car insurance rates is available to you for a fee.  ChoicePoint has made available to consumers their “insurance score” at its ChoiceTrust.com web site:  http://tinyurl.com/mnltns

ChoicePoint provides scores to more than 400 insurance companies.  It maintains a database of 16 billion public records but that does not necessarily mean your data will be available through ChoicePoint.  Some insurance companies use their own scoring systems.  

The insurance industry uses insurance scores because it says a high degree of correlation exists between a person’s overall credit history and the likelihood that he or she will file an insurance claim.  ChoicePoint charges consumers $12.95 for the ability to access their insurance scoring records for 30 days.