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LEARN HOW TO START, RUN, OR GROW YOUR CREDIT REPAIR BUSINESS

The 3 Steps to Dealing with CREDIT DISCRIMINATION

By: Daniel Rosen June 21, 2022

Do you know how to protect yourself against CREDIT DISCRIMINATION?! 

Do you know how to protect your customers from CREDIT DISCRIMINATION?! 

Do you know what CREDIT DISCRIMINATION is? 

Well, on this week’s Podcast I’m going to explain: what Credit Discrimination is, which groups are the most affected by it, how to spot it, and what it means for your business!

 

Credit is an essential part of modern life. 

Credit can determine whether or not you get a job, it can determine whether or not you can buy a house, and it can determine whether or not your child can afford to go to college…

Credit Discrimination happens when a lender allows protected traits – such as race, color, religion, national origin, sexual orientation, marital status, age, or reliance on public assistance programs – to influence its decision to offer you credit or a loan.

When Discrimination enters into the credit equation, the consequences can be massive! 

Not only are people negatively impacted but, for example, if a teenager isn’t approved for a college loan, and they don’t end up going to college, their entire family can be held back for generations of further economic advancement. 

So it’s essential to understand what Credit Discrimination is so that we can combat it wherever we find it. 

There are three types of discriminatory practices outlined under the FDIC:

  • Overt Discrimination
  • Unequal Treatment 
  • Unequal Impact

I’ll explain what those are in a moment…

First, I need to briefly touch on the history of the credit industry… 

The concept of consumer credit came about at the turn of the century, as retailers started extending credit to their individual customers. 

These retailers hired credit managers to evaluate the risk involved on a case-by-case basis and in 1912, they formed a national association to develop a standard method for collecting and sharing information on debtors…And that’s when the first credit bureaus were born. 

That system of evaluating a person’s financial fitness was put in place eight years before women were allowed to vote…

AND women were unable to apply for credit independent of a man until the mid-20th century…

So, you might say that discrimination was baked-in to the credit system from the beginning. 

It also might not surprise you that the credit bureaus and the credit scoring system, in general, operate without almost any oversight. 

This is because credit scoring technologies are not public information. They are considered proprietary trademarks of the companies that invented them…We literally don’t know exactly how the algorithms that shape our lives work because the credit bureaus keep them secret!

But how does this relate to us, the credit repair specialists?

Well, a large portion of your client base is likely one of the groups historically vulnerable to Credit Discrimination…

  • Women!
  • Senior Citizens.
  • People of Color. 
  • Consumers with Disabilities.
  • Veterans and Active-Duty Service Members: who are not specifically protected by the Equal Credit Opportunity Act.
  • And consumers who identify as LGBTIQ+: who didn’t receive specific protection until March of 2021.

Now you might be wondering how they even know demographic information in order to discriminate.  Well, very often they do it by zip code.  Pretty evil, right?  

Here’s the thing to remember…

Credit Discrimination is affecting your life and your business whether you realize it or not… 

This is why we must guard against it in all its forms. 

Here’s why this is important…

The credit system as we know it was born at the turn of the century.

The federal government didn’t recognize the need to protect consumers from discriminatory practices until 1974 when they passed the Equal Credit Opportunity Act

But it’s still happening, so you need to learn how to spot Credit Discrimination to protect yourself and your customers!

The three types of Credit Discrimination are…

Overt Discrimination - This is when a lender discriminates openly against someone for their race, age, gender, etc. It usually involves blatant discriminatory statements.

Unequal Treatment - This is when consumers are treated differently because of a category that is protected by law. In these cases, you don't need to prove the discrimination was intentional, just that you were treated differently and that there isn't a good reason to explain the treatment.

Unequal Impact - This is when a creditor's policies or practices disproportionally affect certain groups, even when the policy is applied equally to all. If the impact of the policy negatively affects a certain group, that can count as discrimination.

A person or group may experience one of these types of discrimination or several types all at once. 

Discrimination can evolve over time, for example, the process of Redlining began in the 1930s and was the human-based practice of denying loans or financial services to residents of certain areas based on their race...This has transitioned into the modern age where an algorithm can deny you loans or financial services based on your zip code or other factors. 

This is why, in a complex world, with historic and modern forms of discrimination, it’s essential to know your rights and the rights of your customers.

When you get credit, you have the right to know WHY the creditor rejected your application. The creditor must tell you the specific reason for the rejection (for example, “your income is too low” or “you haven’t been employed for long enough”) or they must tell you that you are entitled to learn the reason if you ask within 60 days.

You have the right to learn the specific reason why the creditor offered you less favorable terms than the ones you applied for…but only if you reject these terms. For example, if the creditor offers you a higher interest rate, and you don’t accept it, you have the right to know why those terms were offered.

You have the right to find out why your account was closed or why the terms of the account were made less favorable…unless the account was inactive or you didn’t make payments as agreed.

Every right you learn, every law you know, empowers you and your customers. 

Here’s what you need to know…

The CFBP says there are several warning signs of Credit Discrimination to watch out for…

  • If someone hears the lender making negative comments about race, sexual orientation, or other protected statuses
  • If someone is treated differently in person than on the phone or online
  • If someone is encouraged or told to apply for a type of loan that has less favorable terms (for example, a higher interest rate)
  • If someone is discouraged from applying for credit
  • If someone is refused credit even though they qualify for it based on advertised requirements
  • And If someone is offered credit with a higher rate than you applied for, even though you qualify for a lower rate based on advertised requirements

There are also different protections in different states. 

For example, Credit Discrimination for gender identity and sexuality is prohibited in 15 states (and Washington D.C)...with 2 additional states that provide umbrella protection. So this means that MOST states allow this discrimination!

You have to learn the rules in your state! 

You have to know where you’re protected and where you’re vulnerable!

Last, the CFPB and the FTC both recommend specific actions be taken if you believe you’re the victim of Credit Discrimination…

First, write everything down as you recall it and collect all forms of relevant documentation!

Next, reach out to the creditor or lender. Sometimes you can persuade them to reconsider your application. Then contact the company's customer support line and request they remedy the situation.

Then report violations to the appropriate government agency

  • File a CFPB complaint. If the lender refuses to work with you, file a complaint about the company, and the CFPB will work with you to get the issue resolved. 
  • File a Federal Trade Commission (FTC) complaint. The FTC doesn't resolve individual complaints, but they do maintain a database of complaints. Enforcement agencies may be able to identify discriminatory lenders through this database. Share your story and you could help them crackdown on a discriminatory lender. 

If none of this works, talk to a lawyer. You may retain a private attorney, but it’s recommended that you contact your state’s attorney general's office.

  • For legal resources listed by state, visit: LawHelp.org
  • To locate your state attorney general’s office, visit: NAAG.org/find-my-ag/

Now, you might be thinking: “I’m just a small credit repair business…how am I supposed to protect my clients from all this Credit Discrimination?” 

The answer is…you have to try. 

Educating yourself and educating your customers is the best way to guard against these practices to help ensure we are all treated fairly…

As equals under the law. ✊✊✊

If you don’t already have a Credit Repair Cloud account, check it out. It’s the software that most credit repair businesses in America run on. Just sign up for a 30 day free trial at creditrepaircloud.com/freetrial

And If you’d like me to hold you by the hand as you launch your own credit repair business, check out our Credit Hero Challenge!

Challenge-Stack-Mockup-Final


It’s an amazing program where you’ll learn the processes that have made millionaires, and it costs less than you'll spend taking your family to McDonald’s for dinner. 

We’ve got another challenge starting in a few days, so grab your spot right now at CreditHeroChallenge.com!


Also, if you don’t already have a Credit Repair Cloud account, check it out. It’s the software that most Credit Repair businesses in America run on. Just sign up for a 30 day free trial at creditrepaircloud.com/freetrial

Until next time, remember, keep educating yourself, keep educating your customers…

And keep changing lives!

 

 

Be sure to subscribe on your favorite platform below!

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Topics: Podcast

Transcript

Daniel Rosen  0:00  

Hey everybody, do you know how to protect yourself against credit discrimination? Do you know how to protect your customers from credit discrimination? Do you even know what credit discrimination is? Well, today, I am going to explain what credit discrimination is, which groups are the most affected by it, and what it means for your business. So you better stick around. So the big question is this, how can we take our passion for helping people with their credit and turn it into a successful business without taking loans without spending a fortune by bootstrapping it from nothing? So we can help the most people and still become highly profitable? That is the question, and this podcast will give you the answer. My name is Daniel Rosen, and welcome to Credit Repair Business Secrets.

 

Oh, okay, if this is your first time listening to my podcast, every week, I cover industry news, financial tips, and entrepreneurial advice for bootstrapping your business from nothing. This show is essentially a how to guide for business owners. And there's no other podcasts like it. So be sure to click on that subscribe button now and get ready to start changing lives. Okay, so today we're going to talk about a very important topic, credit discrimination. What is it? Who is most at risk for experiencing it, how to protect yourself from it, and how to protect your customers from it. But before we get into this, this podcast is brought to you by the credit hero challenge. If you want me to hold you by the hand, as you launch your very own credit repair business, go to credit hero challenge.com and sign up now. Oh, and I love this part. Every episode, I am featuring one of our credit heroes inside our credit repair cloud Facebook community so that you can see firsthand what real people are doing as they launch and grow their business. And today's spotlight is on I am Moni Mac. I am only recently posted her sales numbers for the month of May and they are over $9,000. And I am only pointing out that she's just started her business in September of last year. And she added if I hit this amount, every month, I'll be looking at six figures. And that is amazing. In fact, I am so proud of her that I had to look up some of her older posts to get a sense of her journey. And let me just say I am ONi has come a long way around the time she started her business back in 2021. She posted this comment. Good morning. One thing that struck me when watching Daniel's video is the fact that he never stopped trying to figure it out. When people said no, he did not stop until he figured it out. And that is what I will have to do. Credit Repair is not an easy task, but I am willing to figure it out in order to succeed. And congratulations i Emoni I may have inspired you. But now you are inspiring others and I can't wait to see how far you can go. Okay, let's get into this. Credit is an essential part of modern life. Credit can determine whether or not you get a job, it can determine whether or not you can buy a house and it can determine whether or not your child can afford to go to college credit discrimination. It happens when a lender allows protected traits like race, colour, religion, national origin, sexual orientation, marital status, age, or reliance on public assistance programmes to influence its decision whether or not to offer you credit or alone. Now when discrimination enters into this equation, the consequences they can be massive. Not only are people negatively impacted, but for example, if a teenager isn't approved for a college loan, then their entire family after them can get held back for generations of further economic advancement. So it is essential that we understand what credit discrimination is so that we can combat it wherever we find it. Now there are three types of discriminatory practices outlined under the FDIC. They are overt discrimination on equal treatment, and unequal impact. And I'm gonna explain what those all are in a moment. But first, I need to briefly touch on the history of the credit industry. See the concept of consumer credit, it came about, at the turn of the last century, as Realtors started extending credit to their individual customers. And these retailers, they hired credit managers to evaluate the risk involved on a case by case basis. And then, in 1912, they formed a national association to develop a standard method for collecting and sharing information on debtors. And that's when the first credit bureaus were born. And that system of evaluating a person's financial fitness, it was actually put in place eight years before women were allowed to vote. And women were unable to apply for credit, independent of a man until the mid 20th century. So you might say that discrimination was baked in to the credit system from the very beginning. And it also might not surprise you that the credit bureaus and the credit scoring system in general, they operate without almost any oversight. And this is because credit scoring technologies, they're not public information, they are considered to be proprietary trademarks of the companies that invented them. So we literally don't know exactly how the algorithms that shape our lives work, because the credit bureaus keep them secret. But how does this relate to us that credit repair specialists? Well, a large portion of your client base is probably one of the groups that are historically vulnerable to credit discrimination. Women, senior citizens, people of colour, consumers with disabilities, veterans and active duty service members who are not specifically protected by the Equal Credit Opportunity Act, and consumers who identify as LGBT iq plus, who didn't receive specific protection until March of 2021. And that was just last year. Now, you might be wondering how they even know the demographic information in order to discriminate. Well, very often,

 

they do it by zip code, pretty evil, right?

 

Here's the thing to remember, credit discrimination is affecting your life, and it's affecting your business, whether you realise it or not. And this is why we must guard against it in all of its forms. Here's why this is important. The credit system as we know it, it was it was born at the turn of the last century, the federal government didn't even recognise the need to protect consumers from discriminatory practices until 1974, when they pass the Equal Credit Opportunity Act, but it's still happening. So you need to learn how to spot credit discrimination, to protect yourself and to protect your customers. Now, the three types of credit discrimination are overt discrimination. This is when a lender discriminates openly against someone for their race, age, gender, et cetera. It usually involves blatant discriminatory statements, then there is unequal treatment. And this is when consumers are treated differently because of a category that is protected by law. And in these cases, you don't need to prove that discrimination was intentional, just that you were treated differently, and that there isn't a good reason to explain that treatment. And finally, there is unequal impact. And this is when a creditors policies or practices disproportionately affect certain groups, even when the policy is applied equally to all if the impact of the policy negatively impacts a certain group, then that can count as discrimination. A person or group may experience one of these types of discrimination or several types all at once discrimination. It can evolve over Over time, for example, the process of redlining. It began in the 1930s, and was the human based practice of denying loans or financial services to residents of certain areas based on their race. And this has transitioned into our modern age where a computer algorithm can deny you loans or financial services based on your zip code, or other factors. And that's why in this complex world with historic and modern forms of discrimination, it is essential that you know, your rights and the rights of your customers. When you are denied for credit, you have the right to know why the creditor rejected your application, the creditor must tell you the specific reason for the rejection. For example, maybe your income is too low or you haven't been employed for long enough, or they must tell you that you are entitled to learn the reason for the denial, if you ask them within 60 days, you also have the right to learn the specific reason why the creditor offered you less favourable terms than the ones that you applied for. But only if you reject these terms. For example, if the creditor offers you a a higher interest rate, and you don't accept it, you have the right to know why those terms were offered. You also have the right to find out why your account was closed, or why the terms of the account were made less favourable, unless the account was inactive, or you didn't make payments as agreed. Every right you will learn and every law you know, it empowers you and your customers. So here's what you need to know. The CFPB says that there are several warning signs of credit discrimination that you must watch out for if someone hears the lender making negative comments about race, sexual orientation or other protected statuses. If if someone is treated differently in person than on the phone or online. If someone is encouraged or told to apply for a type of loan that has less favourable terms, for example, a higher interest rate, if someone is discouraged for applying for credit, if someone is refused credits, even though they qualify it based on advertised requirements, and if someone is offered credit with a higher rate than you applied for, even though you qualify for a lower rate, based on advertised requirements, there are also different protections in different states, okay, they're not all the same. For example, credit discrimination for gender identity and sexuality is prohibited in 15 states and Washington DC with two additional states that provide umbrella protection. So this means that most states allow this discrimination, they allow it. So you've got to learn the rules of your state, it's important to know where you're protected. And it's also important to know where you are vulnerable. And last, the CFPB and the FTC, they both recommend specific actions be taken if you believe that you are the victim of credit discrimination. So here's what you do. If you believe you are first, write everything down as you recall it and collect all forms of relevant documentation. And next, reach out to the creditor or lender and sometimes you can persuade them to reconsider your application and then contact the company's customer support line and request that they remedy the situation and then report violations to the appropriate government

 

agency. File a CFPB complaint. If the lender refuses to work with you file a complaint about the company and the CFPB is going to work with you to get the issue resolved. File a Federal Trade Commission complaint, the FTC, they they they don't resolve individual complaints, but they do maintain a database of complaints. Enforcement Agencies may be able to identify discriminatory lenders through this database. So share your story, and you know what, you could help them crack down on a discriminatory lender. And if none of this works, talk to a lawyer. You may retain a pride bid attorney, but it's recommended that you contact your State's Attorney General's Office. And here's what I'm going to do. I'm going to include links to legal assistance programmes down in the show notes, so be sure to check those out. Now, you might be thinking, but I'm just a small credit repair business, how am I supposed to protect my clients from all this credit discrimination? And the answer is, you have to try educating yourself and educating your customers. That is the best way to guard against these practices to help ensure that we are all treated fairly as equals under the law, okay, and credit repair cloud, we have a whole tonne of information and tools to help you with this. And if you don't already have a Credit Repair Cloud account, what are you waiting for? Check it out. It's the software that most credit repair businesses in America Ron on and you can sign up for a 30 day free trial at credit repair cloud.com/free trial. And if you'd like me to hold you by the hand, as you launch your very own credit repair business, check out our Credit Hero Challenge. It's a live experience that has helped tonnes of credit heroes to get their first clients to get certified in disputing and to gain confidence as they launched their credit repair business on a solid foundation. So they can change a whole lot of lives and make a great living in the process. Now we're starting the next challenge in just a couple of days. So you want to join before the door is closed. Otherwise, you're gonna have a long wait until the next one. So sign up now at credit hero challenge.com. And if you're finding value in the things that I'm sharing on this podcast, be sure to subscribe, okay, and leave me your questions and your comments below, because I read each and every one of them. And be sure to visit my blog if you'd like to read all the show notes. And if you have a question, a specific question that you would like me to answer on the show, just drop it down in the comment section, and I will be sure to answer it during a later episode. And until then, remember, keep educating yourself and keep educating your customers and keep changing lives. 

 

Want to fast track to creating an amazing business that helps people changes lives and makes you a great living in the process that I'd like to invite you to my free online training at creditrepaircloud.com/freetraining. In this free training, you will learn how to get clients willing to pay you even if you're just starting out how to get easy credit repair results without being an expert, and how to get all the clients you'll ever need without paying for advertising. Again, this training is absolutely free. Just visit creditrepaircloud.com/free training

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