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In light of the difficult situations that you may face in repairing your credit, it may be helpful to take a moment and examine your role in the larger credit system. If you get nothing else from reading this manual, you should fully understand this:
The role you play in the credit system is indispensable. Without consumers, there would be no credit and no credit system. There would be nobody to borrow and no need for lending, credit reports, credit scores, collections, credit repair companies, or even the CFPB.
With this in mind, not only do you have a right to an accurate credit report, you also have a kind of “moral obligation” to hold the credit bureaus, creditors, and bill collectors accountable for the inaccuracies they cause on your credit reports. Think about it. If you allow the system to walk all over you, you are not just hurting yourself but also other consumers who are a part of the system. Part of your role as a consumer in the credit system is to care about your credit and to not accept the status quo when it comes to the accuracy and completeness of your credit reports.
Not only is credit repair perfectly legal, it is absolutely necessary for the healthy functioning of the credit system—and for the financial well-being of the millions of consumers that depend on the credit system.
The system isn’t just money driven. It’s people driven. So it’s time for you to hop in the driver’s seat. This manual is an excellent first step to doing that.
Even with all the positive changes happening in the credit system, consumers still face many challenges. The dispute resolution system is still automated. Consumers are still abused and ignored. “Bad credit” is still profitable for the credit bureaus and for subprime lenders. For many consumers with credit problems, credit repair is still an uphill battle.
This is one reason that many consumers turn to credit repair companies for help. Since the dispute resolution system is systematic and automated, it makes sense in some ways to utilize dispute processes that are also systematic and even semi-automated. The main advantage that credit repair companies have over consumers in this regard is the ability to address the challenges of credit repair on a systematic and organizational level. For most consumers, it won’t be worth their time to develop a canned system for handling, for example, “frivolous” responses from the credit bureaus over legitimate credit disputes. But credit repair companies can have systems in place (in advance) to deal with virtually every issue and bump along the way.
There is also an element of “detachment” that can be seen as both good and bad.
Sometimes it’s your personal involvement in your credit that gives you the endurance necessary to see the process through the end. Other times, your personal involvement can actually hinder your progress. In these cases, it can be helpful to get the assistance of an outsider with no emotional attachment to your finances.
So the difficulty that consumers face in navigating the credit system is what creates a need for guides like this, and for credit repair companies, and for government agencies like the CFPB. In a credit system where abuse of consumers has been commonplace, it’s good to have some extra help!
So what makes the CFPB different? Why is a new government agency such a significant step for consumers in the credit world? To really understand this, we have to understand their role as compared to other similar government agencies.
Take, for example, the FTC. At first glance, one might think the FTC and the CFPB do the same thing. Don’t they both protect consumers? (We did just cover an example of the FTC going after abusive debt collectors, did we not?) While in practice both agencies play a role to protect consumers, the focus of each agency is different. The FTC (“Federal Trade Commission”) exists first and foremost to regulate “trade” practices. In other words, their primary focus is on businesses.
In contrast, the CFPB has a different focus. Consider this text from the CFPB website:
In June 2009, President Obama proposed to address failures of consumer protection by establishing a new financial agency to focus directly on consumers, rather than on bank safety and soundness or on monetary policy. This new agency would heighten government accountability by consolidating in one place responsibilities that had been scattered across government. The agency would also have responsibility for supervision and enforcement with respect to the laws over providers of consumer financial products and services that escaped regular Federal oversight. This agency would protect families from unfair, deceptive, and abusive financial practices. The President urged Congress to give the consumer agency the same accountability and independence that the other banking agencies have and sufficient funding so it could ensure that powerful financial companies would comply with consumer laws.
In case you didn’t catch it, a key difference in the role of the CFPB when compared to all other government financial regulation entities is that the CFPB is to have a direct focus on consumers.
Prior to the formation of the CFPB, the only players in the credit system with a focus on helping consumers were credit repair companies. The CFPB has given consumers a new ally; and now that things are in full swing for the Consumer Finance Protection Bureau, we have started to see some positive effects of this.