Good credit score history is essential for many Americans – the state of it decides whether you’ll be able to get a loan, a mortgage, or even pay certain bills. However, a lot of people face credit issues that are out of their control.
Reasons behind bad credit can be numerous, ranging from faulty data to identity theft, but the reality is that each of them brings unnecessary stress into ordinary people’s daily life. And most of the time, the only safe and sane way to deal with these issues is to contact someone in law.
To dig a bit deeper into this, Cybernews contacted Daniel Cohen, an attorney at Consumer Attorneys. They are a consumer protection firm that helps people with various credit-related problems by providing legal advice and guidance.
How did the idea of Consumer Attorneys come to life? What was your journey been like since?
There is a huge need for consumers to have their credit reports and background reports fixed. Credit reports and background reports are both governed by the FCRA – the Fair Credit Reporting Act. We wanted to specialize in credit reporting lawsuits and reach more people who have credit-related problems and don’t know where to go.
When something unexpected happens to people that concerns their credit, people often don’t know where to start, so they google whatever they can find, and get to credit repair companies. But traditional credit repair is expensive and ineffective. They only have so many tools they can use, and most of them don’t even use all the tools available.
Lawyers leveraging the Fair Credit Reporting Act are far more effective. A settlement agreement is legally binding, and the credit bureaus know that they are legally bound by a contract to correct the reporting, so the mistakes do not get back on people’s reports and disrupt their lives. What’s great about the FCRA is that it allows us to charge the defendants our fees, and not our clients. This law was put in place in order to protect consumers and incentivize them to sue when they face these issues.
Can you tell us more about what you do? What are the main issues you help solve?
Consumer Attorneys is a consumer litigation firm. We sue the credit reporting bureaus, creditors (like banks and financing companies), debt collectors, and other financial institutions in federal court under federal laws that protect consumers. That means we help people who have information that is not theirs on their reports, or information that is reported inaccurately. For example, people who were denied a mortgage because of someone else’s delinquent information that was mixed with their credit information. We also have a lot of clients who were denied housing or a job and were shocked to find information that did not belong to them, like criminal records from states they never even visited in their lives. This is a real problem that is affecting real people. We are not a law firm that helps banks get richer, we do the opposite: we help people with problems that affect their lives, using these laws for their intended purposes.
How does having a low credit score affect one’s daily life? What can be done to improve it?
Credit is like your health – when it’s good, you don’t think about it, but when it’s bad, that’s all you can think about. Beyond the obvious outcomes of having low credit, which can be a denial of credit, housing, mortgages, loans, and other financial opportunities, lower credit scores can get you higher rates for things that you actually can get approved for. The truth is that credit scores are a tricky thing. The reality is that no one really knows how credit scores are calculated because these are trade secrets that credit reporting agencies are reluctant to release. We request this information in almost every lawsuit but never get it. There are so many things that affect credit scores, and it can be a real hassle to correct inaccuracies.
Additionally, what are some of the worst habits that can negatively affect one’s credit score?
Of course, missing multiple payments can get your accounts charged off and your credit will take a hit, but also keeping a credit card at its limit. When creditors determine they cannot recover the funds on an outstanding account, they charge it off. That means that they write it off in their books as unrecoverable. You will still owe them the money, but they will likely take the next step and send your account to collections. And if the debt collector cannot recover the funds from you, you might get sued, which can be a scary thing. A lot of people cannot afford to pay back their credit – because of predatory creditors and especially now, with the pandemic. But there are levels to it. A charged-off account reflects better than an account that is in collections. And if you can negotiate and settle the account with the original creditor, that might reflect better on your credit overall. There are also hardship programs out there. People should know that there always are options.
How did the pandemic affect the legal industry? Were there any new challenges you had to adapt to?
We’re seeing a lot more bankruptcies because many people lost their jobs and couldn’t find new ones. The housing moratoriums also got a lot of people in dire straits. The housing moratoriums are likely to affect not only those who were not paying their rent and were facing eviction but also people who did pay rent and never had any problems of that sort. Because of the mass influx of new eviction proceedings, there’s now going to be a lot more mixed files, and people whose financial information is derogatory will be mixed with people whose financial information is not. For our practice, since we are practicing at the federal level, in terms of our daily lives, we could do a lot of court appearances over zoom since federal courts went remote. We didn’t need to physically attend court and take on a lot more clients from different states. That allowed us to reach more people.
In your opinion, what are the most serious consumer rights violations prominent today?
Credit reporting agencies are obligated to investigate consumer disputes and correct inaccurate information. In actuality, these credit reporting bureaus maintain an impossible number of files – hundreds of billions of credit files nationwide. They do not have the resources, nor is it even feasible, to properly investigate all these disputes. So when consumers dispute inaccurate information, the credit bureaus often perform a very rudimentary examination of the information readily available to them. They do not go deep into the facts and circumstances surrounding a dispute, and that is why we sue. There are also a lot of issues with debt collectors calling people at all hours and at work.
What’s the worst that can happen when someone’s identity is stolen? Is it possible to reverse all the damages after such an incident?
Identity theft is scary stuff. I’ve seen people who had accounts opened in their name and they didn’t even know about it, and the account was sent to collections. They only found out about the debt when they were contacted by debt collectors. Imagine being contacted by a debt collector for a debt you never owed and knew nothing about. I also had people who had receipts that they were out of the country when accounts were opened and sent to other addresses, or people who lost their wallets and found out about fraudulent accounts much later. Some people try to handle these types of situations for years before finally coming to us, and their credit takes a hit in the process. Our main goal is to help people get their credit reports corrected. Luckily, we are often able to do just that and get our clients some money back.
Could you share some identity protection tips? What can average Internet users do to protect their identity?
The first thing is to regularly check your credit reports. That may seem obvious, but many people avoid it, for many different reasons. Look for any irregularities and contact an attorney who specializes in credit litigation if something seems off. In some cases, you may need to report the fraud to the police. Also, always keep records – send letters via certified mail, keep emails that confirm that you made payments or closed fraudulent accounts, keep proof that you filed a police report, and so on.
Share with us, what’s next for Consumer Attorneys?
We’ve experienced tremendous growth in recent months and are excited to keep reaching people who need our help. We want to make credit literacy more common and educate more people about credit and their financial possibilities. They really don’t teach this stuff in school. We also want to keep making legal services accessible to those who need them.