How the New CFPB Update will affect Consumers and Financial Institutions
Have you tried to open a checking account only to find that your application has been rejected? If yes, you are not alone.
Banks decide if you can have a checking account with them based on information that may be irrelevant, inconvenient and at times inaccurate. Taking these issues into consideration, the Consumer Financial Protection Bureau (CFPB) made an announcement in October of 2014, stating that it has decided to redress the ongoing consumer complaint of being denied a checking account.
Financial institutions like banks use closed-for-cause data to check your past records. This credit check reviews your history with other financial institution (FI) to see if you ever had an account closed for negative reasons or if you have unpaid account dues.
Closed-for-cause helps banks identify people likely to commit fraud; however, innocent customers are sometimes denied in the process. Sometimes consumers forget to close an account. Other times consumers abandon accounts if they feel overwhelmed by overdraft fees, thereby leaving a trail of unpaid payments to the bank.
Checking Accounts and Credit
Banks or credit unions may review your credit report when you apply to open a new account with them. Usually, they carry out a soft pull, meaning they check your credit score, but not with a fine toothed comb. A soft pull does not leave a mark on your credit report. However, if a bank conducts a hard pull, looking deeply into your credit history and report, this action can leave a mark on your credit for up to 12 months.
Another way in which applying for checking account can affect your credit score is when you sign up for overdraft protection on an account. This may set up a new line of credit, thereby triggering an inquiry on your credit report. The bank may send a report to the three major credit reporting bureaus. These actions taken on behalf of banks can damage your credit.
At RepairMyCreditNow, we educate you on all the various aspects of credit. If you are like most consumers, you are likely unaware of all the various actions and marks happening on your credit that may be damaging your credit score in ways you may not even know about.
Our comprehensive credit repair and restoration process explores all aspects of your credit history as a first step to locating erroneous, inaccurate or damaging items. Then we work to remove these items so you can enjoy the good credit you deserve.
Contact us today to get started.