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New Federal Agency to Help Consumer Credit Score

By Sally Maison
Published: Sunday, October 18th, 2009

Consumers are having trouble keeping their credit score intact because of economic pressures and tighter lending practices. The good news is, the federal government continues to push reforms in financial regulation. In a continuing effort to make American market a friendlier place for consumers, President Barack Obama announced his plan in creating a new federal agency that will provide financial protection for Americans. The agency’s main function would be to keep watch of American financial industry and make regulations clear for companies.  Consumer advocates support the plan since they believe it can provide significant assistance to consumers in getting and keeping better credit scores.

New Federal Agency to Help Consumer Credit ScoreLaw makers, industry specialists, and consumer-protection groups gathered yesterday at the White House to hear President Obama announce his plans in creating The Consumer Financial Protection Agency. Pres. Obama admitted that irresponsible borrowing drove United States into recession but he said there are responsible citizens who are jeopardized because of the predatory attitude by lenders. He added that many lenders do not fully explain the contents of a contract so they can extract as much money from consumers as they can. The President commented that creditors lure people into promises of low payments but do not make them fully aware about fine prints and hidden fees.

Abuses in mortgage lending, excessively high interest payday loans, and overcharged bank fees are just some of several reasons why even responsible consumers cannot manage their debts well. Experts say abuses like these push people to the ends of their finances, causing their credit score to drop despite efforts in keeping their debt standing solid. With the proposed Consumer Financial Protection Agency, Federal Government aims at having a centralized monitor of American financial market to keep abuses from occurring. Pres. Obama added that the agency will be vital in aiding small business owners who primarily rely on card debts in order to keep their business running.

As expected, banks and financial firms represented by US Chamber of Commerce strongly opposed the new federal plan. They believe that it would stifle progress in financial market and emergence of innovations. Meanwhile, consumer advocates lauded yesterday’s announcement. They say consumers need better protection against creditors who got an overwhelming portion of their profit from dishonest business transactions. Advocates add that better financial services would lead to better credit scores. Consumers will no longer have to be surprised with fees they know nothing about when they first signed agreement with lenders, experts commented. Analysts also say that more honest lending practices will stimulate debt activities among consumers which is significant in America’s recovery from recession.

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