Law Talk: Rating your credit
A bad credit rating is a Catch 22. The person is ineligible for credit, which gives them no opportunity to build a positive credit rating. For people in this situation, the promises of loan brokers are intriguing.
Often, loan brokers advertise that credit can be secured despite the applicant's poor rating. This practice is perfectly legal, but some operators have used these claims to prey on people with poor credit. The Ontario Government has received complaints claiming that unscrupulous loan brokers have made misrepresentations, demanded up-front fees, and not supplied applicants with the details of the loan.
In response to these complaints, the Ontario Government has created consumer protection laws specific to loan brokerage. In July 2005, the Consumer Protection Act, 2002 (CPA) came into effect.
The most common scam involves asking the applicants to pay a fee before receiving their loan. Some applicants have paid as much as $700 to secure credit. Once the fee is paid, the applicant never receives the loan. The CPA combats this practice by prohibiting loan brokers from charging fees until the consumer has received the loan. If fees have been paid contrary to the CPA, the supplier must send a full refund within 15 days of the applicant's request.
The CPA requires loan brokers to supply applicants with a copy of their loan agreement. The agreement should disclose the total amount payable, terms of payment, and the broker's contact information. The applicant can still change their mind after receiving the loan agreement at no cost.
If a loan broker is not in compliance with the CPA, contact them and explain they are breaking the law. Make sure the complaint is in writing and copies of any communication with the broker are kept. If not satisfied by the broker's response you may file a complaint with the Ministry of Government Services at www.mgs.on.ca.
Although the CPA adds protection for consumers, it is important to remember that the best solutions to financial problems may not be a quick fix. A helpful agency is the Ontario Association of Credit Counselling (OACCS). OACCS represents non-profit agencies across Canada that assist people in avoiding bankruptcy. The OACCS website has much information that can be accessed at www.oaccs.com. The London branch of OACCS is the Credit Counselling Thames Valley at 125 Woodward Ave. They can be contacted at 519-433-0159.
Often, loan brokers advertise that credit can be secured despite the applicant's poor rating. This practice is perfectly legal, but some operators have used these claims to prey on people with poor credit. The Ontario Government has received complaints claiming that unscrupulous loan brokers have made misrepresentations, demanded up-front fees, and not supplied applicants with the details of the loan.
In response to these complaints, the Ontario Government has created consumer protection laws specific to loan brokerage. In July 2005, the Consumer Protection Act, 2002 (CPA) came into effect.
The most common scam involves asking the applicants to pay a fee before receiving their loan. Some applicants have paid as much as $700 to secure credit. Once the fee is paid, the applicant never receives the loan. The CPA combats this practice by prohibiting loan brokers from charging fees until the consumer has received the loan. If fees have been paid contrary to the CPA, the supplier must send a full refund within 15 days of the applicant's request.
The CPA requires loan brokers to supply applicants with a copy of their loan agreement. The agreement should disclose the total amount payable, terms of payment, and the broker's contact information. The applicant can still change their mind after receiving the loan agreement at no cost.
If a loan broker is not in compliance with the CPA, contact them and explain they are breaking the law. Make sure the complaint is in writing and copies of any communication with the broker are kept. If not satisfied by the broker's response you may file a complaint with the Ministry of Government Services at www.mgs.on.ca.
Although the CPA adds protection for consumers, it is important to remember that the best solutions to financial problems may not be a quick fix. A helpful agency is the Ontario Association of Credit Counselling (OACCS). OACCS represents non-profit agencies across Canada that assist people in avoiding bankruptcy. The OACCS website has much information that can be accessed at www.oaccs.com. The London branch of OACCS is the Credit Counselling Thames Valley at 125 Woodward Ave. They can be contacted at 519-433-0159.
