Sallie Mae Error Tanks 1 Million Credit Scores

Because of a computer error at Sallie Mae, a million people with student loans had their credit scores decimated.

Last week Sallie Mae made an error in the way it reported about a million student loans to credit reporting agencies. Essentially, it reported graduated or extended repayment plans as arrangements for partial payment, causing the loans to be coded as delinquent, even though they weren't.

In some cases, borrowers' FICO credit scores dropped 100 points or more as a result of the error, according to Bankrate.com.

Sallie Mae offered to provide credit reference letters for customers needing one to correct their score or show a prospective lender that the error was caused by Sallie Mae. The Reston, Va.-based lender urged concerned customers to call 1-888-2-SALLIE or 1-888-272-5543.

A personal story about how Michelle Richards and her husband have been affected by the wipe out of their credit score by the Sallie Mae error is here.

Verizon Wireless Defends Another Federal Suit Over Fraudulent Collections

The often sued Verizon Wireless bill collectors are on the docket again.

The newest complaint, filed in Alabama federal court, asserts the No. 2 wireless service provider is destroying the credit of an otherwise uninvolved citizen.

Verizon Wireless is trying to collect more than $1,000 from Johnny Howard he does not owe, and is falsely reporting the alleged debt on his credit reports. Howard is an identity theft victim. After complying with Verizon Wireless’ demands to fill out a police report and send them a copy, he was turned over to a collection agency anyway. The collection agency later received the police report, according to the lawsuit, but the problem was not resolved. The overdue account remained on Howard’s credit reports, prompting him to contact TransUnion L.L.C. and Equifax. Equifax eventually removed the account; TransUnion did not. TransUnion is included in the complaint.

“This wrongful conduct has drastically impacted plaintiff’s credit score and credit worthiness and has caused him past and future monetary loss, past and future emotional distress, and other damages that will be presented,” the lawsuit states.

Pacific States Credit Owner Arraigned On 111 Counts

Jeff Allan McCoon owns Unifund, a debt buying company and Pacific States Credit, a collection agency. He uses Unifund to buy debts from other companies and then collects the debts through his collection agency, Pacific States Credit, by tracking down property possibly owned by the alleged debtors and filing liens against it. If the alleged debtors ever want to sell the property, they have to pay the liens first, whether they actually owe a bill or not.

So what? Many debt buyers operate on just such a business plan, leading their accounts to be known as zombie debts that never die. The difference in the Jeff Allan McCoon method, however, was not going to court to obtain a civil judgment but filing the liens anyway as if he had obtained a judgment.

The Sacramento County District Attorney's office is not amused.

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Cash America International Rises As Its Customers Drown In Debt

When its first quarter numbers came out last month, pawn loan provider and payday loan operator Cash America International Inc. (NYSE: CSH) said revenue from pawn loan and cash advance fees boosted first-quarter earnings higher than previously expected. The Fort Worth-based company said earnings rose 34 percent to $25.8 million, or 86 cents per share, from $19.2 million, or 63 cents per share, in the year ago period.

What many may not know, however, is how much money they and others are making at the expense of working families with Internet loans that are outside the regulatory reach of most state consumer protection agencies.

"It's insane. It is growing like wildfire," said Henry Coffey, a Baltimore-based stock analyst who tracks the payday loan industry including Cash America's online loans. One factor in the growth of online loans, which charge as much as 2,000 percent interest, is that they effectively hook borrowers into cycles of debt, often forcing people to take second and third loans to cover ballooning debts."If you are paying over 1,800 percent interest, you will never get out of that debt," said Elizabeth Schomburg, an official with Family Credit Managing Services, a Rockford-based credit counseling agency.

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