This week, hundreds of credit counseling executives gathered in San Francisco for the annual leadership conference of the National Foundation for Credit Counseling. I participated on a panel to address what The New Credit Normal promises for consumers. As I explained, regulators are helping to empower consumers by having creditors include the underlying credit scores in adverse action notices and in risk-based pricing notices they send to consumers. I also pointed out the unintended consequences that well-meaning government officials can create for all consumers when they limit the negative information that credit reports can contain.
I was surprised and struck by a deep frustration I heard from these counseling experts. Due to the nature of their work, during tough economic times they expect to be – want to be – overwhelmed with work. But as I heard, many consumers simply aren't reaching out for help. Why isn't at all clear. One counselor suggested tongue-in-cheek that consumers are afraid of being yelled at for having behaved badly. I almost wish that were true. It would suggest that strategic mortgage defaults may be an aberration in customer payment hierarchy. But whatever the cause, it's one more sign that the New Normal is bringing surprises for us all.