A new law in Connecticut that went into effect on June 11, 2018, made it a crime to deny housing to someone with bad credit. The article discusses the effects this law will have on the state’s economy and its residents
How did the law come to be?
Ilene L. Hinojosa, the chief legal counsel for the Connecticut Department of Banking and Insurance is quoted as saying that “I would like to see people start thinking more about what they could do with their credit than destroying it.”
The law was passed in October of 2013 and according to the state’s official website, it prevents lending institutions from discriminating against borrowers who have bad credit because of their race, gender, family size, marital status or age.
Many people are unaware of the fact that Connecticut has some of the toughest laws on consumer lending. Even though there are many reasons why everyone should consider a bad credit loan, people with bad credit can also take advantage of these loans in certain situations.
What is bad credit?
Bad credit is not a numerical value assigned to the quality of your credit rating. It means that your credit score is below what is considered normal for the particular lender you are applying for.
Bad credit includes a range of debt that is considered unsatisfactory by the lender. Many lenders have different standards to place people into categories such as good, bad, or doubtful. These standards can be based on how long someone has been in debt (how long they have delinquent debt) and how much of a percentage of their income payments are going towards debt repayment.
The effects of a new law: positive and negative
The Connecticut law, which was signed on October 19th by Governor Dannel P. Malloy, is meant to protect borrowers from predatory lending tactics and encourage lenders to offer consumers loans with lower interest rates. This law will help the state’s residents get the credit they need while reforming the lending industry in Connecticut. However, it’s not all good news: the new law has many unintended consequences.
In September, Connecticut started enforcing a new law that says lenders can’t deny anyone who has an unpaid debt because of their credit score. This law will make it easier to get approved for loans and give more people the chance to buy a home. However, it could also lead to a rise in default rates and higher interest rates for everyone.
Who would use this law?
If you have bad credit and are looking for a loan, then the Connecticut law is for you! This law will allow businesses to offer loans, even if the consumer has had a bankruptcy or other credit-damaging events.
The Connecticut Attorney General has just released the first set of ‘bad credit lending rules’ in the United States. A large reason for this new law is because of the recent rise in predatory lending practices. The idea behind these new rules is that loans should be given to people who “have a reasonable chance of repaying them.”
Alternatives to this law
Some of the most effective alternatives to this law include other lending laws and policies, like requiring financial institutions to assess a person’s ability to repay loans. Other examples include fair lending laws, as well as loan agreements that protect consumers by limiting interest rates.
There is currently a bill in the Connecticut legislature to repeal or amend the prohibition on bad credit lending. It would also make other changes to the law, like allowing loan brokers and mortgage brokers to be licensed without being regulated by the state.
In Connecticut, bad credit is not a barrier to lending. There are options for borrowers with the best credit to still get loans in Connecticut.
It is said that the reason for bad credit lending in Connecticut is due to a lack of regulation in the mortgage industry. Although there are plenty of other reasons people may be denied a loan, it is still difficult to work with the mortgage market when your credit history is less than positive.