December 14, 2010

http://www.adi-news.com/secured-loans-used-in-money-laundering/25895/

Secured loans that are being used to raise credit scores are not carrying the same weight that they used to.  Credit card companies that have invested in their push to get consumers using secured loans or secured cards are now reconsidering the move.

The credit reporting agencies are now modifying how secured loans are waited when reported both negatively and positively on the report.

Reports from the big three of credit reporting are showing that secured loans that are defaulted upon will show a greater negative impact on consumer credit reports and any positive movement has been cut in half.  This method is being used as a deterrent to using secured loans or secured credit cards in money laundering.  This is mostly a practice being used in Asia, but it is affecting the US markets as well.

This is unfortunate news for a lot of debt consolidation and debt relief companies that were also making a move to secured loans and cards in an attempt to increase revenue.  This is supposedly a temporary adjustment and should return to normal reporting in the next three years.