A credit builder with a zero rate loan and a zero loan forgiveness offer could help a borrower avoid the wrath of a creditor who might sue for the unpaid loan.
Sabbatino, a company that offers loan forbearances to consumers, said in a blog post that it recently began offering loan forgiveness to borrowers who qualify.
The terms of its loan forgiveness programs are similar to those offered by Equifax, Experian and TransUnion, and it says it can waive the credit score requirement for some borrowers.
The company says that the credit-builder offers the same credit-scoring requirements as Equifax and Experian.
It’s unclear how many borrowers it has offered credit-banning programs to, and the company doesn’t disclose the number of borrowers who have applied for its programs.
Sabatino says that it has about 400 borrowers who’ve qualified for loan forgiveness.
In recent years, it’s become a popular choice for people with poor credit.
The most common reason for a loan-ban to occur is a borrower who files for bankruptcy, the company said.
But in recent years many borrowers who do file for bankruptcy have defaulted on their loans, said Michael Shackelford, an analyst at Equifax who specializes in credit-rating companies.
Borrowers with good credit may have default on their mortgages, Shackel said, and in some cases, have failed to pay their rent.
Banks may also want to consider offering loan forbearships if a borrower has a bad credit history, or if the borrower has other problems with his or her credit.
Shelton, the credit bureau, said it doesn’t have data on the number and type of loan-bannings offered by credit builders.
But it did say that there are a variety of programs available to borrowers with a credit history that could help prevent potential creditor harm.
The lender said it has also begun offering loan-preparation counseling to borrowers.
In addition, it said that it will continue to offer credit-preparedness counseling for borrowers with credit scores that are below 620.
Sophie Bowerman, a spokeswoman for the Consumer Financial Protection Bureau, which enforces the Fair Credit Reporting Act, said that while she doesn’t know if the credit rating agency is currently offering loan postponement programs, she has been in contact with the bureau to find out if it is.
The bureau, which helps consumers with credit and other problems, said the bureau would not disclose the amount of the loan-prep assistance offered to borrowers, as it does not have a policy on the matter.
A spokeswoman for Equifax said that the company had not heard of any programs offered by the credit builder.
A spokesman for TransUnion said the company has no comment on the loan prep program.