Credit enhancement program thuds

Here's one for the wacky idea file that was trashed before it was even implemented. Seems the Houston City Council had this grand plan to pay off some people's credit cards to help them qualify for homeownership. The idea caused quite a ripple. From "White backs off 'credit enhancement' with tax dollars" at the Houston Chronicle:

Mayor Bill White this afternoon announced that a plan for the city to pay off some debts for first-time home buyers has been pulled from tomorrow's City Council agenda.

Council members are now professing their "embarrassment" about the proposal, which has hit the national news circuit, including drudgereport.com., which picked up this morning's Houston Chronicle story about the plan.

"This issue has hit a nerve across this country," said Councilwoman Anne Clutterbuck. "Not just here in the city of Houston. Giving people the ability to increase their credit score artificially because we're allowing them to pay off their credit cards is exactly what got us into this (national economic) crisis in the first place...."

The "Credit Score Enhancement Program" would have given up to $3,000 in grants to individuals who are trying to qualify for mortgages through the city’s home buyers assistance program. City officials say some applicants fall short of eligibility by only 10 or 20 points on their credit scores, and paying off some debt balances can quickly improve their numbers.

Councilwoman Clutterbuck gets my vote.

--Lauren Beale

Thoughts? Comments?

Photo: A walker heads down a trail near downtown Houston. Credit: David J. Phillip / Associated Press

Free credit monitoring services

Today is the deadline to sign up for nine months of free credit monitoring by registering to participate in a class-action settlement with TransUnion, reports the Wall Street Journal. That means, among other things, that consumers can receive e-mails when there are changes in their reports and lock reports so lenders can't see them.

The $75-million settlement stems from the sale of consumer information to businesses for marketing uses, a practice the Chicago credit bureau says did not violate the law and was discontinued in 2001. More details from the article:

Consumers who had an open line of credit or a credit account -- such as a credit card, mortgage, auto or student loans -- any time from Jan. 1, 1987, to May 28, 2008, can choose from six or nine months of the company's credit-monitoring services.
Under the settlement, consumers who opt for six months of credit-monitoring service can also register for a potential cash payment if any money is available for distribution, or they can file individual suits against the defendants. Those who opt for nine months of service won't be able to get a payment from the settlement nor start an individual suit.

Consumers, for their part, won't need to provide a credit card to sign up for the service. When the free services expire, the services will end, meaning TransUnion won't automatically sign people up for a paid service. To register for the settlement, go to www.listclassaction.com.

-- Lauren Beale

Thoughts? Comments?

Photo: Justin Sullivan / Getty Images