Jason Moore, dressed casually, circulated among the booths with his tiny brown dog, Ringo. A former subprime auto finance manager from Birmingham, Ala., Moore started TeamUSA Credit Repair and worked his connections among car dealers for referrals after the Great Recession of 2008. “It just blew up so fast,” he told me. “By the third month, I made 30 grand with one employee.” Craig Chapman, a former car salesman, wearing a suit with a pocket square tucked into his jacket, started Transformation Financial Solutions in Dallas after seeing a local dentist — who otherwise seemed to be successful — be turned down for a loan with a credit score of 460. Chapman said, “If she has that problem with credit, how many other millions of people do as well?” Julia King and Robert Longshore, a married couple from Louisville, Ky., had driven their motorcycles to New Orleans from Louisville, where they operate King Financial Repair. They charge new clients $299 for an analysis of their credit reports, then $147 a month thereafter, typically for a minimum of six months. King told me she obtained deletions for clients all the time: wrong dates, incorrect balances, inaccurate dates of when an account was opened or closed. “Something’s going to be wrong every single account,” she told me. “I bet you a thousand dollars you can’t find me an accurate credit report.”
Onstage, Liistro and Eric Kamerath, the legal counsel for Utah-based Lexington Law, the largest credit-repair company in the United States, delivered CreditCon’s legislative update. They gave a quick rundown of proposed bills in various states that, among other things, would require credit-repair agents and businesses to identify themselves when filing dispute letters with debt-collection agencies on behalf of clients. The lobbying effort is worth it for the $20 billion debt collection industry: Federal law allows debt collectors to ignore letters from credit-repair organizations, so debt collectors who can disregard millions of letters are more likely to collect. This is why credit-repair companies generally try to avoid giving any clue that their dispute letters were written by someone other than the debt’s owner. (A recent congressional investigation found that the credit bureaus have examined envelope characteristics, ink color and fonts, as well as the language being used, in order to identify letters from agents.)
Kamerath and Liistro went on to describe their industry’s lobbying battles. Liistro recounted an exchange with an executive at an Illinois-based nonprofit, Working Credit NFP, which has received funding from the credit-card industry and had lobbied for a bill in Illinois to restrict credit repair. She told him they “had every intention of shutting down credit repair,” he said. “And I know this because they told me so to my face, right after they said: ‘You seem like a nice guy. But what you do is evil, and you need to get a new job.’ They’re very adamantly against credit repair.”
Such lobbying war stories were relatively minor concerns compared with what Kamerath was leaving unsaid. His company’s biggest existential threat was coming from federal regulators. In May 2019, the Consumer Financial Protection Bureau sued Lexington Law in federal court for charging upfront fees for its credit-repair services. Those fees, it claimed, were substantial: as much as $3.1 billion in gross revenues since about 2016. Earlier this year, the C.F.P.B. submitted a request to the court that Lexington Law pay those fees back to consumers. While attending CreditCon, Kamerath had approved a response to that request, explaining why it would be impossible. His company’s “financial resources are dwindling and nearing zero,” it read.
When I visited Liistro at his company headquarters in Mobile after CreditCon, he told me that he was doing less actual credit repair these days. He found it more profitable to sell his software package, Credit Admiral, which credit-repair agents use to run their business and generate dispute letters. He had fewer than 50 credit-repair customers these days and claimed to be owed more than half a million dollars in unpaid fees. Though he did so rarely, he said, he sometimes hired a collection company to go after those debts — “who will then report it to the credit bureaus, coincidentally.”
The injustices of America’s credit system have not gone entirely unnoticed by national politicians in recent years. During his presidential campaign for the Democratic nomination in 2019, Bernie Sanders proposed a public credit registry, housed within the C.F.P.B., to replace the for-profit system, along with a ban on the use of credit checks by nonlenders, including landlords, employers and insurers. But the idea gained little traction. President Biden — whose largest campaign contributors before joining Barack Obama’s presidential run in 2008 included the employees of a credit-card company — also suggested the idea of a public registry during his last campaign.
America’s current system is itself a product of a previous reform effort. Into the early 1960s, the public was largely oblivious to the power of what were then well over a thousand credit bureaus, which mostly operated regionally. “I am constantly amazed at the average person’s complete lack of understanding of the functions of a credit bureau,” David Blair, a professional credit manager and advocate for the credit bureaus, wrote in a trade journal in 1954. “There is, in my opinion, no organization that affects the daily lives of so many people that is so little understood.” That ignorance ended as computer databases supercharged the industry’s surveillance powers. What had been a fragmented and paper-based industry quickly was consolidating and tracking intimate details — sexual orientation, marital status, even cleanliness. Mistakes were rampant and resulted in congressional hearings by 1968, when the credit bureaus faced their first major existential threat: a proposal for a government-managed registry that would replace the for-profit system.
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