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A Florida woman has sued Equifax claiming she was denied a car loan because of a 130-point mistake in her credit report that she says was part of a larger group of credit score errors the ratings agency made this spring due to a coding problem, the Associated Press reported. The class action lawsuit was filed in federal court in Atlanta on behalf of Nydia Jenkins and potentially millions of others who applied for credit during a three-week period earlier this year. The Jacksonville, Florida woman was forced to accept another, less favorable loan that was $150 per month more than the one she was turned down for because of the error, according to the lawsuit. Credit scores provide lenders with a picture of how a big a risk a borrower is, and they typically range from 300 to 850 points, with a higher score usually resulting in better terms for people applying for mortgages, auto loans or mortgages. The lawsuit says the errors violated federal law that governs credit reporting agencies. The errors occurred over three weeks from mid-March to early April. An analysis Equifax conducted shows that there was no shift in a majority of credit scores, and for those who did experience a change, only a small number would have received a different credit decision, Equifax said in an emailed statement on Thursday.

U.S. household debt increased to a record $16.15 trillion in the second quarter, driven mostly by a $207 billion jump in mortgage balances, with credit card and auto loan debt also rising as consumers lifted their borrowing to deal with soaring inflation, a Federal Reserve report showed on Tuesday, Reuters reported. Overall delinquency rates rose modestly too for all debt types, with delinquencies for credit cards and auto loans "creeping up," particularly in lower-income areas, the New York Fed's quarterly household debt report said. Mortgage debt increased to $11.39 trillion at the end of June, according to the report. Purchase mortgage originations were up 7% in the second quarter, with much of the increase attributed to higher borrowing amounts. The U.S. central bank began raising interest rates in March as it exited the easy money policies it had kept in place during the worst of the COVID-19 pandemic to shield an economy pummeled by lockdowns and other protective measures. Since then, stubbornly high inflation running at four-decade highs has compelled policymakers to raise the Fed's benchmark overnight lending rate by 225 basis points. That rate is currently in a target range between 2.25% and 2.50%. Further interest rate increases are forecast for the rest of this year as the central bank attempts to quash inflation that is sapping the pocketbooks of Americans.

Inflation is at a four-decade high, and a recession could be near. Credit-card issuers aren’t worried: They are aggressively courting new customers and trying to increase credit-card balances, the Wall Street Journal reported. Marketing expenses are up at big issuers, including American Express Co., Capital One Financial Corp. and Discover Financial Services. New credit-card account openings are surging. Solicitations promoting zero-percent interest rates on purchases and balance transfers, which fell after the Federal Reserve began raising interest rates in March, are rising again. Big card issuers reported record levels of credit-card spending for the second quarter. At JPMorgan Chase & Co., credit-card purchases totaled $271.2 billion, the highest amount dating back to at least 2004 and 33% above the fourth quarter of 2019, before the pandemic caused spending to plunge. Bank executives say low unemployment and credit-card delinquencies that remain below prepandemic levels give them confidence in consumers’ ability to keep up with their debts. And inflation isn’t such a bad thing for card companies, some executives say, since it can result in higher spending that translates into more fee revenue.

The Department of Justice and the Consumer Financial Protection Bureau (CFPB) issued a joint letter today reminding auto finance companies of their responsibilities to recognize important legal protections for military families under the Servicemembers Civil Relief Act (SCRA), according to a CFPB press release. While servicemembers have the same rights as non-military borrowers, the SCRA provides additional rights to protect servicemembers and their families against unique financial challenges. Recent CFPB research has shown that servicemembers tend to carry more auto loan debt at younger ages than their civilian counterparts, largely due to the need for transportation while living on a military base. They’re also commonly the target of unfair or predatory practices including costly loans and expensive contracts because of the financial inexperience of many entering the service as young adults, combined with their steady paychecks and ability to structure payments through the military allotment system. CFPB’s Spring 2022 Supervisory Highlights also uncovered unfair acts or practices, prohibited by the Consumer Financial Protection Act, in the auto-servicing industry.

Consumer spending jumped in June as Americans continued to absorb stubbornly high prices on groceries, gasoline and other basic needs. But the mood of these shoppers remained quite gloomy, potentially signaling that a broad pullback could be on the horizon, the Washington Post reported. Two data points released Friday — in a week brimming with economic markers — illustrate how the behavior of American consumers has neared a tipping point heading into the second half of the year. Overall consumer spending climbed a healthy 1.1 percent in June, the Bureau of Economic Analysis reported Friday, a significant uptick from the 0.2 percent recorded in May. That increase came during a month when gas prices surged past $5 per gallon in many parts of the country and the consumer sentiment index — as measured by the University of Michigan — reached a record low of 50. As gas prices receded somewhat in July, consumer sentiment ticked up to 51.5, a marginal improvement but still the index’s second-lowest level. Whether this is the beginning of a slow rebound or a minuscule blip is unclear. When consumer sentiment is low, many Americans can be compelled to pull back on spending. That is the type of behavior that can pull an economy into a recession. And consumer sentiment hasn’t been this low in recent history, even during recessions.

After more than a year of record run-ups in apartment rents, growth is starting to cool off, a trend that could help housing affordability and ease the rise in overall inflation, according to several market measures, the Wall Street Journal reported. Nationally, average apartment rents rose 9.4% in the second quarter of 2022 compared with the same quarter in 2021, according to data firm CoStar Group. While that is high by historical standards, it is down from the more than 11% annual increases seen the previous two quarters, CoStar said. The decline also comes at the time of year when the rental market is typically at its strongest. The slowing of the growth rate in the second quarter is “a really ominous sign,” said Jay Lybik, national director of multifamily analytics at CoStar. “It’s retreating quickly.” CoStar projects that rent growth will continue to slow in the coming months, finishing the year 6.2% higher than last year. The firm is projecting a 4.9% increase for 2023. The rental markets that are slowing fastest include many of the cities that saw some of the country’s fastest-growing rents during the pandemic, such as Phoenix, Las Vegas and Tampa, Fla. In Phoenix, asking rent grew 10.1% in the second quarter compared with a year earlier, according to CoStar, down from the 18.4% annual increase in the first quarter of this year and the 21.3% rise in the fourth quarter of 2021. In Palm Beach, Fla., top-tier rents have actually fallen below their 2021 high point of $2,704 a month.

More than 100 Democratic senators and U.S. House members sent a letter to President Biden yesterday urging him to renew the pandemic pause on student loan payments, citing continued economic difficulties for borrowers, the Wall Street Journal reported. In a letter whose signatories span the party’s ideological spectrum, the members asked Biden and Education Secretary Miguel Cardona to extend, for the seventh time, the moratorium on federal student loan payments that is set to expire at the end of August. If Biden doesn’t act, millions of borrowers will have to return to making monthly payments on their student debt that have been frozen since March 2020 just two months ahead of this fall’s midterm elections. The letter was led by Sens. Bob Menendez (D-N.J.) and Cory Booker (D-N.J.), Sen. Elizabeth Warren (D-Mass.), and Senate Majority Leader Chuck Schumer (D-N.Y.). The signatories included moderates like Rep. Conor Lamb (D-Pa.) and progressives like Rep. Rashida Tlaib (D-Mich.). “Resuming student loan payments would force millions of borrowers to choose between paying their federal student loans or putting a roof over their heads, food on the table, or paying for childcare and health care,” the Democratic members wrote. White House press secretary Karine Jean-Pierre on Tuesday pointed to Biden’s comments last week that he would address the issue before the Aug. 31 deadline. “He’ll make a decision,” Jean-Pierre said. “I’ll let him speak.” The Education Department said Tuesday that it would be in touch with borrowers once a decision is made.

A shortage of vehicles at dealers due to the supply chain snarls gripping automakers is expected to drive down U.S. auto retail sales in July, according to industry watchers, Reuters reported. Total new-vehicle sales including retail and non-retail transactions are expected to decline 5.7% this month from a year earlier after adjusting for total selling days, consultants J.D. Power and LMC Automotive said in a report on Wednesday. Research firm Cox Automotive predicted a 13% fall in July sales volume. Automakers have struggled with supply chain disruptions caused by the COVID-19 pandemic, including those resulting from recent lockdowns in China, with Russia's invasion of Ukraine exacerbating the problem. While the consultants expect the seasonally adjusted annualized rate (SAAR) for total new-vehicle sales in the country to decline by 0.9 million units in July to 13.7 million units, Cox Automotive is forecasting a slight uptick in SAAR to 13.2 million units. The industry, which has to compete for limited chip supplies with other manufacturers such as electronics device makers, will continue to be constrained by procurement, production and distribution challenges in August, said J.D. Power and LMC Automotive.

President Joe Biden is considering extending a pause on student loan repayments for several more months, as well as forgiving $10,000 in student loan debt per borrower, Bloomberg News reported. The current moratorium on student loan payments expires Aug. 31, and a fresh pause could extend either through the end of 2022 or until next summer. Biden told reporters last week that he hoped to decide on an extension by the end of August. Debt forgiveness may follow the extension, but the president hasn’t reached a final decision on either move, the people said. The president is intent on ensuring any student loan forgiveness doesn’t benefit high-income people, so the administration is likely to cap eligibility somewhere between $125,000 and $150,000 in annual income. Biden has neared a decision on student loan forgiveness at least three times in the last several months, according to one Democrat close to the White House. Yet concerns about escalated inflation have complicated the discussions, preventing Biden and his top aides from moving forward with an announcement.

The federal government’s student loan servicing contractors have been instructed to hold off on sending billing statements ahead of an Aug. 31 deadline for ending the pandemic freeze on loan payments, giving companies little time to start loan collection processes if payments resume, the Wall Street Journal reported. The future of the federal student loan portfolio is in limbo as President Biden considers whether to cancel a limited amount of debt for borrowers whose incomes fall under a certain threshold. The president and his advisers have been debating the issue for more than a year, frustrating activists and progressive Democrats, and putting borrowers, loan servicers and other stakeholders on edge about what happens next. Scott Buchanan, the head of a loan servicer industry group, said the Education Department has told loan servicers that they shouldn’t be communicating with borrowers about resuming payments. That message was reiterated in a call in recent weeks between department officials and a servicing company, Mr. Buchanan said, prompting speculation in the industry that the administration will further extend the pause on payments.