Credit Services Organization vs. Credit Access Business: Understand the Differences

With the economic outlook continuing to be uncertain, many Americans find themselves in need for credit options. For some borrowers, this may mean considering to apply for a CSO loan or a loan arranged through a Credit Access Business (“CAB”). Keep reading to find out what the key differences are between a CSO and a CAB, and what to know before applying for a loan.

What Is a Credit Services Organization (CSO)?

CSOs (short for Credit Services Organizations) are defined in several state laws such as Ohio’s and Delaware’s, as companies that assist customers with their credit history or credit rating, help customers obtain credit, or provide advice to customers about their credit or about how to obtain a loan. In most states, CSOs must register with the applicable regulatory entity, and obtain a CSO license before providing their credit-related services. 

Some companies are exempted from the definition of a CSO in many states. The exemption from the CSO definition typically includes state-licensed and federally-licensed banks, and lenders or brokers who are duly licensed under other sections of applicable state law. 

What Is a Credit Access Business (CAB)?

The term Credit Access Business is a Texas-specific regulatory designation that refers to companies that are similar to CSOs, but provide access to certain types of loans. Specifically, companies that arrange Texas title loans and payday loans from non-bank third party lenders are required to obtain a CAB license. Per definition, any CSO in Texas that offers access to these two types of loans is acting as a CAB.

The CAB license requirement was created by Texas lawmakers in an attempt to define strict parameters and regulations for the title and payday loan industry in the state. In order to become a licensed Credit Access Business, companies need to register with the Texas Office of Consumer Credit Commissioner (OCCC), and they must comply both with the CSO provisions of the Texas Finance Code, and with the CAB provisions of the OCCC’s rules.

There are several hundred Credit Access Business locations in the state of Texas that residents can visit in order to obtain an auto title loan or unsecured loan. Of course, Texas residents can also choose to apply for payday or title loans online.

What Is a CSO Fee or CAB Fee?

CSO fees or CAB fees as applicable are fees that the respective businesses charge for their credit counseling services or their services in connection with obtaining a loan or line of credit. For the latter, the fees are meant to compensate the CSO or CAB for brokering the loan or line of credit, and potentially guaranteeing the repayment of the credit product. 

The amount of the CSO fee or CAB fee can vary from one provider to the next, and is often expressed in $ per $100 borrowed for comparison purposes. For example, the 2024 Credit Access Business Cost Disclosure by the Texas OCCC discloses average fees and interest as follows:

If you are considering to apply for a loan that comes with a CSO fee or CAB fee, it’s always a good idea to review the disclosed Annual Percentage Rate (APR) of any loan offer you receive. This will allow you to compare your loan options from different providers which may come with different loan terms and fee amounts. This approach will also help you compare your CSO loan or CAB loan offer with other products such as bank loans.

Do Title Loans Serviced by LoanMart Have a CSO Fee?

With so many confusing options available to consumers, it can be easy to feel overwhelmed when choosing the right option. The good news is that title loans serviced by LoanMart don’t have a CSO fee or CAB fee that you need to worry about. Whether you’re a resident of Austin, Dallas, Houston, San Antonio, or anywhere else in the great Lone Star state, there’s no need to worry about a CSO fee or CAB fee when you get a title loan serviced by LoanMart!¹

Final Thoughts On CSO Loans and CAB Loans

If you live in a state where Credit Services Organizations or Credit Access Businesses broker loans for borrowers with bad credit, it’s understandable to explore these loan options. Be sure to compare the APR of and other terms of any loan offers you receive, so you can make the best decision for yourself!

If you’re specifically looking to obtain a title loan, consider applying for an auto title loan serviced by LoanMart so there’s no need to worry about paying a CSO fee or CAB fee!