With tightening mortgage guidelines, increasing foreclosures, growing credit card delinquency, credit standards have become more and more important. In response to growing consumer need, numerous companies now offer "for fee" credit repair. I had written about concerns with some of these services in a previous post.
A recent NPR story addressed the growing industry that offers to "power wash" consumer credit scores. Many companies promise to increase credit scores over 100 points by removing negative references, including items that are correct and accurate. Most companies even advertise to remove bankruptcy, foreclosure, and judgment references.
In the interview, Charles Helms with non- profit Consumer Counseling North West, points out that credit repair companies cannot do anything that a consumer cannot do on their own. An informed consumer hiring a repair company to do something that the consumer could do themselves does not bother me.
Disputing credit report items can be tedious, and it may very well be worth it to hire a service. The problem for me is that so many of these services advertise to remove legitimate derogatory items. This would basically make the credit report grossly inaccurate. In cases where accurate bankruptcy, foreclosure, and judgment references were removed, it would either invalidate the credit report for mortgage purposes or would encourage false disclosure on an application.
The FTC has recently coordinated efforts with many states to crack down on credit repair companies for false advertising, unfair and deceptive practices, violations of the Credit Reporting Act, and violations of various state laws.
List of companies sued by FTC and various states.
The NPR report indicated that federal law provides for a free, relatively easy way for consumers to dispute items on their credit report." I have helped many clients with their credit disputes. In most cases, I have found that it is not so "easy."
The important matter for a consumer is to have an accurate credit report.
Here is a link to some FTC information on credit .
My process to help clients with credit repair is to start with a detailed review of each reference, verifying that the information is accurate. We determine what the target credit rating is, what the client resources are, and develop a step by step plan.
Possible steps can include paying collections, requesting a deletion letter, issuing disputes with the credit repositories, rapid rescoring.
Clients who need an immediate improvement in their credit scores should be careful not to take well intentioned steps that might actually lower the scores.
Credit is one of the most significant barriers to home ownership, more so in the current lending environment. Credit repair can be done, but it must be done right.
Richard Smith
American Acceptance Mortgage, Inc
Toll Free 888-474-9920 Cell 423-280-0345
Home financing in Tennessee, Georgia, and Alabama.
Experience matters when it is your home loan.
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FHA, VA, Rural Development, Reverse Mortgages, Construction Permanent, Renovation,
FHA Renovation, Mortgage Modification and Loss Mitigation
Mortgage lending offices located in Chattanooga, TN
rsmith@aamonline.com
