As a professional that has been in and around the real estate and mortgage business I often wonder how people can choose a company based on fluff and spin. I see ads all over the place claiming "Attorney Based Credit Repair" or "Legal Credit Repair" and I question if the people reading these signs in the ground or tacked to the telephone pole or the claim they represent. I think it is important to understand the difference so that more people don’t pay good money on a hoax or dream. Here are some facts:
1. Credit Repair is "Legal" by the Fair Credit Reporting Act. It is not only the right for a consumer to challenge an item on their credit report, but hire a 3rd party company to do it for them.
2. The 3rd party company has to comply with the FCRA and the Credit Repair Organizations Act (CROA) which govern everything from guarantees to contracts.
3. You have to be LICENSED AND BONDED to charge any money up front and ONLY if it is allowed by the state that the services are performed in.
4. There has to be a NOTICE OF CANCELLATION and any guarantees in writing.
5. The time to CANCEL the agreement varies from state to state.
6. The "Credit Bureaus" have to follow the same laws whether and attorney or not sends in the dispute.
7. The bureaus flag "form letters" and "credit repair disputes" because often they are generic.
8. The dispute that is sent in is based on the "INTERPERTATION" of the investigator handling the dispute.
9. It is possible to "LOCK" a file because they tried to dispute the same item multiple times.
I could go on and on with this list but I will not bore anyone who chooses to read this. Understanding a few things more will better set the two apart.
1. A "CREDIT SCORE" is not part of your credit profile.
2. A credit score is a "RISK" calculation based on the lenders risk equations.
3. Credit is scored by a mathematical algorithm that changes at least every 18 months with FICO (Fair Isaac and Company) and as often as necessary by the lenders risk tolerances.
So based on that morsel of information, how can a CREDIT REPAIR company possibly promise results? I hear promises of higher scores and loan approvals. The fact remains that if the person, attorney based or otherwise does not know the mathematical algorithm or the lenders risk tolerance based again on an equation, how can they promise anything?
A "Credit Management" company focuses on the portfolio of information itself to deliver results of a more "accurate" and attractive profile for lenders. It is not hard to understand that the lenders require:
1. Good Payment History
2. Low CTB (Credit to Balance) ratios
3. A healthy mix of installment and revolving account
4. Stability
5. History
6. Category
This means that credit is too "FLUID" of a concept to think that sending in a letter will "FIX or REPAIR" the damage caused by poor performance or "LIFE" in general. The result of a Credit Management Company is true "Financial Literacy" that extends beyond one item or another. But the byproduct of correcting the profile of blemishes and re-organizing the profile is the removal of the items that the FCRA say can be removed.
1. Erroneous
2. Obsolete
3. Un-verifiable
4. Unknown
5. Outdated Information
It is no wonder that people on our industry have such a bad name. We rank right up there with used car salesman and life insurance. The only thing that I can hope for is that the people who service the industry get the education they need to be a professional. But, since I have been doing this for 13 years I only get to see the greed and ignorance that both the consumer and provider share.
Bottom line, do your research, ask questions, see the bond and license and at the very least, ask them "What make you an expert?" A book on credit repair from Barnes and Noble will not make you an expert. Working at a car dealership will not make you an expert. Being a past mortgage professional does not make you an expert.
I am an expert! Why you may ask? Because I have experience; I am a college graduate with a degree in finance. I am FCRA Certified by the CDIA (Consumer Data Industry Association) in Washington, DC. I have been both a banker and underwriter in my career. I was a Private Asset Manager for 2 large banks with lending authority. I know the market because I have been licensed as a loan officer and realtor. When in banking I had my Series 7, 63, 22, 26 and Group One Insurance License. I constantly communicate with the repositories and FICO's media relations department for our articles. I am not just out to make a living, but to try and change the captivity that the system has us bound too.
Ok, I am going to get off my soap box and wish anyone who has read this nothing but the best!