Feb 8, 2010

Can Credit Repair Ruin Your Mortgage Hopes?

If you are considering do-it-yourself credit repair in order to qualify for a mortgage, you may be surprised to find out that it can do more harm than good. While you have a right to dispute any inaccuracies on your credit report, and to have them removed if they cannot be verified, Fannie and Freddie have a standard policy that rejects automated underwriting for any applicant with an open dispute. What does this mean? If you are currently disputing any items on your credit report, it means that a mortgage application will not automatically be approved in the system, no matter how high your credit scores.

For individuals with already shaky credit, it may mean that the application is denied outright. This is because many lenders would rather avoid any potential risk associated with disputed listings, and won’t take the effort to perform what is known as manual underwriting in order to get a more accurate picture of your situation. To make matters worse, the dispute does not have to be related to the removal of an item on your credit report – if you have an ongoing dispute over the amount of a bill, or fraudulent charges, you may also be rejected by the automatic underwriting system.

So what can you do to minimize the chances that your application will be denied, while still taking advantage of your legal right to a fair and accurate credit report? If you plan on disputing an item, and you already have decent credit, it may be in your best interests to hold off on the dispute until after your mortgage has been approved.

If you have an ongoing dispute, be up front about it with potential lenders – most will be able to tell you right away if they’ll be able to process your loan application while the dispute is in effect. And lastly, if you do dispute an item and the company agrees to make the adjustment, follow up to be sure that your creditor removes the disputed item notation from your credit report. Even if the account is no longer in dispute status in their system, a dispute notation on the credit report could cause your loan application to be rejected by the banks.

If you are currently using the services of a credit repair company, make certain that they are following up with your accounts to ensure that any successful disputes are taken care of, and that the notations are removed from your credit report in a timely fashion. By being vigilant, you can enjoy both increased scores and increased financial opportunity.

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Jan 10, 2010

Credt Repair – Three Tips to Spot Scammers

Credit repair scams are on the rise – and while the FTC continues to go after fraudulent credit repair companies, being an informed consumer is your best defense against being taken in by a scammer. With credit repair scams becoming more sophisticated, it pays to revisit the three most common red flags when it comes to credit repair scams.

Tip 1: Ask questions to any prospective credit repair company before you sign up for service.

Make certain that you know what you are paying for, and how your credit report will be handled. Be certain that any credit repair company you choose has a privacy policy and security in place to protect your sensitive information. Stay away from any company that refuses to tell you any details about their credit repair services, or that claim they can remove accurate information due to “special relationships” with creditors and credit bureaus. These types of offers are always a scam – there is no credit repair company that can remove accurate information due to special ties with any of the credit bureaus, and creditors do not maintain special relationships with credit repair companies.

Tip 2: Don’t pay large fees up front.

Credit repair companies that charge thousands of dollars up front are almost always a scam. People who pay generally see little if any action on their case, and often these companies disappear as soon as the complaints start to roll in. Charging high fees up front is illegal when it comes to credit repair companies, so if the price seems unusually high, stay away. Additionally, stay away from any credit repair company that does not uphold the legally required grace period when signing up for credit repair services. If you change your mind within the first few days of your contract for their service, you have the right to cancel and not be billed.

Tip 3: Do your research.

Is the company registered to do business in your state? Are they a member of the Better Business Bureau? Do they have any clients that you can contact as a reference? While the answers to these questions may not identify all potential scammers, any company that has problems following state and federal laws should be avoided at all costs. If they don’t follow the laws in regards to providing their service, chances are good that they won’t be working in your best interests. When considering any credit repair company, always check both online and offline sources for any information that may point to a scam – don’t stop at online complaint boards, as an absence of complaints is not a guarantee that the company is trustworthy.

If you follow these three tips when you are looking for a reputable credit repair company, you’ll save yourself time, money, and financial security in the long run. By weeding out the scammers from legitimate credit repair businesses, you can rest assured that your investment in your financial future is a sound one.

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Dec 14, 2009

Credit Repair and Identity Theft – How to Protect Yourself

When most people think of credit repair scams, what comes to mind are the fraudulent companies that take people’s money and provide little or no service in exchange. While it’s true that there are numerous credit repair scammers out there who thrive on this practice, consumers should also be aware of the threat of identity theft when it comes to fraudulent credit repair companies.  These companies not only take your money, but they take over your identity as well – months or even years down the line, when you’ve finally gotten your credit back on track, they can resurface to wreck havoc on your finances and destroy what you’ve worked to carefully rebuild.

Protecting Your Identity

Because credit repair companies must handle sensitive information in order to help you improve your credit scores, it pays to find out exactly how they secure your information, and what type of policies they have in place to protect your identity. Stay away from credit repair companies that don’t have a clearly visible privacy policy, and/or don’t have any method of contact other than email. Ideally, you want to be able to contact the company via telephone and an actual physical address – not just a P.O. Box. By establishing a physical presence that is easily located, a reputable credit repair company is one that will be around for the long-term.

Online Precautions

You should be able to get answers about the methods used to secure your data, about encryption on the company’s website (if they have one) and who has access to your data, and when. You should also be able to revoke access to this data at any time, if you choose to end your business relationship with the company. Check the security certificates of the website – they should be current, and they should match the name of the website and the credit repair company. Be wary of any company that has an invalid or expired security certificate – without a valid certificate, your information is not safe.

Company Policies

Different credit repair companies will have different policies when it comes to how your information is handled. You should find out who will have access to that information before you sign up for service. While the credit repair company may take appropriate security steps, third-party vendors with access to your information may not, and this can cause troubles with identity theft down the line, if unauthorized people are able to view your information.

The Final Choice

When deciding on which credit repair company to use, always factor in the security of your personal information. Credit repair can benefit you in many ways, including improved credit scores, lower interest rates and better rates on insurance to name a few. Always make sure that your final choice for credit repair is one that protects these benefits by protecting your identity as well.

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Jul 1, 2009

Recognizing Credit Repair Scams

As the economic slump continues, more and more people are looking to credit repair in order to improve their credit scores. Creditors are requiring higher scores in order to qualify for loans that in the past could be obtained with mediocre or even marginal credit. Individuals who have lost their jobs and missed payments on credit accounts depend on credit repair in some cases to improve their scores to levels that will allow them to qualify for these increasingly strict credit requirements that lenders have imposed. Scam artists recognize the increased market, so any consumer looking for credit repair help should be prepared to go the extra mile before signing on with any credit repair company. In particular, be wary of any company that falls into one or more of the following categories – chances are good that you may be looking at a scam:

  • Guaranteed Score – any credit repair company that guarantees you a particular credit score is almost always a scam. There is no way to know for certain how high your credit score will be, even if the credit repair is successful. Creditors advertising a 700 or better in 30 days are just out to take advantage of desperate consumers.
  • Minimal Contact Information – be wary of a credit repair company that operates solely from a website. If there is no phone number, and no physical address, it is very difficult to be certain of a company’s legitimacy.
  • Just Opened – don’t trust your credit repair needs to a company that just opened. Scam artists often start fake companies only to fold months later, after taking hundreds of thousands of dollars from unwary consumers.
  • High Pressure Sales – reputable credit repair agencies don’t need to resort to high pressure sales tactics to convince you to hire them. If the company’s experience, history, and level of service aren’t enough to impress you with their ability to help, don’t let a flashy sales presentation convince you otherwise.

Credit repair companies provide a valuable service to consumers looking to get a fresh financial start, but it’s important to be certain you’re working with a professional. Check references, the Better Business Bureau, and even online complaint boards before you make a decision, and be prepared to shop around in order to avoid being taken in by scam artists. By doing the research before you commit, you’ll have a better chance of avoiding scam artists and actually getting the credit repair services you need.

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Sep 29, 2008

Do-It-Yourself Credit Repair: Why it’s Not as Simple as it Seems

Looking at credit repair websites online, it’s easy to get the impression that credit repair is simple, painless, and quick. Just hand over your credit report (or in some instances, the company even pulls your credit report for you) choose which items to dispute, and sit back while the credit repair company mails a letter or two and gets the negative information off of your credit report for good. Credit repair sites can make the process look so simple that some people may wonder why they need a credit repair company at all. It’s just mailing a form letter, right?

Though you may be tempted to try to repair your credit on your own, there are some definite pitfalls to this route. Aside from the fact that most people lack the expertise to really repair their own credit effectively, there are some common pitfalls that the ‘do-it-yourself’ types often fall into when it comes to credit repair. If you decide you want to try it on your own, keep these caveats in mind:

1. Don’t Dispute Everything at Once.

Consumer reporting companies are required to respond to and investigate any dispute that is not deemed “frivolous”. There are no hard and fast rules for what constitutes a frivolous dispute, but having all of your negative credit entries in dispute at once will almost certainly cause some companies to ignore your request. This means that negative items may be even more difficult to remove – as multiple disputes over the same item can also be considered frivolous.

2. Provide Proof When You Have It.

If you have receipts that show you paid on the first of the month, but the creditors are showing the payment on the 19th, you should use this to your advantage. Make copies of the receipts and enclose them with your dispute. Is your name correct on those derogatory items? How about your address? Any legitimate reason to dispute a negative item should come along with some proof as to why the dispute is being made.

3. Keep Your Tone Professional.

Consumer reporting companies respond best to communications that are courteous, professional, and direct. Don’t’ write long-winded letters of dispute, and don’t try to obscure the facts. Make your request, present your evidence, and summarize your position on the issue. Poorly worded disputes may also be seen as frivolous, so pay careful attention to both spelling and grammar. Additionally, you may wish to use a template – but be aware that if all of your disputes read like form letters, you may not see much progress. Still, for those who want to handle the dispute from start to finish, there are form letters available online that serve as a good base to start with.

Credit repair isn’t as simple as it seems to be in the surface. The expert credit repair representatives that do a good job and operate above board provide a valuable service to those individuals who either cannot, or will not attempt to handle credit disputes themselves. This is why it is especially important to find a reputable agency to repair your credit – expertise always gets results. However, if you are one of the do-it-yourself types, following the above guidelines will help ensure that your credit repair attempts aren’t derailed from the start.

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