BiggerPockets

I'm curious to know your position on credit repair

I think it can be useful & effective to a certain degree however I feel that most making outlandish claims are just cons.

Do you believe in it's benefits?

Yes, but

Tell us what some of those benifits are from your perspecive?

Do you use it in your business? How?

Personally I view credit alot like my drivers licence you can catch me speeding but I'm still going to contest it in court!

I believe the most effective credit repair is in paying down & off all old debts as well as maintaining active trade lines.

How I use it in my own business is through corperations I develope new lines of credit.

& welcome to the BP community!

The guy I use for clients is VERY effective and his costs are 595-695 for individual and 895-995 for a couple flat fee.. (he does not just do the online electronic disputes..He actually challenges many of the credits to PROVE up their claim in documentation and not just challenging their electronic communication, they have been very thorough.) I have seen him take less on really simple fixes too.

The thing I love about my guy is that if he is not confident he can improve their score enough for them to qualify for a loan he WILL NOT take their money at all...

I am sure you operate with the same integrity tell me about your biz.


BTW TIM : I too would never pay the 3-4K that Tracy Ballard charges that is a complete over charge.

Originally posted by Kenneth Hocking

BTW TIM : I too would never pay the 3-4K that Tracy Ballard charges that is a complete over charge.

I didn't either, but when you're young, freshly divorced, have lost your home and have no idea what to do next you're an easy target.

Great feedback. Thanks for making me feel welcome.

Outlandish claims are relevant to your own experiences. I regularly get my clients credit score jumps of 50. 100, even 150+ in as little as 45 days. I regularly record their testimonials when they call me gushing with praise because I know my results are hard to believe.

Can I do that 100% of the time. No. I average 60 points in 90 days. Can I guarantee the removal of accurate negative information. Definitely not.

I never guarantee a score. I can't. I can't force someone to make timely payments and there's just too many unknown variables.

I can make an educated guess and come close.

I don't work miracles. I simply enforce the laws in place to protect the consumer. Most people don't have the time or education to do it themselves.

The benefits of credit repair are numerous. To a great degree, your credit score determines where you'll live, what you'll drive, when you'll retire, and even where your kids will go to school.

In the world of real estate investing, it's a powerful motivator for both borrowers and distressed sellers.

Tell a seller you'll help restore their credit after you've acquired the property and that could be the deciding factor as to who gets the deal, you or your competitor.

On the buy side, you'll have a larger pool of qualified borrowers. More buyers means higher prices and faster turn over. Supply and demand.

According to the government accountability office 80-90% of credit reports have errors. My own research has verified this to be accurate.

It's a little known fact that the credit bureaus make a profit being wrong. There's no incentive to fix the system.

There is a very real possibility that your credit is being effected without your knowledge.

It's not my intention to make a sales pitch. I have respect for this forum and wouldn't abuse the opportunity to converse with you. You help me understand a new market. I currently work with LO's and direct with consumers, though I would like to break into the real estate investor niche.

For now, I'd rather offer my expertise to assist you in your ventures. If you want to talk about retaining me, I'm easy enough to reach outside the forum.

So please, if you have questions, fire away.

Originally posted by Brian Diez

I'm curious to know your position on credit repair. Do you believe in it's benefits? Do you believe it's legal? What experiences have you had? Do you use it in your business? How?

Okay, well, please remember, you asked... :lol:

The various credit repair schemes are just ways to game the system. Legal? Sure, the system is built that way. Ethical? Well, that is for each to decide.

However, the huge flaw in the system allowing itself to be gamed is at a heart of the mechanics allowing the housing bubble and the extreme proliferation of mortgages that should have never been written with borrowers who should have never been approved.

Now, don't misunderstand me. I am not saying this flaw caused the problems we are facing only that it facilitated it.

The vast majority of the loans in trouble today were poorly and minimally underwritten. The primary criteria was the FICO score. Many argue about the accuracy of the FICO model to predict future behavior but no one, not one single expert, disagrees that the FICO model is 100% dependent on correct and complete information on the subject being modeled.

Prior to the FICO gaining its current lofty position, few people really bothered with the minute details of what was in their credit report. When they needed a new loan or mortgage, the information in the credit file was just one of several determining factors. If there was something questionable, it was usually addressed with the underwriter, proof was submitted and that was the end of it.

However, once almost all the lenders when to software based desktop underwriting systems the FICO became all important. That meant every little detail in the credit file could positively or negatively affect the FICO score.

The FICO model was built prior to the current era of "credit repair" and that leads to its flaw. It assumes a pattern of behavior on the part of lenders and consumers that no longer exists.

The pendulum never stays in one place. It is swinging back to the other side. The FICO is under intense scrutiny and eventually will either be modified or replaced. Lenders are also changing their behavior to adapt to the consequences of the consumer changing theirs.

That is a long winded way of saying, the ways credit is "cleaned up" are becoming less and less effective especially for loans like mortgages where the lenders are moving beyond the traditional consumer credit report as their primary basis for evaluating credit worthiness.

Taz,

You're stating a variety of opinions and theories as facts.

The FICO scoring model isn't to blame for the subprime meltdown nearly as much as the Clinton administration applying pressure to lenders to lend within the "red line".

Banks were given quotas to reach for lending in low income areas. What where they supposed to do except lower their lending standards?

There is ZERO evidence that the FICO model will be replaced. That is nothing more than conjecture.

The model works fine. Lenders were simply lending 106% financing to borrowers with scores as low as 560, or borrowers with scores of 700+, but thin trade lines.

The flaws in the credit system are attributed to how the bureaus collect and store data. FICO had nothing to do with it.

Click here to watch my video explanation.

The FICO scoring model isn't to blame for the subprime meltdown nearly as much as the Clinton administration applying pressure to lenders to lend within the "red line".

Banks were given quotas to reach for lending in low income areas. What where they supposed to do except lower their lending standards?

There's a persistent misunderstanding about loans created under the underwriting guidelines set forth by the Community Reinvestment Act of 1977 and granted to low-to-moderate income borrowers. I'm always happy to debunk this swift-moving urban legend. Maybe Snopes should devote a page to it.

CRA essentially says to banks: "If you wish to maintain your right to build handsome bricks-and-mortar banks in Beverly Hills, you must also lend in South Central [Los Angeles]."

In this respect, the Community Reinvestment Act of 1977 is one of the most humane pieces of legislation ever passed. Without it, no one living in the inner cities of our country would ever be able to own a home located there. People who live in inner cities are poor, not necessarily deadbeats. CRA loans are not, nor were they ever, subprime loans. Consider this:

The borrower may select either a 30 year FRM or 5 year ARM--neither of which can be considered a subprime loan by any stretch of the imagination. No Option ARMs, no 2/28's, no neg am, no stated income, no no-doc, no nuthin'. Just plain vanilla long term FRMs or intermediate term ARMs allowed.

If you have bad credit, you can't get a CRA loan. If you have NO credit, you can still get a CRA loan, but you must submit "non-traditional credit"--which is far different than bad credit. If you have no non-traditional credit, you can't get a CRA loan.

CRA loans are full doc loans. You must adequately document your ability to make the monthly mortgage payment. You can use "boarder income" to qualify, but you can't say you make $X per year if you really make only $Y per year. That silliness was confined to the prime sector known as Alt-A.

CRA interest rates are below market. Incentives are paid to loan originators to originate them because poor people generally don't think about buying houses, so someone must go out into the community to prosyletize about home ownership.

First Time Homebuyer counseling is a part of obtaining approval for a CRA loan. Such a thing is practically unheard of in subprime lending. In fact, it's safe to say pre-purchase counseling has never been a prerequisite for subprime loan approval.

Hoping to disprove the unfounded rumor that CRA loans are somehow responsible for the subprime meltdown, an analysis was done. CRA loans are, at best, a fractional part of the overall problem. It's more likely that the slumping economy hits inner cities first and hardest, resulting in the INABILITY, not the UNWILLINGNESS to pay.

CRA Loans Not Responsible for Credit Meltdown

The Clinton Administration urged expansion of home ownership, and CRA loans were ONE WAY of accomplishing that goal, but the responsible underwriting guidelines of so called "geo-code" loans--that is, loans for houses in ZIP Codes identified as populated by low-to-moderate income citizens--take CRA loans squarely outside the definition of "The Mess We're In Now." Yes, quotas were put in place to incentivize banks to fulfill their moral obligation not to redline geographic areas, but CRA loans were never a license to lend without restraint, nor did they.

FDIC Chairperson Sheila Bair on CRA: "Not Guilty."

"Where in the CRA does it say to make loans to people who can't afford to repay? Nowhere." --Sheila Bair

Preach it, Sistah!

Originally posted by Brian Diez

Your argument only re-enforces my own, that FICO was not to blame.

Your absolutely right on this. FICO is the fiscal equivalent of gun control policy. FICO is just a tool. With all the money spent on the regulation and repair of it....can you show me a dime spent or name a single public school in America (grade school or high school) that has a class on Credit and FICO scores? It's a black eye upon American education that we neglect training in something this important.

FICOs been around for 52 years. Has it facilitated today's "problems" for 52 years?

BTW - not sure who's having "problems" these days outside of the uneducated....who always seem to have "problems".

However, by implementing quotas, they essentially forced lenders to lower their lending standards to meet those quotas.

But they didn't lower their lending standards--unless you're saying they put borrowers in loans riskier than full doc, fully amortizing 30 year FRM and 5 year ARM. What riskier loan might that be?