"Operation Clean Sweep"
Banker · Bohemia, NY · Member since 2008 · 12 posts · 0 votes
I'm new to this forum, but hope to add value since my area of expertise (credit repair) benefits real estate investors and seems to be neglected in this community.
On October 23rd, the Federal Trade Commission and 24 state agencies today announced a crackdown on 33 operations that deceptively claim they can remove negative information from consumers' credit reports, even if that information is accurate and timely. Click here for the full article.
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?
& welcome to the BP community!
Very interesting..... I was one of those who nearly hired Tracy Ballard's company back in my seminar koolaid drinking days.
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.
Lee Common wrote: I think it can be useful & effective to a certain degree however I feel that most [credit repair companies] making outlandish claims are just cons. [...] Personally I view credit alot like my drivers license 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.
Preach it, brutha! Very few consumers can plausibly claim that their situation is being erroneously stated. A very small minority have derogs that are truly not theirs; everyone else earned their credit score.
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.
My view on Credit Repair is mixed.
There are a some quality tips. No question there:
Pay your bills on time. Keep your oldest credit card open. Don't get more than five revolving/CCD lines of credit (Thanks Alina, I always thought 3). Keep the balances low but the cards active. And a few others I am probably unaware of.
Those basic tips will help anyone that already has the right psychology in place.
However, for the general subprime public, It seems more to me like the credit is not
what needs the repairing. This is a hybrid of psychological and cultural issues. A psychological shift will be required. Unless there is a shrink on staff - or someone teaching these people new ways to fill the void - I don't see the value add in this context.
As far as the obligatory underwater sub primer that used his or her equity to buy boats and such, all while blaming the banks for "doing this to them". I see no value add.
I also think the repair will last a lot longer if the general subprime borrower has to spend quite a few years getting back to good status. I speculate he or she will be more vigilant about maintaining credit due to working so long and hard to repair his or her credit damage: Versus simply getting a quick fix from a credit repair company (if there even is such a thing as a quick fix)
I am not referring to the minority credit repair case; divorce, identity theft victims, etc... Those people deserve fast repair, and will benefit from it. In this context, If a credit repair company can facilitate the repair and make it happen quickly then I am all for it. I see the value add here.
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.
I would only recommend credit repair to someone who can make their monthly debt obligations on time. Otherwise, you're adding negatives as I'm removing them. That's pointless.
That said, try the William D. Ford Federal Direct Loan Program.
http://www.ed.gov/offices/OSFAP/DirectLoan/index.html
From what I understand they'll allow you to consolidate your student loans and give you a payment based on what you make regardless of credit score.
Collection agents hate it when I give that golden nugget out.
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.
Go back and read what I wrote.
Well put. However, by implementing quotas, they essentially forced lenders to lower their lending standards to meet those quotas. When they did, they extended universally.
We don't live in a Utopian society. The intentions were honorable. The result inevitable.
Your argument only re-enforces my own, that FICO was not to blame.
For the record, I did not say FICO caused the problem. I said it facilitated it.
The problem was poor underwriting practices. Those poor underwriting practices were tolerated because of belief in the FICO models, which btw, data showed to be sound.
The ultimate flaw in the whole system is the FICO score is able to be gamed through these various "credit repair" schemes.
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".
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?
The FICO model was no longer a reliable predictor of risk once there was widespread success at gaming the system. When FICO scores were artificially inflated by "credit repair" schemes it became totally useless as a risk predictor tool.
You're right - was looking at the date it was invented rather than implemented.
Given that it's a mathematical risk indicator it's interesting that an engineer and a mathemetician rather than actuaries put it together. But I guess one could argue they have nearly the same skill set.
Do you have a credible citation for this belief? How would an actuarial approach be better?
Personally, I'd like to see the fraud statutes extended to cover the case where someone disputes an item they know, or should know, is true.