"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?
Paying off a collection is not the same as an unpaid collection. The old FICO scoring model was flawed in that it scored making a payment as an update to a derogatory tradeline. The new FICO08 model fixed that glitch.
It been my experience that removing one of 2 collections can have a significant impact on boosting your credit score.
As to how a credit repair service treats derogs... the FCRA states that the lender or collection agency must delete any item they cannot verify. I can't speak for all credit repair services, but 80% of what my office does is attempt to verify with the creditors/collection agencies.
You'd be surprised at how often they fail to accurately document your history. That's probably why my results are so hard to believe.
It has taken a decade or longer for Fair Isaac to fix its significant FICO glitches, resulting in, cumulatively, millions of dollars of unmerited higher interest rates for those caught in the vise of FICO glitches.
Yes, we know that nearly all successful credit repair is accomplished through "failure to verify." Verification of credit data sure keeps creditors busy, resulting in higher costs to all consumers. Lovely.
Lol. Yes, but the failure to verify is normally due to disputes submitted to the credit bureaus, which they actually make a profit on, but the way.
I speak directly with the creditor or collection agency.
Your tone implies you're throwing the blame on companies like mine for "higher costs". Please, be serious.
You were just complaining a few threads ago how it took weeks, months, and years to remove inaccurate items from a credit report. Now you imply they're so busy handling complaints and disputes that they're forced to raise their fees.
So which is it? If they're busy handling disputes, why'd it take you so long?
I've spent the past 2 years studying the business models of major lending institutions, collection agencies, and the 3 CRAs. I know for a fact they spend their money trying to figure out how to either profit from disputes or avoid dealing with them entirely.
Here's how to the CRA's make money on your disputes.
Taz, have you ever assisted a consumer in disputing a valid derog? On a scale of 1 to 10--1 being easy, 10 being difficult--how did that go for you, generally?
Anyway...responding to Mr. Diez:
BTW, Taz, I heartily agree with your summation. If every citizen of this country lived like that, we wouldn't be in the mess we're in. Welcome to Nirvana.
I prefer to believe that Taz was referring to the purchasing of Authorized User accounts to establish credit history where there was none, but he can elaborate.
The CRA's don't VALIDATE anything. The FCRA stipulates they must VERIFY with the creditor. They interpret VERIFY to mean ask politely if the information they submitted is what they intended to submit.
There is NO investigation. That's why I'm so successful. I deal with the source and force them to investigate and VALIDATE.
That's what I said: If one manually confronts each merchant and, citing the Fair Credit Reporting Act, requests that they VERIFY the basis for an invalid derog, I don't see anything wrong with that. I suspect, however, that you utilize software available to anyone willing to pay for it to blitz the merchants with disputes--valid and invalid--in the hope that some of them will simply not respond within FCRA's statutory time limit, thereby gaming the system.
In a very real sense, as a "credit repair" consultant, service, whatever you want to call yourself, you are much more a part of the problem than the solution.
I have to defend Mr. Diez, but only a little. He has undoubtedly met folks with valid disputes who have worn themselves out trying to get them resolved. Because the FICO scoring system is so riddled with glitches, it becomes a target for gaming, in which Mr. Diez enthusiastically engages because it's also profitable. But the bottom line is, if FICO was constructed better, there would be no system to game.
BTW, I've NEVER known a credit repair company that did anything for a consumer that he or she couldn't do for themselves for the cost of a stamp. Here, for example, is a guide that anyone can follow, and achieve the same results that Mr. Diez claims.
FICO 850: Achieving Perfect Credit
No matter which way you go--DIY or credit repair company--disputing takes time.
This board is probably not a good source of business, Mr. Diez. The vast majority of posters here are conservative, their own credit is impeccable (to hear them tell it) and they all think (rightly) everyone else should pay their bills on time, too.
How dare I defend a consumer's rights? Is that what you're saying?
Again, I deal directly with the source. Less than 20% of what I do is with the CRAs.
I generally only contact them when I have PROOF. I am not a dispute mill.
As I stated earlier, I have spent 2 years learning the system. I interviewed former executives from the CRAs, major lenders, and collection agencies.
I'm on another level entirely.
I am pointing out subtle intricacies in the law which prevent people like you from getting results.
The whole 80-90% of credit reports having errors isn't sinking in with you. You talk to me, not as someone you can ask advice from, but as an adversary.
That's all fine and good until the day comes when your file is mixed or a lender reports inaccurately. If not you, then someone you care about.
Maybe the damage is minor. Then again, maybe it costs you a home or worse. I hope it's the former.
It's not hypothetical. It's inevitable.
From "FICO 850: Achieving Perfect Credit"
Legal vs. Moral vs. Fair - I'm not going to try to convince anyone of the inherent fairness of these tactics, because I'll tell you right up front: These tactics just aren't fair, and here's why.
Most consumers aren't educated to how credit scores are derived, and the purveyor of the secret FICO formulae, the mysterious Fair, Isaac & Company (NYSE: FIC), likes it that way. So, by definition, the mere act of reading this seminar puts you at a horribly unfair advantage with respect to the hordes that are terribly blind.
Even worse, those FICO scores radically--or should I say, RADICALLY, in all caps--impact how much one pays for home mortgages, car loans, credit card interest, and even insurance premiums, among other things. Some potential employers, in fact, routinely pull credit reports in an effort to better judge the character of their applicants. What's worse is that not everyone agrees--certainly not all psychologists, a group I can dare to represent--that a FICO score provides a valid measure of one's personal character. The reason: horrible stuff can happen to otherwise moral people, all of which can completely trash a heretofore decades-old pristine payment history--accidents, uncooperative health insurance adjusters, sudden unemployment, expensive litigation, divorce with unsatisfactory terms, personal tragedies of all kinds, etc.
Consider this: Credit scores, and the credit reports that underlie them, have become a kind of "Human Worth Quotient" rather than simply a flexible credit score. For example, a potential employer disqualified a divorced woman, on the basis of her credit score, even though her runaway husband left her with huge debts beyond her means. Is this moral? It may not be moral, but it's legal. And it will be legal for the full seven years it takes for those correct but negative tradelines to naturally age off of her report. Oops, I should say, "age off of her reports"--because if she wants to confront this, she'll need to wrangle with three (not just one) sometimes uncooperative private companies who compile and sell those reports about her. Again, is this fair or moral? Perhaps not, depending upon your personal point of view, but one thing's certain: It's definitely legal.
Those of you who are reading this seminar certainly have an unfair advantage. Likewise, those of you who want to play hardball--with the ultimate goal of three clean credit bureau reports, irrespective of what's there now--will likewise enjoy an unfair advantage when armed with the guerilla tactics described here. But you'll be legal. Some of these techniques are delineated by Federal statute; in fact, and I'll say so when that's the case.
So it comes down to this: If you knew you could raise your FICO scores by 200 points and do it by breaking no laws, would you do so if you knew you weren't being fair to other consumers? I can't answer that for you. I will say that these private companies--i.e., the credit reporting agencies, some of the companies that use the resultant credit scores, as well as certain abusive collection agencies--are treating consumers unfairly every single day and don't seem to worry much about it at all. Is that true of all companies and in all cases? Of course not. Credit scoring allows colorblind loan qualifications (which is, I would contend, far superior to the pre-1971 system where white men--almost exclusively--made lending decisions in accordance with their subjective whims). My contention, however, is that the present system, in which these incredibly critical scoring formulas are kept secret and facilitated by three accident-prone privately-held credit reporting companies, is inherently unfair, inconvenient and often immoral. They're all legal, though.
Likewise, my personal advice--within this context but certainly NOT within all areas of your life--is to be like these companies. Adopt their modus operandi: Be concerned only with what's legal. Do what you can to improve your reified, unfair credit scores. The system needs to be fixed, in my opinion, but until it is, this remains unfortunately true: Less informed consumers must simply be left to fend for themselves.
I don't think so. It's garbage in/garbage out at the bureaus. The "garbage producers"--merchants, collection agencies, etc.--are the source of the garbage when it occurs. But there's a lot wrong with FICO's scoring algorithm itself that it cannot make the distinctions necessary to present an accurate score.
It's interesting because now Fair Isaac's employs actuaries to improve the model.
Tim, I was merely asking if you somehow found a comprehensive article or website that discusses FICO scoring. I like to read the root resource, don't you?
Anyone who has a little spare time and internet access can fix their own credit, learn excellent credit habits, and gather alot of practical info about different creditors.
www.creditboards.com is a great resource. I have no connection to this site, but visit for a few minutes each day and will say that it has had a large impact on my quality of life.
As for gaming the system(creditors), doesn't the system spend a whole lot of money gaming us?
Tim, you have formed a belief--an impression, if you will--have you not? From what? And anything you post ought to be credible, don't you think? Anyway, please don't lecture me--itself passive agressive, in my opinion--on how to make friends on a discussion board. In any event, you're certainly entitled to your opinion.
Back on topic...I'm friends of many years with an economist who was instrumental in bringing "risk based pricing" (RBP) to the mortgage industry through his company, GHR Systems.
http://www.mtgprofessor.com/about_the_professor.htm
What Mortgage Niche Are You In?
Jack and I often discussed how FICO scoring integrates with RBP. FICO scoring, long used in the car finance industry, credit cards, etc., only relatively recently came to be used, along with RBP, in the mortgage industry. They blended together at about the same time. I can't remember when Fannie/Freddie announced they would no longer purchase loans that didn't include a FICO score, but I remember it caused a big brouhaha in the industry, for precisely the reason that now explanations for the contents of the consumer's credit report would be irrelevant. Now that the weakness of FICO scoring has so crushingly been revealed, I suspect underwriters will go back to manually analyzing credit reports, as they do now for FHA loans when the score is below 580, where background for existing derogs can be explained by (hopefully) an intelligent, thinking human to another intelligent, thinking human.
I am by no means an actuarial and wouldn't want to be one. We do use one on a semi-regular basis as we adjust our risk models for investment evaluation. They are absolutely worth every single penny they cost.
The one we use also has an actual personality which is rare in that profession. My interest and curiosity in the FICO as a risk assessment model was sparked by conversations over adult beverages with the actuarial we use on a contract basis.
As we first talked about it, I was struck by the absolute fact the model is totally devoid of any attempt at addressing human behavior. Hence, my point about it being flawed because the data it relies upon is not reliable and easily gamed.
Some of the other things our actuarial mentioned about the FICO model is it fails to look at how the borrower evaluates and adjusts to risk. One big area is in the down payment.
Sure, intuitively, everyone knows the more a borrower puts down the less likely they are to default. But, the models FICO built for all lenders never took that into account even in a subjective manner.
In other words, a more accurate model would adjust the FICO based on the proposed down payment. Put 20% down and your score goes up x points, for example.
Another big area is as I mentioned before, since the FICO became all important in the financial lives of borrowers, some figured out ways to alter the data to provide an inaccurate picture of their financial history. That is what I meant by "gaming the system".
It also fails to address any macro economic issues like the health of the local economy.
The list of short comings is long and no doubt some will be addressed over time. But, FICO suffers the ultimate same failing as any other statistical gating model. It cannot overcome chaotic events and behavior.
Granted, many of the things it does not address could not be addressed easily or quickly, like economic conditions. But, that does not negate the problems with the model.
I think when one's down payment melts away from a market downturn, having made a large down payment doesn't matter anymore. I talk to borrowers every day who express their utter despair that there's no reason to carry on because the market took it all away.
I attended a luncheon where a statistical scientist from Fair Isaac made a presentation about FICO and how it was going to transform the industry. After a while, it was clear that even HE didn't know what he was talking about. He sounded about like this.