With all the doom and gloom going on in the mortgage industry, the stock market and the banking industry, there are some highlights; It's a great time to have excellent credit and it will continue, going forward. Lending institutions have money to lend (that is there primary function) and if you have an excellent credit score 750+, you will be the beneficiary of those opportunities. You will be offered the lowest interest rates in years when you apply for a mortgage, an automobile,  auto insurance, and home owners insurance.  You will continue to receive 0% interest on balance transfer offers, as the lenders pursue your business. And credit card companies want to keep you as a client, may offer to rasise your credit limits even higher, raising your credit score along with that. (I just received a notice last Friday raising my credit limits.)

For those of you living in Texas, our homes are holding value and there are bargains galore out there as the market has slowed a bit. How dramatically my business has changed in the past year. A year ago most of my business was people with damaged credit trying to get their score above 600. In the past 60 days it has evolved to many calls from people, who realize what great oportunities abound for them if they can get their score above 750.

They also realize the downside of the this new paradigm: If you are not Rated Excellent with a 750+ score, the reverse goes into affect. Your homeowners insurance and auto insurance, will probably go up. Your vulnerable to having your current credit limits go down, resulting in a lowered credit score and possibly have your card holder invoke Universal Default, allowing the card holder to raise your credit card interest rate to the highest allowable by state law.

Our credit scoring consultations are free and certainly worth a 30 minute time investment to make sure you are doing all the right things to raise your credit score. 

Since the market adjustment occured I have received two calls from financial planners, who refer business to me, about their clients being notified of their credit limits being lowered. Obviously their credit score decreased, and now they are concerned about Universal Default (raising their current interest rate as a result of declining credit scores) being exercised. When exercised, the credit card company can, if it so chooses,  raise your rate to the maximum allowed by law. This rate, now applies to any revolving balance that exists with that card or institution.

How does the consumer protect himself from being at risk to these new tactics? Achieve and maintain an excellent credit score rating: > 750

Solvent lending institutions will continue to make loans, but only those with as little risk as possible, and I suspect, the fees attached to less than excellent credit will be substantial. As recently as a year ago, I would seriously discuss going forward with a client, wanting to use my services, to achieve a greater than 750 credit score. My 3 newest clients this week all enrolled into our program for just that purpose, " Get me over 750!"

With the volatility of the market and current lending practices tightening, credit restoration services will be as valuable as a diversified portfolio, and a resource utilized to achieve an excellent credit rating, not just a tool to help qualify for a loan.  

Original Blog in August:

As the mortgage industry faces more constrictive lending practices, qualifying for a residential loan has become much more difficult for the average consumer.  Consumers and mortgage lenders may find an unwelcome surprise as they are in the process of closing on a home loan; A substantial drop in the consumers credit score, due to their credit card limits being lowered.

"This is an unintended consequence of the financial world's widespread racheting down of risk. Banks and other card lenders are trying to better protect themselves from more massive losses like those they've seen from subprime mortgages."

Washington Mutual, HSBC, and Wells Fargo are lowering their credit limits according to data from the consulting firm Institutional Risk Analytics.

Banks and Credit Card companies must notify the cardholders at least 15 days in advance before making changes in the terms of their account, but they don't have to inform them that the change can impact their credit score.

Click for the article.

Leslie Peterson sent out an announcemnt earlier this week outlining the more constrictive guidelines that become effective June 1, 2008. She writes....

"Fannie Mae Announcement 08-08 is 25 pages long. It's not only grueling to wade through, the new and more constrictive guidelines will be just as difficult for originators to swallow. It is effective on June 1, 2008, in conjunction with Fannie Mae's implementation of a new version of Desktop Underwriter, Version 7.0. Some of the changes, which are applicable to both manual and DU underwriting, include:

•" Foreclosures: The new rule mandates five years must pass after a foreclosure before a borrower is eligible for a new Fannie Mae loan. Previously, DU would consider loans with foreclosures after two years. Now, the loan will receive a Refer or a Caution/IV if it hasn't been a full five years.
Extenuating circumstances won't be considered unless it's been at least three years after the foreclosure, and the loan will have to be manually underwritten.
Borrowers must wait for seven years before they are eligible for a cash-out refinance.
After five years, the borrower would have a 10% down payment to be eligible for a purchase. After five years, the borrower must have a 680 or higher credit score. "

• Minimum Credit Score: ALL Fannie Mae loans must have a minimum credit score of 580."

This is the tip of the iceberg. For complete (simplified and explained) information on the rules that actually affect loan officers, check out www.MortgageCurrentcy.com . It saves you all kinds of time trying to sort through what is relevant, and gives you the changes in plain English (without taking 25 pages), and then tells you how the changes affect your loans and what you can do about it.
Leslie Petersen is a well-known mortgage guideline expert. With over 30 years experience in mortgage lending, she writes http://www.MortgageCurrentcy.com an online newsletter on the changes in Fannie/Freddie, FHA, VA and other regulatory agencies-but with a twist. For originators, underwriters and managers, she interprets them in plain English and shows them how to make the rules and changes work for them--and get more of their loans approved. Find her at leslie@MortgageCurrentcy.com .

What does this have to do with Credit Repair?  You may have prospects or clients that fall under these new constrictive guidelines - We can Significantly Improve a Consumers Credit Score and help them qualify under the new regulations. Attend our "How to Significantly Improve a Consumers Credit Score..." webinar and learn how the credit scoring system really works and what you can do to improve a clients credit score.

Go to our website at www.national-credit-alliance.org Sign in with a user name and password and when you log in the Webinar will be available for you to attend at your convenience.

Have you ever wondered why your clients credit score varies between the 3 Credit Reporting Agencies? Or had a client tell you they just ordered their free credit report and their credit score was, for example 675, only to have your mortgage professional tell you it was much lower than that?

Really want to know how credit scores are actually determined and what you can do to help your clients improve their credit score....

Attend our 45 minute recorded Webinar and learn how the credit scoring system really works and what you can do to improve a clients credit score.

Go to our Website at www.national-credit-alliance.org  Register with a username and password, authorization will be sent to your email address; Once you sign into our website with your username and password the WEBINAR will appear on the left side of the site; Click Webinar and listen to my partner, Bill Cloyd, enlighten you with the information accumulated from 18 years experience challenging the Credit Reporting Agencies on behalf of consumers.

In today's critically assessed credit  environment, every point counts and what you don't know could be costly to you and your client.   

Mistakes Do Happen

According to "Mistakes Do Happen: A Look at Errors in Consumer Credit Reports" a recent report by public issues watchdog U.S.Public Interest Research Group (USPRIG.) There is a one in four chance your credit report contains an error serious enough to cause you to be denied credit.  79 percent of credit reports examined in a recent survey contained either serious errors or mistakes of some kind.

54 percent of the credit reports contained personal demographic identifying information that was misspelled, long outdated, belonged to a stranger. or was other wise incorrect.

According to Ed Mierzwinski, USPRIG Consumer Program Director, "It is outrageous that inaccurate credit reports could damage one-in-four consumers's ability to buy a home, rent an apartment, obtain credit, open a bank account, or even get a job."

Credit Repair Myths

1. The credit bureaus are a branch of the government, infallible, and above reproach. Fact is: The credit bureaus are publicly traded companies in business to impress stockholders. They are not government agencies. A recent survey by an independent research group revealed more than 70% of credit reports contained mistakes or errors, which led to consumer protection legislation that allows consumers to challenge the bureaus and force the removal of inaccurate, outdated, or unverifiable information.

2. There are items such as bankruptcies, foreclosures, and tax liens that are impossible to remove from credit reports. Fact is: There is no type of negative listing that has not been removed from a credit report thousands of times.

3. It is illegal for creditors to take a negative, accurate listing off my credit report. The law requires that these items remain on the credit report for at least seven (7) years. Fact is: The law limits negative information from appearing longer than the legal (7) year maximum. The credit grantor or credit bureau may choose to delete the item whenever they see fit.  

One Reason You Should Never Dispute on line

When the Fair Credit Reporting Act was amended, they put in a section for "Expedited Dispute Resolution" Section 611a(8) the on-line dispute system. It reads as follows....

".... the agency shall not be required to comply with paragraphs 2, 6, and 7 with respect to that dispute if they delete the tradeline within 3 days."

The Credit Reporting Agency can delete a disputed trade line for 30 days, then, the trade line can appear when the furnisher (creditor or collector) reports it again in the next cycle. That is because the CRA is not required to tell the furnisher you disputed it thanks to section 2 being omitted.

Further more , you lose your rights to request "Method of Verification" so you lose this powerful tool in the dispute process thanks to Paragraph 7 being omitted.

Never dispute errors on line if you want them permanently removed. if you are going to dispute items on your credit report, do it in writing, and do it by certified mail with a signed receipt.

Is Credit Repair Legal?

Absolutely! If Credit Repair was illegal, attorneys would not offer this service. Congress has provided consumers with the right to challenge information that's deemed to be inaccurate or unverifiable or obsolete. Therefore, the disputed item must be corrected or removed if it is not properly validated (whether it is accurate or not.)

The Credit Repair Organizations Act was passed to govern credit repair facilitated by a third party. Assume providing credt advice and services were illegal, then there would be no laws governing how to provide credit repair services wtihin the law.

What Does Congress Have to Say?

Consumers have a vital interest in establishing and maintaining their creditworthiness and credit standing in order to obtain and use credit. As a result, consumers who have experienced credit problems may seek assistance from credit repair organizations, which offer to improve the standing of such consumers.

Sec.402 (a) Credit Repair Organization Act.Title IV of the Consumer Protection Act (Public Law 90-321, 82 Stat.164)

Dee E Hoffman

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