Most of the lenders I speak with find these tools to be invaluable. Anything that helps close more of the clients in your pipeline is essential in today’s housing market. Differentiating between rapid re-score and credit repair is important; they should be like apples and oranges to lenders and real estate professionals.
Unfortunately, speaking to these professionals on a daily basis, it seems far too many lenders and realtors think they’re one in the same. They are not!
Rapid re-score is a way of gaining points on a credit report, in a relatively short time, sometimes even days.
How is this done? By providing documentation (evidence) from a creditor of an inaccuracy or mistake on your credit file. By providing this documentation, to a service that provides rapid re-score you could “re-score” the report without going through the normal credit disputing process, which saves time. Companies like Kroll, Skyblue, and American Reporting Company offer these services to lenders and mortgage professionals (for a fee, of course). Keep in mind that credit “re-scores” usually charge by item, by bureau! These fees can mount up, so be careful....
I’ll give you a real life scenario. One of my brokers, Steve, from a national mortgage firm, had a client (John) with an actual mistake on a trade line; his finance company was reporting late items, though he wasn’t late. For some reason, the car financing company clearly made a mistake and reported several past due items, when in fact his payments were on time. John contacted the finance company and the finance company produced a letter (evidence) stating that yes, in fact, they had made an error. John was able to provide this letter to his lender, who faxed the letter to their credit service provider. Once the bureaus verified the updated information, the credit score was adjusted (re-scored).
Rapid re-score usually uses a “credit analyzer” to provide “what if scenarios” of a credit report, as well. By analyzing data and adjusting specific accounts, such as credit utilization, and by providing evidence of adjustments made, a credit provider could re-score a credit file based on those adjustments. Let’s say that I had a$10,000 limit Visa Platinum credit card, with a $9,500 balance. If I paid down this card by $9,000 and provided receipt of this payment; the lender may then have my credit file adjusted, or re-scored. This adjustment to my credit utilization ratio, and re-scoring the credit file would result in an adjustment in my credit scores.
A good credit repair company takes care of educating the consumer, gives them all of the advice the re-scorer will, plus will get inaccuracies deleted. They may also (at least in our case) have the ability to add unsecured lines of credit, that decrease the client’s utilization rate, which will also increase the client’s scores. So with credit repair, you get it all…all that credit re-score can offer plus, plus, plus.
Credit repair uses Federal Laws to remove derogatory items from a credit file. These items are in violation of federal laws. These laws were enacted by Congress to protect consumers from unfair and predatory behaviors by creditors and collection agencies. Some examples of commonly abusive practices are: the majority of medical bills, which fall under HIPPA (an act that protects the security and privacy citizen’s medical information), duplicate accounts, and just plain inaccuracies. Under the Fair Credit Reporting Act, all consumers are afforded protection by these laws, and their rights should be exercised. All lenders bear witness to these violations on a daily basis. A reputable credit repair company simply becomes an advocate for the consumer, leveling the playing field.
The benefits a reputable credit repair company provides to the mortgage and real estate industry is an invaluable productivity tool. Credit repair expands a lender’s client base by providing denied applicants the best opportunity to reach the scores that may qualify them for a mortgage. A good Credit Repair Company can yield a greater number of points to a report than Rapid Re-score. Based on the company’s dispute process, this may be done in as little as 30 to 90 days, depending upon the applicant’s credit file. Rapid Re-score and Credit Repair, when used by effective real estate and mortgage professionals, can produce great returns on that pool of denied applicants, and provide your clients with direction and answers instead of just a flat denial. According to USA Today, over25% of Americans has a credit score below 600. US Today article and breakdown of US credit scores. Do you really want to lessen your potential client list by 25% off the top?
“How do I choose a reputable credit repair company? What questions should I ask?” I will provide you with some suggestions in my next blog. Please participate in the discussion; I appreciate all re-blogs, comments, questions, and criticisms.
Comments(2)