Admin

Warning - Shark Bite Alert! Credit Repair Offers Can Hurt Your Customers.

By
Mortgage and Lending with Guaranteed Home Mortgage Company, Inc.

All of these new Credit Repair Companies are coming in like a swarm of Sharks! Noting that this is the next new huge profit making opportunity. Likely you are being marketed to as well. Watch out, the FTC has strict guidelines and laws governing these companies. I will tell you what I have learned.

First, there are free Credit Counseling / Non-Profit organizations that you can refer your clients to and you can find them here  http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm   HUD Approved Housing Counseling Agencies. The resources here can refer you to local Credit Counseling HUD Approved Agencies that assist with just Debt Management or Credit Issues.

All Credit Repair Companies (sometimes operating under Law Firms) are suppose to first refer people to these free resources before they sign you up. Also, by law, it is illegal to charge any upfront fees for their services, memberships, monthly fees, etc. until they have actually performed a service. Next, they have a minimum of 6 months to complete their service, so any long term membership would be illegal.

Second, Short Sales, Foreclosures, Bankruptcies, Judgments, etc. cannot be removed from your report. They can and will stay on for 7 years. Anyone telling you any different is pulling your chain. FTC supports the credit bureaus in maintaining their reports of all accurate information, including negative info. Deleted items are those that are legitimate errors to your report. If they tell you the items will be removed simply because credit agencies are understaffed, forget it, not true.

Third, all the things that they promise, you and your clients can do yourself. Print or save this PDF straight from the FTC. It is very helpful and will assist in repairing your own credit yourself for free. 

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre03.pdf

Lastly, sorry your credit score can only increase if you work on it yourself. No one has the right to dispute or remove anything without your permission and consent. It is unlikely that it will happen overnight, but the good news is the more you work on your credit the better your score will get! So kiss the Sharks goodbye, tell them to go find new prey.

I am getting offerred to receive a referral fee for my clients from $35 to $300 as an Affiliate. I don't know if this is legal, I do know that it seems like a violation of RESPA. I do know that the FTC is understaffed and this new market is exploding. So help out and report these sharks if they swim in your stream at www.ftc.gov. Good Luck!

 

 

 

Justin Ukaoma
Vizion KC - Kansas City, MO
Kansas City Real Estate Investments

Thanks for the info I have seen quite a few credit repair companies popping up all over and wondered what the law had to say about credit repair.

Aug 01, 2008 05:03 AM
Jack Loughborough
PrimeLending, A PlainsCapital Co - Austin, TX
Mortgage Lender PrimeLending, A PlainsCapital Co

I have a borrower who paid off a collection and then did a rapid resocre and her scores actually went down. Be aware is you are doing a rapid rescore.

Aug 01, 2008 05:04 AM
Julie Hite
Guaranteed Home Mortgage Company, Inc. - West Bloomfield, MI

What was the fee for the rescore? I have seen up to $150. Just curious.

Aug 01, 2008 05:11 AM
Dominic Campasano
HTDI Financial - Gilbert, AZ

Credit repair has been around for decades and has always been one of the more profitable industries.  Nothing has changed or is new, with the exception of people now trying to get into this industry.

This is why you should check with the National Association of Credit Services Organizations to see if the company is a member.

Credit repair companies are not required to refer potential clients to free resources, rather they are required to advise the potential client of his/her rights in writing.

Any negative item CAN be removed from a credit report, including Short Sales, Foreclosures, Bankruptcies and Judgments.  What it all comes down to is whether or not the items meet the requirements outlined in the Fair Credit Reporting Act to be continuously reported.

Also, referral fees offered by credit repair companies are not a violation or RESPA since it has nothing to do with your loan.

Aug 01, 2008 05:32 AM
Dominic Campasano
HTDI Financial - Gilbert, AZ

Jack,

  Your clients credit score went down because it is bad practice to pay off collections.  Every credit repair company that has been around for any amount of time knows this.  What happens, is by paying on an old debt it renews the date of last activity and the score drops as a result.  The Rapid Rescore was not what lowered her score.

  This is why it is always best to leave the credit repair to the professionals.  There are a lot of unknowns out there and some things that consumers or brokers for consumers do cannot be undone.

Aug 01, 2008 05:35 AM
Broker Nick
South Florida Real Estate & Development, Inc. - Coconut Creek, FL
Broker Nick Relocation Broker Service

Great information. It is a shame that there are people out there who are vulnerable and gullible. That is exactly what they look for to make money on.

Aug 01, 2008 07:01 AM
Julie Hite
Guaranteed Home Mortgage Company, Inc. - West Bloomfield, MI

Realtors are the next new target for clients. They are looking for fresh clients and your referrals are the best, and may be compensated for. Is it worth it? Thanks

Aug 01, 2008 05:27 PM