Credit Repair - Too Good to Be True

Have you ever seen an ad that read, “Repair Your Credit –Guaranteed!” or “Perfect Credit in 30 Days!” or some similar ad? Sounds great. Who doesn’t want a better credit rating?

Good credit allows for better interest rates on mortgages, credit cards, auto loans, insurance rates and much more. Is your credit score slowing you down? Wouldn’t life be wonderful if that score could be improved? How can this be done?

There are different ways to improve credit scores.

Build Good Credit

This means pay your bills on time, pay off any legitimate outstanding collections and use credit judiciously. Close any revolving accounts you are not using. Don’t consolidate and pay off bills. That could likely raise your score. It is better to have a small balance (about 30% of the credit limit) than to have a bunch of balances at zero thereby having a lot of available credit and one new “maxed-out” loan. Do not let anyone “pull” your credit report unless it is necessary. Inquires on your report by creditors can lower your score from 3 to 7 points each time. When a consumer pulls their own report it does not affect the score. Here are the web addresses of the three credit agencies where you can order a copy of your report. http://www.experian.com/, http://www.equifax.com/ and http://www.beacon.com/. You may also want to visit http://www.myfico.com/ for more information concerning how to raise your credit score.

Challenge Derogatory Items

Once you view your report and find any inaccuracies you should immediately contact the creditor and “challenge” it. The Fair Credit Reporting Act (FCRA) provides options for the consumer when the information and accuracy of items in the report is incorrect. All information must be proven correct within 30 days of receipt of your request to the creditor and or they must remove it from the report. Creditors and credit reporting agencies do not make it easy to correct problems. Don’t let them confuse you and give you the runaround. Don’t give up. Keep copies of all correspondence and follow up. If you feel this may be too much to tackle on your own then you may want to speak with a credit repair company.

Credit Repair Companies

Credit repair companies have received a bad name recently. But there are reputable companies out there. You may want to explore what options they offer. They are familiar with procedures and laws and they may be able to deal more effectively with the bureaus and creditors. Discuss in detail with them how they intend to improve your credit score. Get nervous if they mention a change of names or how to obtain a new social security number. Be wary of anyone that offer claims that sound too good to be true.

Consumer Credit Counseling

There is a difference between Credit Repair and Consumer Credit Counseling services. Credit repair is just that, repairing credit. Consumer Credit counseling services are usually non-profit agencies that help you negotiate with credit grantors to accept smaller payments over an extended amount of time. Consumer Credit Counseling can adversely affect credit scores because partial payments may be reported as late payments.

Once a credit report has changed it may take up to 60 days to see the score change. Some mortgage brokers and lenders have the ability to have your score updated immediately. This is called Rapid Rescoring and there may be a small charge. Discuss this option with your lender.

Remember, be pro-active about your credit history. Get the credit you deserve.

Adrian Skiles, GML

Mr. Skiles, GML has over 20 years experience in the mortgage and real estate industry. He is currently President/Broker of Florida MortgageGroup, Atlanta Mortgage Group and The Mortgage Group of North Carolina. On the web at http://www.efloridamortgagegroup.com/, http://www.atlantamortgagegroup.com/ and