CREDIT REPAIR COMPANIES – No Quick Fix!
CREDIT REPAIR COMPANIES – No Quick Fix!
ACCURATE DEROGATORY INFORMATION CANNOT BE REMOVED FROM CREDIT FILES!
They are proliferating in today’s tough economy.
Companies – seemingly dozens of them promising to scrub clean a person’s credit score. You see them all over the web on Sports Talk Radio and late-night TV.
"It’s not your fault you’ve got bad credit" many claim. But if you take this claim seriously – who’s fault is it?
Recently here our Team began to work with a client who needed a slight improvement to his credit score in order to qualify for an FHA Loan. Within the last few weeks a derogatory item – a cell phone dispute he thought was corrected five years ago – magically appeared on a Quality Control Pull of his Credit Report. It dropped his credit score over 35 points and below the new FICO Score Minimum for FHA – 620.
On the advice of one of our Lending Partners the frustrated prospective homebuyer contacted a Credit Repair Company in South Florida with a supposed common-sense method for improving credit scores. The process can take some time said the rep. The fee – nominal and charged only after work had begun.
To date – about 30 days in – no change. We’ll check again in a few weeks to gauge any improvement. And we are hoping for some – our client’s issues were minor compared to others with far-more-seriously tarnished credit.
Of course no guarantee but our client’s investment in the credit repair firm was not a large one.
According to Syndicated Real Estate Reporter Kenneth R. Harney from a Chicago Tribune story posted yesterday other supposed Credit Repair Companies have advertised far stronger guarantees – one in Woodland Hills CA – a "100% Guarantee – even if you’ve had a recent bankruptcy."
The firm Successful Credit Service Corporation requested hefty up-front fees sometimes as high as $4000 to begin their work. They promised their file of close contacts within the credit bureaus and at many creditors would allow them to scrub files quickly resulting in a vastly-improved individual FICO Credit Score – fast!
The problem – their claim was alleged fraudulent and resulted in legal action against the company by the Federal Trade Commission along with an $8.3 Million Court Judgment against Successful Credit Service. Collection of the judgment was suspended however – the firm has little assets from which to pay.
Indeed Credit Repair Firms are not supposed to charge distressed borrowers any fees until work is actually performed. Further it is a Federal Offense to remove or alter any accurate information from credit files according to the FTC.
The FTC also went after two individuals who ran Credit Repair Firms in TX. Another judgment here – roughly $2.5 Million – against these companies citing their misleading claims and illegal business practices.
The Bottom Line according to a TX FTC Lead Attorney – there is no quick fix to a credit score if the information is accurate. Those promising such a fix – they’re not exactly being truthful!
DEAN MOSS & DEAN’S TEAM CHICAGO
