Posted by David Alexander on November 05, 1998 at 12:55:21:
Has the Fair Credit Reporting Act changed? Any significant changes? Are the changes slanted to help
the bureaus now?
David Alexander
“Cleaning Credit?” - Posted by FJW
Posted by FJW on November 04, 1998 at 17:17:20:
Mr Behle
I posted a couple of weeks ago to you and Mr. Garcia about receiving my mortgage broker license and how I should proceed. At the time the board was having posting problems. You said you responded, but your post was lost in space somewhere. Since then, I have learned a few things and I’m wrestling with a situation.
I’m working with a new brokerage that seems to be on the up and up. It’s obvious to me that “manipulating” is done in varying degrees and probably is necessary just in order to keep the wheels of progress moving. It certainly would be much easier if everything in this business were black & white instead of a rainbow of grays. I saved many of your old posts and reviewed one you titled “A date for the prison prom” which sort of addresses the situation, but not quite.
I know a Real Estate Broker who wants to bring me business, but is concerned with my inexperience, which is understandable. He wants to know what I’ll be able to do if he or his agents bring me a buyer that just misses qualifying under conforming criteria and will walk if they have to go to non-conforming with a higher rate. Supposedly he knows and works with mortgage brokers that can “clean up their credit”, meaning they will get items removed from the buyers credit report. I’ve been telling him it’s impossible, maybe even illegal, to remove items from a credit report, but apparently these mortgage brokers say it’s perfectly legal. He says these mortgage brokers do this everyday and, for a few, that is all they do.
I mentioned this to the mortgage broker I’m working with, who’s been in the credit and finance business for 20 years, and he’s never heard of it either, even though he’s heard of many ways to “get a deal through.” He said he knows you can get items paid off to improve the credit but it takes up to seven years to get things removed.
If it’s legal, we want to know what it is, obviously. If it’s illegal, I want to be certain I know what I’m talking about when I talk to the Real Estate Broker.
Any ideas?
Thank you,
FJW
Some is legal and ethical and some is not - Posted by John Behle
Posted by John Behle on November 06, 1998 at 13:01:03:
A good mortgage broker is usually cleaning up credit all the time. There are errors, that can be challenged and removed. That would normally be done by the consumer, but when it hits the broker’s desk, the loan officer or processor works to clean it up. There usually isn’t the time to clean or challenge it direct with the bureaus, so they clean it up through the reporting agency they use. Most mortgage companies deal with a third party reporting agency instead of direct with the bureaus. They can clean up their “in-house” file, though sometimes the changes do not reflect in higher FICO or Beacon scores.
Cleaning up credit can take the road of:
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Getting releases and statements from creditors on bills and judgements that have been paid.
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Getting a release from a creditor on an account, charge off or judgement that has passed statutory limits.
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Arranging a full payoff in exchange for a release.
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Arranging a partial payoff in exchange for a release.
When it goes beyond that, is where the questions as to ethics surface. The way most credit repair companies work is to challenge bad credit and say it isn’t correct - when it is. It can work, but puts a consumer in the position of lying to the creditor.
The way some “repair” agencies work too is to challenge all of the credit and they can end up getting good items removed also. The consumer’s file can be flagged as someone trying to improve their credit and resistance can increase. Some attempts at improving credit can actually make it worse.
For example, I had a client a few years back that went in to a bank to pay off a “charge off.” He had the satisfaction of the bank officer’s astonished thanks (as she had never seen anyone come back to pay a debt), but the dismay of finding out the the charge offs had already fallen off of the credit (even though it had only been about 4 years) and his paying this one brought it back on to his credit as a “paid charge off”. As they say “Stiving to better - oft we mar what’s good”.
Yes, it’s legal… Ethical? - Posted by David Alexander
Posted by David Alexander on November 04, 1998 at 22:01:08:
Cleaning up credit is very legal, but, can become unethical in some instances(My Opinion).
Here’s a brief explanation of how it works.
Your borrower has a judgement on his credit for $500.
If it’s been there a while, you can send in say 50 bucks to that company, they deposit the check.
You pull your credit report, it will probably have not
been updated. So, legally, you can challenge the report, with a statement to the credit bureaus (all 3).
There is erroneous or inaccurate information on my
credit report, this should be checked at once and verified. I will assume that 30 days is a reasonable
amount of time, if it is not verified in a reasonable amount of time then this innacurate information must be removed immediately. Please send me notification.
It then has to go from the the credit agency to the company, back to credit agency, and to you in a reasonable amount of time.
Let’s say they pull this feat off, and verify the debt,
do it again, and again. Usually, is removed before 90
days, alot of times in 30.
You can challenge anything in your credit report, and it’s a good thing to know whats on there anyway,
at one time I had bad credit from three different
sources on my report, none of my own.
This works with repossesions, charge-offs, judgements,
slow pays, and sometimes bankruptcies.
You can also, negotiate with creditors, there are alot
of ways fix the credit, not all of them ethical.
But, let me say this, I believe everyone should pay there bills. We all have problems, some worse than
others, but, we should pay our debts.
David Alexander
Thank you, sir. - Posted by FJW
Posted by FJW on November 06, 1998 at 17:11:16:
I’ll see if this lines up with what these guys are doing. It probably is. Thanks again.
FJW
Thanks. Maybe this is what there doing. - Posted by FJW
Posted by FJW on November 06, 1998 at 07:20:04:
This sounds something like they’re doing. We’re still trying to find out. It sounds like they can do it within days though, but maybe you nailed it.
Thanks.
Re: Yes, it’s legal… Ethical? - Posted by MichaelR (NoVA)
Posted by MichaelR (NoVA) on November 05, 1998 at 10:56:56:
There are a good deal of other ways to “clean up” credit as well. Ed Garcia often references http://www.creditinfocenter.com/ which details some of them.
It’s legal, but if you aren’t careful, and don’t thoroughly understand how credit reporting agencies work, you can harm the credit more than help it. Especially with the latest version of the FCRA. Research, research, research.
Michael