Do Credit Repair Services Work?
Elizabeth Williams asked:
A credit repair service is a company that specializes in cleaning up your credit history with the goal of raising your credit score in a short period of time. Before you use a credit repair service, there are a number of things you should know about the legalities of such services in order to protect yourself from federal crimes.
The idea of credit repair is a good one, and for companies that are able to raise your credit score, there are many benefits of using such a service. Bad credit that comes from errors and inaccurate information on your credit report needs to be fixed – and the result should be a higher credit score. For example, if you went through a bankruptcy but the individual accounts are still showing past due on your credit report, they need to be erased. If someone got a hold of your credit card and made unauthorized purchases, your report shouldn’t reflect the non payment of those.
When someone has poor credit, it’s typically because they haven’t made their payments on time, or skipped them altogether, or a loan has been moved into collections for non payment. Using a credit repair service to remove accurate negative notations from your credit report is illegal, and punishable with fines and even jail time.
Credit repair services are only useful if you have items on your credit report that are inaccurate, or even a result of identity theft. While you can contact the creditors who reported the information in error yourself, it’s time consuming and frustrating. In these situations, credit repair services are helpful to remove inaccuracies and save you time and frustration.
To repair your credit history, you first need to request a credit report to see which information is incorrect, and then work with creditors to get that inaccurate information removed.
You can write your own letters to each individual creditor as needed to have bad credit items removed. Also, while it is illegal to try to remove a credit item from your report that is the result of actual late payments you have made, you can work with the creditor for a settlement that would result in an update to your credit report showing that the debt is settled. That is all of the steps necessary in the credit repair process.
When you contact a credit repair service, you will know if they are reputable if they ask you whether or not the information on your credit report that’s causing the lower credit score is accurate or reported in error. If they don’t seem to care whether your credit report is accurate, you can be sure they’re not a reputable service.
Remember these things when using a credit repair service:
Only inaccurate credit information can legally be removed. Any company that makes guarantees for performing credit repairs on anything causing a lower credit score is not reputable and should be avoided.
When you use a credit repair service, you’ll pay high prices for the services that you could perform on your own. They are simply saving you time and frustration but it’s up to you to decide whether that’s worth the fee to you or not.
If you keep this in mind, you can successfully have your credit repaired and your score raised so that you can begin to take advantage of lower interest rates and other charges again.
A credit repair service is a company that specializes in cleaning up your credit history with the goal of raising your credit score in a short period of time. Before you use a credit repair service, there are a number of things you should know about the legalities of such services in order to protect yourself from federal crimes.
The idea of credit repair is a good one, and for companies that are able to raise your credit score, there are many benefits of using such a service. Bad credit that comes from errors and inaccurate information on your credit report needs to be fixed – and the result should be a higher credit score. For example, if you went through a bankruptcy but the individual accounts are still showing past due on your credit report, they need to be erased. If someone got a hold of your credit card and made unauthorized purchases, your report shouldn’t reflect the non payment of those.
When someone has poor credit, it’s typically because they haven’t made their payments on time, or skipped them altogether, or a loan has been moved into collections for non payment. Using a credit repair service to remove accurate negative notations from your credit report is illegal, and punishable with fines and even jail time.
Credit repair services are only useful if you have items on your credit report that are inaccurate, or even a result of identity theft. While you can contact the creditors who reported the information in error yourself, it’s time consuming and frustrating. In these situations, credit repair services are helpful to remove inaccuracies and save you time and frustration.
To repair your credit history, you first need to request a credit report to see which information is incorrect, and then work with creditors to get that inaccurate information removed.
You can write your own letters to each individual creditor as needed to have bad credit items removed. Also, while it is illegal to try to remove a credit item from your report that is the result of actual late payments you have made, you can work with the creditor for a settlement that would result in an update to your credit report showing that the debt is settled. That is all of the steps necessary in the credit repair process.
When you contact a credit repair service, you will know if they are reputable if they ask you whether or not the information on your credit report that’s causing the lower credit score is accurate or reported in error. If they don’t seem to care whether your credit report is accurate, you can be sure they’re not a reputable service.
Remember these things when using a credit repair service:
Only inaccurate credit information can legally be removed. Any company that makes guarantees for performing credit repairs on anything causing a lower credit score is not reputable and should be avoided.
When you use a credit repair service, you’ll pay high prices for the services that you could perform on your own. They are simply saving you time and frustration but it’s up to you to decide whether that’s worth the fee to you or not.
If you keep this in mind, you can successfully have your credit repaired and your score raised so that you can begin to take advantage of lower interest rates and other charges again.
Categories: Credit Tags: Credit History, Short Period, Unauthorized Purchases
Loans For Bad Credit Ratings- Manage Your Expenses With Hassle Free Funds
Caron Young asked:
Every borrower borrows money with the good intention of paying monthly installments to clear the debt. However, many factor influence regular monthly payments of debts by any borrower. At time the reason is within the control of the borrower but at some other time, reason is beyond the control of borrower. Therefore even with the good intention of paying the dues, he or she may not be able to pay on time. Such defaults keep on adding in the credit history which ultimately reduces the overall credit rating or score of any borrower. The worst nightmare in this case is that once, you get a bad credit rating, no lender wants to offer you any loan, considering the risk associated with offering you any loan. This risk is reflected through your bad credit rating.
However, now there are lenders who offer loans to people with bad credit ratings. There are lenders who specialize in arranging loans for people with bad credit rating . Loans for people with bad credit rating is available even for people with county court judgments (CCJ), bankruptcy or defaults on a loan will stay on file for six years; bankruptcies and CCJs are a matter of public record, with details held by the courts. Loans for people with bad credit rating come in both secured and unsecured forms.
In case of secured loans for people with bad credit rating, the borrower has to offer collateral against the loan borrower, which reduces the risk for lender. Whereas in case of unsecured loans, no collateral is required therefore unsecured loans are considered risky for lenders. To compensate against this increased risk in unsecured loans, lenders charge a little higher rate of interest than that of secured loans. Therefore, secured loan is always cheaper than that of unsecured loans.
Loan amount depends upon borrower’s profile which in turn considers the income and expenses of borrower, the amount he can pay comfortably every month, previous track record etc. Similarly, repayment duration and amount of monthly installments vary according to the loan amount, the amount that borrower can pay comfortably every month etc. Rate of interest varies according to the loan amount, period of loan and whether the loan is secured or unsecured.
Loans for people with bad credit ratings offer two very important advantages to borrowers-First, meet the expenses for which loan borrowed and second, the borrower with bad credit rating gets a new chance to improve his ratings by paying regularly.
Every borrower borrows money with the good intention of paying monthly installments to clear the debt. However, many factor influence regular monthly payments of debts by any borrower. At time the reason is within the control of the borrower but at some other time, reason is beyond the control of borrower. Therefore even with the good intention of paying the dues, he or she may not be able to pay on time. Such defaults keep on adding in the credit history which ultimately reduces the overall credit rating or score of any borrower. The worst nightmare in this case is that once, you get a bad credit rating, no lender wants to offer you any loan, considering the risk associated with offering you any loan. This risk is reflected through your bad credit rating.
However, now there are lenders who offer loans to people with bad credit ratings. There are lenders who specialize in arranging loans for people with bad credit rating . Loans for people with bad credit rating is available even for people with county court judgments (CCJ), bankruptcy or defaults on a loan will stay on file for six years; bankruptcies and CCJs are a matter of public record, with details held by the courts. Loans for people with bad credit rating come in both secured and unsecured forms.
In case of secured loans for people with bad credit rating, the borrower has to offer collateral against the loan borrower, which reduces the risk for lender. Whereas in case of unsecured loans, no collateral is required therefore unsecured loans are considered risky for lenders. To compensate against this increased risk in unsecured loans, lenders charge a little higher rate of interest than that of secured loans. Therefore, secured loan is always cheaper than that of unsecured loans.
Loan amount depends upon borrower’s profile which in turn considers the income and expenses of borrower, the amount he can pay comfortably every month, previous track record etc. Similarly, repayment duration and amount of monthly installments vary according to the loan amount, the amount that borrower can pay comfortably every month etc. Rate of interest varies according to the loan amount, period of loan and whether the loan is secured or unsecured.
Loans for people with bad credit ratings offer two very important advantages to borrowers-First, meet the expenses for which loan borrowed and second, the borrower with bad credit rating gets a new chance to improve his ratings by paying regularly.
Categories: Loans Tags: Bad Credit Ratings, Collateral, Credit History
Self Credit Repair is the Optimal Direction to Go
Lee Beattie asked:
No one plans to contend with bad credit when they start out on their own but, regrettably, matters take place and we fall behind on our obligations. Maybe you lost your job and had trouble acquiring a new one or you got ill and missed a good deal of work, either way you fell behind on bills and nowadays your credit is troubled. You can opt to start with a credit repair company only many a find that the best means to go is self credit repair.
Restoring your own credit is simple to perform if you know what you are managing. One of the first things that you need to do with self credit repair, is to get a copy of your credit report from the three credit bureaus. To me the chance to take a look at your entire credit history and learn what areas you demand to work on. Each of the 3 credit bureaus provides a free copy of your credit report one time a year. You can go direct to all of their web sites to request your free copy.
The next thing you’ll need to do when performing self credit repair, is make up a list of the duplicate entries on your credit reports. This is a quick means to advance your credit score as you can speedily have creditors erase duplicate entries. You would plainly write a letter to every creditor that bears a duplicate entry and explain to them the situation and call for that they readily remove that multiple entry from your credit history. If you’re doubtful how to formulate the letter to your creditor, you can get a free credit repair kit on how to repair your credit history yourself from whatever of the three major credit bureaus.
Once you clear the duplicate entries as well every bit the errors given on your credit reports, you can concentrate on paying off some of the smaller debts and make up payments to larger ones. While processing of a credit repair can be time consuming, it could be worsened if you don’t establish some effort to it. You will discover that in no time at all, your credit score will be getting higher and you’ll be well on your means to the credit score you deserve.
Never feel that your credit score is out of your control as on that point is always a means to fix things. Once you start your credit score on the appropriate track you need to be sure to set up a budget that you can comply with each week and be sure to include each of your incoming money as well as all of your expenses. This will serve you to maintain your credit score on the great side while improving on it each month.
If you would like more information on this topic and want Fast Credit Repair or if you are in need of Free Credit Repair, Beatlands Credit Repair has many credit repair topics and tips that can be very useful.
No one plans to contend with bad credit when they start out on their own but, regrettably, matters take place and we fall behind on our obligations. Maybe you lost your job and had trouble acquiring a new one or you got ill and missed a good deal of work, either way you fell behind on bills and nowadays your credit is troubled. You can opt to start with a credit repair company only many a find that the best means to go is self credit repair.
Restoring your own credit is simple to perform if you know what you are managing. One of the first things that you need to do with self credit repair, is to get a copy of your credit report from the three credit bureaus. To me the chance to take a look at your entire credit history and learn what areas you demand to work on. Each of the 3 credit bureaus provides a free copy of your credit report one time a year. You can go direct to all of their web sites to request your free copy.
The next thing you’ll need to do when performing self credit repair, is make up a list of the duplicate entries on your credit reports. This is a quick means to advance your credit score as you can speedily have creditors erase duplicate entries. You would plainly write a letter to every creditor that bears a duplicate entry and explain to them the situation and call for that they readily remove that multiple entry from your credit history. If you’re doubtful how to formulate the letter to your creditor, you can get a free credit repair kit on how to repair your credit history yourself from whatever of the three major credit bureaus.
Once you clear the duplicate entries as well every bit the errors given on your credit reports, you can concentrate on paying off some of the smaller debts and make up payments to larger ones. While processing of a credit repair can be time consuming, it could be worsened if you don’t establish some effort to it. You will discover that in no time at all, your credit score will be getting higher and you’ll be well on your means to the credit score you deserve.
Never feel that your credit score is out of your control as on that point is always a means to fix things. Once you start your credit score on the appropriate track you need to be sure to set up a budget that you can comply with each week and be sure to include each of your incoming money as well as all of your expenses. This will serve you to maintain your credit score on the great side while improving on it each month.
If you would like more information on this topic and want Fast Credit Repair or if you are in need of Free Credit Repair, Beatlands Credit Repair has many credit repair topics and tips that can be very useful.
Categories: Credit Tags: Credit History, Debts, Write A Letter
Understanding your Credit Rating
Joseph Kenny asked:
Your credit rating is important. It may determine whether you can get a car loan or a mortgage. But do you understand the elements that decide whether your credit request is approved or denied? Here’s what you need to know about your credit rating.
What Is A Credit Rating?
When people apply for loans, credit cards, store cards or mortgages) they are scored according to factors in their application and their credit history. This effectively makes up their credit rating and determines whether lenders think they are a good risk.
The credit history looks at areas such as: – Whether people have recently applied for credit – How long they have had credit – What type of credit they have had (such as different types of loans, credit cards or a mortgage) – How much money they owe in total – What their payment history is.
Lenders are particularly concerned with whether people have paid the specified repayments on time. Although one or two late payments may not unduly affect a person’s credit rating, regular late payments will raise question marks for lenders.
Looking Into Your Financial History
Lenders are also concerned about other aspects of people’s financial history. For example, lenders will want to know: – Whether people have had any County Court Judgements (CCJs) against them – Whether they have ever been made bankrupt – Whether they have ever defaulted on a loan or credit card – Whether they are in arrears on existing loans or credit – How many credit applications they have made recently – Whether they have been turned down for credit in the past
Much of this information is held in reports compiled by credit reference agencies. Equifax and Experian are the largest and best known credit reference agencies in the UK. People can find out what information is held about them by paying a small fee and requesting a copy of their credit report.
Other criteria that affect approval for credit are on lenders’ individual application forms. These might include whether people own or rent their homes and whether people are employed (full-time or part-time), self-employed or unemployed. Lenders also look into existing salary and outstanding credit.
How To Get Credit With A Poor Rating
Although having a poor credit rating can make it difficult to get credit, this does not mean it is impossible. Options for getting credit include: – Loans which are secured on the value of the property owned by the applicant – A higher interest credit card, with an interest rate that reduces once the holder shows a good payment history – Prepaid credit card, which works like a mobile phone top up card
Some people have a poor credit rating even when they have no CCJs or arrears on their credit report. This might apply to self-employed people (such as taxi drivers, market traders, hairdressers and other small business people). These people have similar options for getting credit. And they don’t have to live on the streets, either. There are self-certification mortgages to enable self-employed people to buy houses.
Your credit rating is important. It may determine whether you can get a car loan or a mortgage. But do you understand the elements that decide whether your credit request is approved or denied? Here’s what you need to know about your credit rating.
What Is A Credit Rating?
When people apply for loans, credit cards, store cards or mortgages) they are scored according to factors in their application and their credit history. This effectively makes up their credit rating and determines whether lenders think they are a good risk.
The credit history looks at areas such as: – Whether people have recently applied for credit – How long they have had credit – What type of credit they have had (such as different types of loans, credit cards or a mortgage) – How much money they owe in total – What their payment history is.
Lenders are particularly concerned with whether people have paid the specified repayments on time. Although one or two late payments may not unduly affect a person’s credit rating, regular late payments will raise question marks for lenders.
Looking Into Your Financial History
Lenders are also concerned about other aspects of people’s financial history. For example, lenders will want to know: – Whether people have had any County Court Judgements (CCJs) against them – Whether they have ever been made bankrupt – Whether they have ever defaulted on a loan or credit card – Whether they are in arrears on existing loans or credit – How many credit applications they have made recently – Whether they have been turned down for credit in the past
Much of this information is held in reports compiled by credit reference agencies. Equifax and Experian are the largest and best known credit reference agencies in the UK. People can find out what information is held about them by paying a small fee and requesting a copy of their credit report.
Other criteria that affect approval for credit are on lenders’ individual application forms. These might include whether people own or rent their homes and whether people are employed (full-time or part-time), self-employed or unemployed. Lenders also look into existing salary and outstanding credit.
How To Get Credit With A Poor Rating
Although having a poor credit rating can make it difficult to get credit, this does not mean it is impossible. Options for getting credit include: – Loans which are secured on the value of the property owned by the applicant – A higher interest credit card, with an interest rate that reduces once the holder shows a good payment history – Prepaid credit card, which works like a mobile phone top up card
Some people have a poor credit rating even when they have no CCJs or arrears on their credit report. This might apply to self-employed people (such as taxi drivers, market traders, hairdressers and other small business people). These people have similar options for getting credit. And they don’t have to live on the streets, either. There are self-certification mortgages to enable self-employed people to buy houses.
Categories: Finance Tags: Credit History, Experian, Financial Lenders
How a Credit Repair Service Can Help You to Be Debt Free
Joseph Feross asked:
With so many people in debt and feel that they can’t get out, one would think that they would search every angle and avenue to get help. The more debt a consumer has, the more their credit suffers. Some of them are scared to contact their creditors to negotiate payments. They are afraid that the creditors will turn against them. However, companies such as credit repair services are in business to help those that need assistance in credit repair.
There are some free credit repair services out there, but you have to find the right ones. There are some legitimate companies that specialize in credit repair. Some of the legitimate ones, whether free or paid will work with you to correct and clean up your credit. There are some that will go as far as helping you to set up a budget so that you will be able to rebuild your credit and increase your credit score. This is a great benefit that no consumer should want to pass up.
There are companies that have credit repair services that offer debt consolidation. They will work to get you a loan so that you can pay off your creditors. If you have a lot of credit card or charge card debt and robbing Peter to pay Paul, debt consolidation may be a form of credit repair that can work for your situation. After your debts have been consolidated into one, you will start making one payment instead of having scattered payments. It can be difficult to keep up with the individual payments for your debts.
Another way to work toward debt freedom is to have an installment loan. The company that specializes in credit repair services will work with you to see if a secured or unsecured loan would work best for you. With a secured loan, collateral is involved. This could be your vehicle or your place of residence. An unsecured loan doesn’t require collateral but you will have a high interest rate. With your credit repair program, having this type of loan will help you to rebuild your credit history.
Companies that offer credit repair services can also help to remove negative information from your credit report. They will dispute items that are on your credit report that should not be on there. These items may not be correct, inaccurate or outdated. The creditor is responsible for responding to the dispute. If they do not respond in a timely fashion, then the item is supposed to be removed from your credit report. This part of the credit repair process will help you to increase your scores quickly.
The company that you are receiving credit repair services from will also contact your creditors by phone and mail in order to make negotiations in regard to your credit report. This is also a part of your credit repair program. Doing this yourself can be a headache and not get you very far, so hence the reason the credit repair company steps in to intervene.
Credit repair services is a good way for consumers to get back on the right track Having someone that is trained in credit repair can help you to get the credit score that you need. Having good credit is so important that it’s a good idea to have someone help you to get it back up to speed.
With so many people in debt and feel that they can’t get out, one would think that they would search every angle and avenue to get help. The more debt a consumer has, the more their credit suffers. Some of them are scared to contact their creditors to negotiate payments. They are afraid that the creditors will turn against them. However, companies such as credit repair services are in business to help those that need assistance in credit repair.
There are some free credit repair services out there, but you have to find the right ones. There are some legitimate companies that specialize in credit repair. Some of the legitimate ones, whether free or paid will work with you to correct and clean up your credit. There are some that will go as far as helping you to set up a budget so that you will be able to rebuild your credit and increase your credit score. This is a great benefit that no consumer should want to pass up.
There are companies that have credit repair services that offer debt consolidation. They will work to get you a loan so that you can pay off your creditors. If you have a lot of credit card or charge card debt and robbing Peter to pay Paul, debt consolidation may be a form of credit repair that can work for your situation. After your debts have been consolidated into one, you will start making one payment instead of having scattered payments. It can be difficult to keep up with the individual payments for your debts.
Another way to work toward debt freedom is to have an installment loan. The company that specializes in credit repair services will work with you to see if a secured or unsecured loan would work best for you. With a secured loan, collateral is involved. This could be your vehicle or your place of residence. An unsecured loan doesn’t require collateral but you will have a high interest rate. With your credit repair program, having this type of loan will help you to rebuild your credit history.
Companies that offer credit repair services can also help to remove negative information from your credit report. They will dispute items that are on your credit report that should not be on there. These items may not be correct, inaccurate or outdated. The creditor is responsible for responding to the dispute. If they do not respond in a timely fashion, then the item is supposed to be removed from your credit report. This part of the credit repair process will help you to increase your scores quickly.
The company that you are receiving credit repair services from will also contact your creditors by phone and mail in order to make negotiations in regard to your credit report. This is also a part of your credit repair program. Doing this yourself can be a headache and not get you very far, so hence the reason the credit repair company steps in to intervene.
Credit repair services is a good way for consumers to get back on the right track Having someone that is trained in credit repair can help you to get the credit score that you need. Having good credit is so important that it’s a good idea to have someone help you to get it back up to speed.
Categories: Finance Tags: Card Debt, Credit History, Unsecured Loan
Credit Repair and the End of Authorized User Accounts
Jim Kemish asked:
Common Practice
It is a common practice for parents to give a child a credit card. It’s good for emergencies and handy for everything from summer camp to college life. It is also common for one spouse to make the other spouse an additional card member.
A Little Software Bug
None of these practices are even slightly questionable. Additional card member accounts didn’t attract the attention of lenders or Fair Isaac Corporation, the creator of the credit-scoring model used by lenders when they make credit decisions, until they noticed an interesting bug in the credit-scoring model which was to spawn a questionable little sub-business in the credit repair industry.
A Cool Credit Repair Trick
It seems that as soon as the new account appeared on the credit report of the beneficiary their credit score would jump. In other words they were inheriting the credit history of the card from the donor. In the case where the donor had excellent credit the beneficiary discovered their own credit score jumping significantly, often over one hundred points, a cool little credit repair trick, but not what Fair Isaac really had in mind.
Word Spread Quickly
Well, the word quickly spread. And as always happens, creative entrepreneurs thought up a way to package this small credit repair miracle and sell it to absolutely anyone who had the money and desire to give their credit score a quick, albeit undeserved boost. And it is this undeserved issue that became the real problem.
FICO in our Life
In 1989 Fair Isaac Corporation first made their FICO credit scores available to lenders. And in 1995 the mortgage lending giants, Fannie-Mae and Freddie-Mac made FICO scores a part of their mortgage underwriting consideration. Since that time lenders have become virtually dependant on Fair Isaac’s scoring model, and the credit repair services began to focus on these powerful little numbers.
Score Distortion
The reliability of these important numbers is essential to good decisions. If something were to threaten the validity of the FICO score undeserving borrowers would be able to obtain loans they did not deserve. Lenders making these loans would be in jeopardy of increasing default rates and potentially disastrous losses.
Credit Repair, or is it?
So you can image the concern that lenders felt as they discovered that pseudo credit repair companies were popping up on the Internet selling these accounts to anyone with the money to pay. In response, Fair Isaac went to work to modify their computer model to block the benefit of these accounts, and to end to the distortion being caused by credit repair card sellers. And so they rewrote the model and introduced it as FICO ’07. But there was a problem.
The Credit Repair Battle Continues
As much as lenders wanted to eliminate the score distortion caused by authorized user accounts, they were unable to implement FICO ’07. It seems that there is a paragraph in the Equal Credit Opportunity Act (ECOA) that states that, “when lenders assess a spouse’s credit risk they are required by law to consider the credit history of accounts which both spouses are permitted to use.”
Back to the Drawing Board
This little directive stopped FICO ’07 in its tracks and sent Fair Isaac back to the drawing board. For those of us in the credit repair business, we were amused to see the fanfare amongst the brokers of these authorized user cards that trumpeted FICO ’07 as “illegal”, and of course continued to sell their questionable credit repair product to the public. Their celebration, however, was short lived.
Credit Repair Card Brokers Say Goodbye
On July 31, 2008, Fair Isaac announced their final solution. They have managed to create a way to block questionable authorized user accounts from inheriting the score benefit of the donor without blocking those of spouses and family members. So finally the death blow was dealt against the shadowy credit repair businesses selling their quick fixes.
Those Amazing Brainiacs
The exact language of the press release reads, “We have developed technology that will reduce any impact on the FICO 08 score from intentional tampering, while allowing the scores of spouses and other genuine authorized users to benefit from their shared credit experience.” How this works, I can’t say, but my hat is off to the brainiacs at Fair Isaac.
Credit Repair the Right Way
Intentional distortion of the validity of credit scores was good for no one. Intelligent credit repair never requires questionable practices. There have always been many legal and powerful ways to boost your credit score, quickly and effectively. A well-planned approach to credit repair has always produced real and lasting results that endure and truly reflect your own credit worthiness. Do it right, and do it for real.
Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.
Common Practice
It is a common practice for parents to give a child a credit card. It’s good for emergencies and handy for everything from summer camp to college life. It is also common for one spouse to make the other spouse an additional card member.
A Little Software Bug
None of these practices are even slightly questionable. Additional card member accounts didn’t attract the attention of lenders or Fair Isaac Corporation, the creator of the credit-scoring model used by lenders when they make credit decisions, until they noticed an interesting bug in the credit-scoring model which was to spawn a questionable little sub-business in the credit repair industry.
A Cool Credit Repair Trick
It seems that as soon as the new account appeared on the credit report of the beneficiary their credit score would jump. In other words they were inheriting the credit history of the card from the donor. In the case where the donor had excellent credit the beneficiary discovered their own credit score jumping significantly, often over one hundred points, a cool little credit repair trick, but not what Fair Isaac really had in mind.
Word Spread Quickly
Well, the word quickly spread. And as always happens, creative entrepreneurs thought up a way to package this small credit repair miracle and sell it to absolutely anyone who had the money and desire to give their credit score a quick, albeit undeserved boost. And it is this undeserved issue that became the real problem.
FICO in our Life
In 1989 Fair Isaac Corporation first made their FICO credit scores available to lenders. And in 1995 the mortgage lending giants, Fannie-Mae and Freddie-Mac made FICO scores a part of their mortgage underwriting consideration. Since that time lenders have become virtually dependant on Fair Isaac’s scoring model, and the credit repair services began to focus on these powerful little numbers.
Score Distortion
The reliability of these important numbers is essential to good decisions. If something were to threaten the validity of the FICO score undeserving borrowers would be able to obtain loans they did not deserve. Lenders making these loans would be in jeopardy of increasing default rates and potentially disastrous losses.
Credit Repair, or is it?
So you can image the concern that lenders felt as they discovered that pseudo credit repair companies were popping up on the Internet selling these accounts to anyone with the money to pay. In response, Fair Isaac went to work to modify their computer model to block the benefit of these accounts, and to end to the distortion being caused by credit repair card sellers. And so they rewrote the model and introduced it as FICO ’07. But there was a problem.
The Credit Repair Battle Continues
As much as lenders wanted to eliminate the score distortion caused by authorized user accounts, they were unable to implement FICO ’07. It seems that there is a paragraph in the Equal Credit Opportunity Act (ECOA) that states that, “when lenders assess a spouse’s credit risk they are required by law to consider the credit history of accounts which both spouses are permitted to use.”
Back to the Drawing Board
This little directive stopped FICO ’07 in its tracks and sent Fair Isaac back to the drawing board. For those of us in the credit repair business, we were amused to see the fanfare amongst the brokers of these authorized user cards that trumpeted FICO ’07 as “illegal”, and of course continued to sell their questionable credit repair product to the public. Their celebration, however, was short lived.
Credit Repair Card Brokers Say Goodbye
On July 31, 2008, Fair Isaac announced their final solution. They have managed to create a way to block questionable authorized user accounts from inheriting the score benefit of the donor without blocking those of spouses and family members. So finally the death blow was dealt against the shadowy credit repair businesses selling their quick fixes.
Those Amazing Brainiacs
The exact language of the press release reads, “We have developed technology that will reduce any impact on the FICO 08 score from intentional tampering, while allowing the scores of spouses and other genuine authorized users to benefit from their shared credit experience.” How this works, I can’t say, but my hat is off to the brainiacs at Fair Isaac.
Credit Repair the Right Way
Intentional distortion of the validity of credit scores was good for no one. Intelligent credit repair never requires questionable practices. There have always been many legal and powerful ways to boost your credit score, quickly and effectively. A well-planned approach to credit repair has always produced real and lasting results that endure and truly reflect your own credit worthiness. Do it right, and do it for real.
Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.
Categories: Credit Tags: Beneficiary, Credit History, Fannie Mae And Freddie Mac