BOOST YOUR CREDIT
It’s long been understood that the all-important consumer credit score is a make-or-break affair when it comes to home financing. What’s also been known for almost as long, is that the average American consumer has been plagued with a litany of inaccuracies on their credit report, and that their scores suffer as a result.
Credit repair, when done correctly, and according to the federal law that govern how it’s done, can be the consumer’s best ally when it comes time to obtain financing on their dream home. At it’s core, credit repair is a process whereby inaccurate, outdated, incomplete, and unverifiable information that exists on a consumer credit report is skillfully addressed, with the intent of correcting, completing, or deleting the offending misinformation. With recent studies showing that consumer credit reports are rife with errors, and that the people responsible for ensuring the accuracy of the reported information are often under-trained and ill-equipped to do so, there’s never been a greater need for this valuable service.
In Texas, credit repair companies must be registered with the Secretary of State’s office as a ‘credit services organization’. That registration is reviewed and renewed annually, and complaints against a credit repair organization are investigated by that office. According to the Texas Finance Code, credit repair companies that charge any upfront fee must secure a $10,000 surety bond. However the federal law that governs the industry expressly forbids the charging of any fee, prior to the completion of services being performed. This discrepancy between state and federal law has resulted in litigation against several Texas-based credit repair companies, resulting in closure of those companies. As such, it is becoming the industry standard to move away from any “up-front fees” model.
Although there are many different mechanisms by which the credit repair process is effectively performed, the basic idea is that the credit repair company, acting on behalf of the consumer, communicates with a consumer’s creditors and the major credit bureaus, specifically highlighting items of concern. Those items are investigated, based on the federally required standards of accuracy, completeness, verifiability, and timeliness, and the results of those investigations are then sent back to the consumer, with the necessary corrections and/or deletions notated. Generally speaking, the correction and deletion of the inaccuracies is geared toward improving the consumer’s credit scores, thus making them eligible for financing on major purchases. In addition to the aforementioned benefits, the consumer, upon improvement in the credit scores can also expect to see savings in other financial areas as well. Insurance, for example, can be made significantly less expensive by virtue of a better credit score. One can also expect a reduction in the amounts of deposits necessary on utilities and cell phone accounts.It’s important to note that, in addition to simply making qualifying for a home loan a possibility, oftentimes, the credit repair process can make the consumer eligible for better rates and terms, thus enabling them to purchase more and better homes, or to simply save money each month on their monthly mortgage payment. Those savings open all kinds of financial doors, like the reduction of other debts, paying off the mortgage early, or simply saving or investing the money for future use.
In short, credit repair can be a significant tool in the home buying process for many consumers!
The Fair Credit Reporting Act
Governs how the credit bureaus operate, and handle consumer disputes.
The Fair Debt Collection Practices Act
Governs how debt collectors operate.
The Credit Repair Organizations Act
Governs how credit repair companies must conduct their businesses.
The Texas Finance Code
Covers many consumer credit and finance issues.
-Doc Compton, Operations Manager, Consumer Credit Section, Prevost and Shaff–