As a professional Realtor, I have helped numerous home buyer clients repair their credit. Good credit is like having a good resume. It allows you to get low-interest loans, car loans and credit card loans. When it comes to buying a home, even if you have “less-than-perfect” credit you don’t have be a renter forever if you can qualify for a low-interest home loan.
This is especially appealing since home prices are at an all-time low. Let’s start with a little background information about credit repairs.
Ever since the Fair Credit Report Act (FCRA), enacted in 1970, made credit repair possible, creditors have been working to complicate the consumer’s understanding of how to repair their own credit. The FCRA allows consumers to challenge information on their credit report on the basis of “completeness and accuracy.” The credit bureaus are required to complete the investigation within a “reasonable period of time,” currently set at 30 days.
If, after an investigation by the credit bureau, the disputed information “is found to be inaccurate or can no longer be verified,” the credit bureau is required to promptly delete the information.
In theory, the disputation process should be simple, but many consumers quickly discover that creditors and debt collectors can make the process more difficult than imaginable.
For example, three years ago, a consumer owed a local utility company $25. This bill went unpaid and was logged on his credit report. Later the same year, his $25 account was sold three times to four different collection agencies. How frustrating must it be to call all four collection agencies just to pay off $25? The process to delete one $25 charge from one account that keeps showing up on the credit report every month for three years is a long one. Imagine the damage done to this consumer’s credit score.
For most consumers, credit nightmares seem to lie in the medical collections twilight zone. When they or a member of their family gets sick or hospitalized, the medical bills start mounting without any means for the consumer to pay them off. Bills soon turn into collections that are reported negatively for years on end. Most consumers live out their lives in the collection twilight zone. They cannot get past their bad credit to get decent interest rates on cars, credit cards and they certainly cannot buy a house.
If a consumer cannot easily repair their own credit, what is a fair cost for professional credit repair? There are many professional credit repair companies locally and nationwide that will offer low-cost repairs. A low-cost repair for a single person is around $400 and $800 for a married couple.
It typically takes six months to one year to raise a FICO score. As part of a repair service, the consumer is provided with a game plan to pay off some debts in order to achieve the maximum results. Every case is different and unique just as every consumer’s credit situation is unique.
People tend to get overwhelmed with the complications of disputing their own credit. Fortunately, there are professional organizations to help manage the process. It is well worth the fee, especially since the consumer will see results in just six to 12 months.
If you choose to enlist professional credit repairs, expect the following stages of credit restoration:
Stage 1: Complete the credit repair application. Obtain credit reports from the three major credit bureaus.
Stage 2: The credit advocate assigned to work with you will go over the items on your credit report and initiate credit disputes.
Stage 3: The credit dispute process begins, online and in writing. Your credit advocate will design a game plan to delete all late items on your credit report. This requires your cooperation to maximize effective results.
Stage 4: Track results and follow up. The credit bureaus are required to respond within 30 days of the investigation. Your credit advocate will continue to monitor your updated credit reports and follow up with each disputed item on a regular basis.
Hiring a professional organization to restore credit is a very pleasant and painless way to restore credit for consumers who can afford a reasonable fee — especially if it means getting into a new home, right?
Annie Christian is owner of The Annie Christian Real Estate Group and is a real estate broker. She helps clients with everything from buying and selling to foreclosure and short sale. To submit a question to her, call 351-5117. Her website is www.anniechristian.com.