With the tightening of the mortgage markets, we see a lot of new ‘vendors,’ offering a seemingly needed product: paid credit repair. We even have one here on Lenderama who seems like a good guy. There is no worse idea for originators to pursue than relying Credit Repair customers to pay your personal mortgage. Nothing will drive you out of the business faster than staking your income on people with crap credit. Even if the credit improves, can you improve the homeowner credit faster than the guidelines change?
I’m not against credit repair services in theory. In practice, they are far from ‘set it and forget it’. If you could make one phone call, and be sure that the recipient honored them, then it would be fine. But as it works now, the customer follows up with you instead of the service. The membrane between the originator and the poor credit risk is too permeable to not have the originator get infected and dragged under.
First Reason Not To Use Credit Repair: It Crushes Your Velocity
Speed is important in this business. With more uncertainty entering the picture, we have a situation where we are in need of more certainty as to our own personal finances. We need closings NOW, not later. When a customer takes 30-60 days before they are even qualified to maybe apply for mortgage financing, try sending that lead to AMEX to get your bill paid.
Credit repair clients that do everything they are supposed to do don’t get funded for 90 days. But, even with a good service, they will call you, say 1 time a week. Let’s say that per that one time per week, 60% of the people get to the closing table (best case scenario). For 12 weeks, you’ve gotta talk to them for 5 minutes a week. That’s 1 hour. If you have ten credit repair clients, you’re working with them for 10 hours in 12 weeks. And in those ten hours, I could find two buyers that could close. Bubba, today’s market doesn’t allow for charitable conversations. Why would you subject yourself to this?
Probably to avoid rejection, but the tonic for avoiding rejection also avoids a paycheck, and gives you busy work that you sort of have to do.
Second Reason: You Should Be Chasing the Creme De La Creme OF BORROWERS, The Ones that have the best per hour rate.
The other thing (that is being talked about over at BHB) is the fact that you should be chasing the best borrowers. You should position yourself to earn their business. The best borrowers will have the most easily packaged loan scenarios, and the fastest closings, and usually the most gratitude. These are the folks you will be working with if you’re going to be sustainable. Think: white shoe bank, not shyster in a zoot suit. Being able to earn the best business that exists is the surest way to ameliorate the problems with this market.
Settling for credit repair borrowers lets you off the hook and confuses activity with productivity. You’re insulated from feedback. You don’t know how good you really are because you have people that ‘let you help them.’ Essentially every credit repair candidate will say yes. Some qualified borrowers shop around. Credit repair candidates don’t. They are loyal and are able to ‘let you help’.’ But Tom Saywer ‘let people help’ too.
Help the folks that pay, not the folks that don’t reject you.
Third Reason To Avoid Credit Repair Business: You Are On The Hook For The Service Provided BY SOMEONE YOU DON’T KNOW.
Let’s think about this for a second.
Realtors commend commissions into our hands all the time. And they are implicitly responsible for all that we do as lenders. It takes a lifetime to build up our lists, and one missed phone call or bad deal to hurt both our selves and the real estate agent. Will we be able to ‘vet’ the actions of a credit repair guy? And do we want to invest the time and energy learning about a service that just gives us more unprocessed loops to weigh us down psychically?
I don’t want to learn the nuances of credit repair and the methodology. I don’t want to ‘vouch,’ for the responsiveness and efficacy of a call center, and I can’t imagine a financial structure that puts highly competent people in charge of the minutiae of credit repair. So, I’m not going to risk my reputation on any organization that relies on call center (i.e. uninvested) employees.
Forth Reason: Like Attracts Like
This is a corollary of #2. You should chase the good and avoid the bad. Studies have shown that looking at fat people makes you fat. Being around people that have gone through adult failure spiral changes you psychologically. Makes it OK for you to do likewise, and makes shady and entitled behavior OK with you. It’s the same moral hazard that was created by the meida,only it’s happening to you. You see people, have empathy, and then realize the consequences aren’t that bad.
Then you don’t really care about slipping a little because you see that it’d be OK if you did, because you surrounded yourself with a group of tough people to work with.
I know Chris will likely have a lot to say about this. And it’s not a malicious service, but no top flight originators should be using this type of thing. My take: if they aren’t closin’ in 45 days, find someone that will.
Chris Johnson is a Vagabond new market survival enthusiast that is unable to catch up with the sheer number of blogs that Todd Carpenter runs.
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{ 28 comments… read them below or add one }
Great post Chris.
I suprisingly agree with some of it!
Before I properly respond, I was hoping you could clarify a few things….
1) Are you stating that Credit Repair should NEVER be considered by a Loan Officer or just as the sole/primary marketing/origination effort?
For example, if a brother of a very important client is in need of credit repair services, are you suggesting they simply be turned away?
2) Are you suggesting all loan originators work for a direct lender? Or can you still be a broker in this day and age? I ask, because the “third reason” talks about not relying on a third party’s “cell centers” and “uninvested employees” — which describes many wholesale operations.
3) For purposes of this post, can you describe who the “Credit Repair” client is that you are writing about? You talk about “like attracts like”. We see so many different types of clients that it’s hard for me to get my head around this.
Are you talking about financially irresponsible people? Or people not properly counseled by their Divorce Attorney? Or people who have suffered from Identity Theft? Or people who are simply victims of inaccurate reporting?
Do the “credit repair” clients you are talking of have no money? Or do they have a lot of assets and just a low credit score? Do they make $250k plus per year? Or are they unemployed?
I think you bring up some great points – some I agree with and some I don’t. Your clarification on the questions above will help me properly reply.
Thanks,
Chris
1.) A credit repair at most should be a soft letdown. Send \’em away, forget they exist. Unfortuately, we\’re responsible for the actions of the vendor so they\’ll kepe calling.
2.) Originators should still be brokers, that opinion is subject to change.
3.)identity theft is the only one that I\’d work with. THe rest–regardless of reason–is a danger and a waste, period. 8 out of 10 people that are \’vicitms,\’ aren\’t.
I do disagree!! When I first got in this business, I swore to myself I wouldn\’t turn people away. No matter what the loan size, no matter what the credit situation. The things we do in any career or job to help people will always come back as a reward. Not maybe in the form you want it to… $$$$$ But at some point and time, there will be a return on your efforts. So I do disagree that s pending a few minutes on the phone with a client is a waste of time. You never know that they won’t refer someone to you because you helped them. You can always turn a negative into a positive. You can choose to view those people as a waste of time or as the potential of future business. If your credit repair company is not taking care of the client, then you\’re working with the wrong credit repair company. I use http://www.veracitybrokers.com/
Thanks for your time to read my post
Casey Moseman
http://www.lasvegascustomloans.com
An interesting post. I’d like to throw in a couple of points I’ve noticed over the years:
1. Most of the time there’s nothing to repair. Why? Because it’s correct. That car payment really was 90 days late, and yes, that $2,000 collection account is legit. Plus, you can’t just repair credit, like it’s a broken car or something that can be immediately fixed. Mistakes can be removed immediately. But you have to rebuild credit, which is a process that takes time.
2. Usually, it’s not the credit report that needs the repairin’, it’s something else. There’s a greater problem like a lack of income or financial responsibilty. That’s what needs to be fixed and the credit will follow. Even if you could magically repair credit overnight and increase someone’s score from 500 to 800 (or whatever), odds are they will drive it right back down because of the real problem.
Chris,
From my perspective, your post is riddled with quite a few generalizations and misconceptions about my industry – unfortunately, for very good reason.
Most Credit Repair companies are opportunistic and ineffective, if not fraudulent.
Not all of them…
Many are large and run like mills with little care for customer service/satisfaction (e.g. they know they can replace an unhappy customer quickly). Or they are very small, often one-man shops run out of a home office, and they can’t provide the level of service they aggressively market.
Some actually under-promise and over-deliver…
Most provide very little value to the credit repair process and do nothing more than help facilitate the printing and mailing of template dispute letters.
A few utilize attorneys, provide a legal representation to consumers, aid in the building of new credit, etc…
Credit Repair has become synonymous with frauds/scams/etc.
Some actually operate legally and ethically…
When most think of credit repair, they envision people that are financially irresponsible
Financially irresponsible people tend to be the smallest category of people that benefit from Credit Repair (from my perspective)…
I could go on, however, as I thought about how to respond to your post, I realized the best thing to do would be to write a couple of posts addressing some of the myths and misconceptions about the credit repair industry, what to look for in a credit repair company, etc.
I’ll do my best to get those up in the near future.
I believe that if you were to find a credit repair organization that effectively set the proper expectations at the beginning of the process with clients, offered excellent customer service, over-delivered on their promises, and were extremely effective at removing derogatory information, correcting inaccurate info, and maximizing credit scores – you would view this differently.
Assuming you found that company, why wouldn’t you refer a client to them who had credit challenges/issues versus simply sending them away? Why wouldn’t you want them to come back in 4-8 months able to qualify for financing (no, you wouldn’t be talking to them once a week for 4-8 months)?
Should you target “credit challenged” borrowers as your exclusive source of future business? Absolutely not!
Regardless of the marketing you do though (even if you focus entirely on the “crème de la crème” of borrowers) – you’re bound to come across people that could benefit from credit repair/credit score maximization. I just don’t see the logic in turning them away if you have an exceptional organization to refer them to?
Alright, if I don’t stop here, I’ll probably go on forever…
It’s Friday night and I’m responding to a post about credit repair – so sad….
-The Other Chris
Mike:
Playing a bit of devil’s advocate (which will probably lead to a heated debate about the ethics and legalities of credit repair):
If you could have accurate derogatory information legally and permanently removed from a credit report, and the cost of doing so made financial sense due to the benefits of doing so, why wouldn’t you?
-Chris
If you could have accurate derogatory information legally and permanently removed from a credit report, and the cost of doing so made financial sense due to the benefits of doing so, why wouldn’t you?
Uh, because it’s wrong?
Read the articles that Brian Brady is writing over at Bloodhound Blog and that will tell you more about why you shouldn’t spend too much time with them.
Tom Vanderwell
Chris Rocks-
I agree with Tom Vanderwell. Snowing lenders does not epitomize where we want to be as leaders in the industry. Getting rid of ‘accurate’ information is pretty shady–at best.
But there is zero benefit to being involved with this. ZERO. It puts me in a categoryo f losers. If I discovered identity theft, I referr them to the deaprtment of commerce and my contact tat the FBI. Their paperwork is meaningful.
Tom – Not sure I know which posts of Brian’s you are referring to?
Also, and these questions aren’t meant to be obnoxious but rather to further the conversation — why is it wrong?
Is it wrong because we should do our part to support the credit bureaus and their efforts to resell our information?
Should we go out of our way to ask creditors who aren’t reporting a derogatory item to the bureaus — to start reporting it?
Should it be mandatory for all creditors to subscribe to the bureaus and report payment history on all accounts?
Chris – I’d encourage you to go to your local library and use the free law databases to start pulling up and researching lawsuits that have been brought against the bureaus on behalf of consumers. Suggesting that resolving identity theft issues is often as simple as contacting the FBI is naive at best.
The most indeotg look at credit reporting accuracy, done by PIRG.org back in 2004, shows that 79% of credit reports contain serious errors or mistakes – are you suggesting that 79% of prospective clients are losers?
Quote – “Nothing will drive you out of the business faster than staking your income on people with crap credit.”
As subprime lenders are finding, that will indeed drive you out of business. And it will take down a whole lot of people along with you…
Chris,
By wrong, I mean that if you remove accurate information from a credit bureau report, that is not the right thing to do. It’s essentially fraud on a loan application because you are presenting information to a lender that isn’t accurate.
I’m all for helping people get mistakes on their credit report straightened out, but I don’t believe in and I won’t be party to getting accurate derogatory information removed from a credit report. That’s wrong in the moral and ethical sense. Does that make sense?
The series that Brian is working on started here:
http://www.bloodhoundrealty.com/BloodhoundBlog/?p=3503
and it’s boil it down to 1 sentence it says this: Don’t waste your time going after business with the Gen X & Y’s, they don’t have money, have bad credit and are too deep in debt.
Tom
Tom,
Yes, of course it makes sense. I think it’s safe to say that most probably feel the same way you do with regards to removing accurate derogatory information.
It’s not as black and white for me though.
Credit Repair/Restoration is one of the services my organization offers. That work is done by a small team of attorneys that we have on retainer. They approach the process the same way a defense attorney represents a client in a criminal or civil case.
The credit report is really nothing more than a list of allegations. Chase didn’t have to provide Experian any proof that Joe Schmoe was 30-days late on his credit card payment — Experian took their word for it (Chase and Experian are in business together). Experian is now reporting that info about the consumer.
Our Attorneys choose to represent clients against creditors, the bureaus, and collection agencies in an effort to force the removal or updating of derogatory information (or any information that can suppress a credit score).
Before taking a case, like any defense attorney, they don’t make judgements about the guilt of the client (or in this case, the validity of the information being reported).
They simply represent the client as effectively as possible.
Do they wind up sometimes helping people that are looking for a way around the system — of course. There are plenty of criminals walking around free due to the excellent work of a defense attorney.
Is ensuring that people who have inaccurate information removed from credit reports worth that risk? Absolutely.
I guess I’m starting to get off topic now though — the real question is whether or not a loan officer who comes across someone with credit challenges should turn them away — or take the few extra minutes to refer them to an organization they trust and have a good relationship with.
Chris Johnson say’s no. He’s obviously had some terrible experiences with Credit Repair in the past and a lot of success working with “creme de la creme” borrowers — so he’s viewpoint makes absolute sense for him. He wouldn’t waste his time with someone that won’t close in 30-45 days or risk dealing with another 3rd party that could make him look bad or eat up more of his time.
I’m obviously quite a bit biased and think that absolutely, if an Loan Officer can refer a client to my organization, one that has the income/assets/etc to qualify but has credit challenges preventing them from moving forward (or making the loan too expensive), not be bothered by that client until they are ready to reapply for financing — then absolutely they should take those few extra minutes!
Chris and I will probably never be on the same side of this discussion — which is fine — I’ve still learned a lot from him and will continue to enjoy his viewpoints……
-Chris
Oh, Tom, one other thing (probably a whole other discussion but thought I’d toss it out there since I’m interested in a Loan Officer’s perspective — we can take this offline if you’d prefer) — Tom, you said, “It’s essentially fraud on a loan application because you are presenting information to a lender that isn’t accurate.”
Since the reporting of payment information/account history by creditors is not required by law — how should a Loan Officer ensure that any loan application isn’t fraudulent — since most will have at least some liability information missing (not reported).
Also, considering that 79% of credit reports have some inaccurate info, does that mean you should take the time to fix the inaccurate info prior to submitting a loan application for 79% of your clients? Or can you pick and choose which inaccurate information you feel is misleading or not? Or do you just notate the inaccurate info on the loan application (e.g. this account was opened a month later than being reported…this balance is actually $1,000 less than being reported, this collection amount is for $3 more than being reported, etc).
Most interesting discussion…
The very idea of “defense” attorneys battering creditors who report lousy payment records into removing the records so the “client” can massage a FICO score makes me want to puke.
Get real. This is where we separate ethical professional originators who lenders can trust from those that need to be weeded out of the system.
Chris R. -
“If you could have accurate derogatory information……….so, why wouldn’t you?”
Chris, the operating word there is accurate. If they don’t pay their bills, it is what it is. That indicates their ability or willingness to pay (or not pay) a mortgage on time. The best predictor of future behavior is past performance.
I agree with Tom, an LO who obfuscates this is affecting the integrity of the loan application. Would it be ok to white out an accurate account on a credit report? No.
Also, I don’t view the credit report as nothing more than a list of allegations. Consumers have massive protection under the FCRA. Any creditor who haphazardly reports and doesn’t have documentation to support their reports would be open to a class action lawsuit that would be a field day even for an attorney just out of law school. Chase knows this and it’s not worth it for them to risk it.
Yes, there are mistakes, identity theft, etc. and I’m not addressing those. I’m talking about people who just don’t pay their bills on time for whatever the reason.
A LO isn’t required to, nor can they, ensure that a loan application isn’t fraudulent. An LO can’t hide something they don’t know about, the issue is if they hide something they do know that could seriously question the creditworthiness of the applicant.
My point is it’s an American Dream to buy a home, not an American Right. People will have to demonstrate a level of financial ability and responsibility in the future. Paying bills on time is part of that.
The other thing the mortgage industry could do is to relax guidelines to give these people a break. Oh sure, the critics will say that would build a house of cards, a real estate bubble that would come crashing down one day sinking our economy into a recession and losing billions.…but those critics would be wrong, of course.
Chris (the other one),
I think that all of us know there’s a big material and ethical difference between saying that someone has a $1000 balance on their chase card when it’s really $800 because they just paid $200 off and Chase hasn’t updated things since June and someone who made 5 late payments in the last 12 months but can some how manage to get all of those removed so it looks like they are a better credit risk than they really are.
The one is talking about a variance in the numbers that are factored into the person’s debt to income ratios. The other is an intentional misrepresentation of the facts.
I’m all for helping those who really want to dig out from bad credit situations and I still need to talk to Chris to learn more about what his company does, but one of the things that I’ve learned hanging around with the Bloodhound gang is that, as Bawldguy says it, “Lenders lend” and I need to focus on working with people who want or need to borrow money.
Does that make sense?
My experience is that there are legitimate companies that provide credit repair services and do indeed deliver. Sure, there are a plethora of companies that exist solely to fleece desparate borrowers out of their money. That said, if you work with a reputable mortgage broker that recommends a good credit repair shop you may be pleasantly surprised. As mentioned, I have personally worked with wonderful people that have allowed borrowers to get a home mortgage that would not be elgible otherwise. Bottom line – credit repair does work but it depends on what credit repair shop you use.
This is getting to be quite interesting… and I appreciate the professional (not personal) responses thus far. I recognize there are some strong opinions on this topic.
Diane – you wrote, “The very idea of “defense” attorneys battering creditors who report lousy payment records into removing the records so the “client” can massage a FICO score makes me want to puke.” Does that mean you feel that people have no right to dispute inaccurate info. Or are you assuming that all information reported on a credit report is accurate? How is an Attorney supposed to know what is accurate or not accurate prior to taking a case? Should they refuse all cases just because some might be looking to “beat the system”?
Mike – actually the best predictor of future behavior is current behavior from a credit reporting standpoint. Someone who went late 60-days on a mortgage 3 years ago because of an unexpected job loss isn’t any more/less likely to go 60-days late on a mortgage in the future than someone who never went late (assuming everything else is equal). If someone is currently going thru a financial difficulty — it’s likely that will continue in the near term (e.g. currently unemployed).
Credit reporting is a great resource for lenders. Credit scores are great for automating the lending process or lending on a large scale.
With the introduction of credit scores though, the ability for a human to evaluate a credit report went out the window. Gone are the days (for the most part) where a consumer can explain to a bank that the reason they have a derogatory item on their report was the result of a one time event (Natural Disaster, Loss of a Spouse, etc). The bank used to be able to make a common sense decision on that situation — now it’s whether your score meets a threshold — and someone that is 30-days late on a credit card because they don’t care and someone that is 30-days late on a credit card because their house was destroyed by a flood — are treated the same with regards to that individual late. It may work on a macro level – It’s not always fair on a micro level.
This probably fits in well with your comment about relaxing guidelines — if slightly less importance was placed on credit scores and more on the actually story behind the credit report, that would go far in helping the right people.
Fannie already allows for exceptions to be made with regards to people obtaining financing after a bankruptcy/foreclosure if they can demonstrate extenuating circumstances. It would be great that was applied to other situations….
Mike — there are some protections under the FCRA, however, it still doesn’t do nearly enough to protect the consumer. You’ll be hard pressed to find an attorney willing to take on most “credit bureau” cases. Class Actions are hard to put together since many of the errors aren’t attributable to one source (e.g. Chase doesn’t screw up reporting for all of their customers — maybe it only happens 1% of the time). Plus, most consumers don’t even realize there is an error, or if they do, the consequences of that error — so many just don’t do anything. The bureaus are also VERY effective with lobbying, which doesn’t help the consumer.
If you’re every REALLY bored, you should read Evan Hendrick’s book, (http://www.creditscoresandcreditreports.com/). He does a very good job of looking and specific legal cases involving consumers, the credit bureaus, and creditors. I think you’ll be pretty astonished by what goes on. It’s a pretty “dry” book, so it’s not the easiest read, unless you’re really interested in the topic.
Tom – everything you say makes perfect sense. I guess my issue is that this entire post and the discussion that has followed focuses entirely on the people “trying to beat the system”. The financial deadbeats. On a daily basis, I see less of those than people with legitimate reporting issues. Perhaps we’re unique in who we attract as customers — and I certainly understand why the general impression of people seeking credit repair are “losers” (I’ve seen various ads posted online, in local papers, etc). I just feel like lumping everyone into that category does a huge disservice to those who legitimately need help. It potentially discourages them from getting the help they need. If fixing credit reporting errors was so easy, you wouldn’t see the number of lawsuits we currently see…
(And yes, I know I opened the “accurate derogatory item” part of the discussion — just thought it would make for an interesting conversation — it seemed to be the theme though prior to me mentioning it).
Let me end this “comment” with a couple of questions (not to change the direction of conversation, we can stay on the same track — I’m just curious…and this is open to an LO’s — not just the one’s that have commented thus far)
1) What counseling, as a loan officer, do you typically provide your borrowers with regards to credit score maximization (e.g. paying down balances, removing inaccurate previous addresses, advice about how current occupations are listed, etc)? How deep do you go into their credit report? How much time is spent on this topic when working with a new client?
2) Do you feel like that are good resources available to you that help you provide this information to your clients? (e.g. besides the basic stuff floating around out there about paying balances down below 35%, not closing open accounts, keeping inquiries to a minimum, etc)
3) Do find this to be a very important knowledge-set to master with the relatively new risk-based pricing models that are heavily reliant on credit scores?
-Chris
“Our Attorneys choose to represent clients against creditors, the bureaus, and collection agencies in an effort to force the removal or updating of derogatory information (or any information that can suppress a credit score).
Before taking a case, like any defense attorney, they don’t make judgements about the guilt of the client (or in this case, the validity of the information being reported).”
Unless I am misunderstanding the meaning of these words, credit repair attorneys are not concerned with the accuracy of the information.
That tells me that they are hell bent on getting data removed from a credit report so the consumer gets a better credit score whether or not there was any error reported in the first place.
Credit repair of this kind, it seems to me, is not good for mortgage lenders.
I disagree also with the idea that what happened 3 years ago isn’t material to a credit decision. It is a fair indication of how a potential borrower manages their money. They may have been hit with circumstances beyond their control OR they may have a pattern of getting into trouble – over extended – every three years or so.
Traditional underwriting would vet these cases. FICO stinks.
My friends, this thread is fraught with errors on both sides of the argument.
Re-reading the post and applying the logic/strategy outlined/contained herein to test a business plan of a couple years ago, I would have to conclude (albeit erroneously) that doing stated/stated loans for 4 YSP pay option ARM borrowers who asked few questions would be a winner!
But alas none of us can go back in time; all we can do is look ahead. And that’s how I’ll sum up this thread. Help people first and make money second – it leads to a much more satisfying life after all is said and done.
Bankruptcy, foreclosure, job loss, credit reporting issues, etc. don’t discriminate; they cross over all socio-economic classes. When people come to you, point them in the right direction. I’m not saying ‘make that your business plan’. I’m saying calling others “a categoryo f losers” definitely “changes you psychologically”.
Cheers.
Help people first and make money second – it leads to a much more satisfying life after all is said and done.
When people come to you, point them in the right direction.
Very true and I agree wholeheartedly. I think that the point that Chris is making (johnson not rocks) is that if you spend too much time pointing people in the right direction and actually helping them get the credit repair done (for those who are in deed the victims of the inaccuracies and identity thefts, not the cheats) you run the risk of not using your time effeciently and in our business, time is money, especially in today’s market. Does that make sense?
It’s always good to do the right thing, but I think there is a difference between saying, “I know this guy by the name of Chris Rocks who runs an agency that might be able to help you get that fixed. Here’s his number, get it fixed and then we’ll run with things,” or saying, “Let’s get Chris on the phone right now and get this fixed.” The one, you make a referral and then step out until the customer comes through. The other, you hold hands the whole way.
Does that make sense?
Tom Vanderwell
1) What counseling, as a loan officer, do you typically provide your borrowers with regards to credit score maximization)?
None – I don’t believe that credit score maximization lends itself well to the type of business that I run. “Improving credit” does, because that truly helps the client improve their financial position.
How deep do you go into their credit report?
Only as deep as I need to in order to get the deal done which is typically not very.
How much time is spent on this topic when working with a new client? Once again, only as much as needed and typically that’s not much.
2) Do you feel like that are good resources available to you?
No – that’s why I’m hoping some day Chris Rocks and I will actually hook up and be able to talk. LOL
3) Do find this to be a very important knowledge-set to master with the relatively new risk-based pricing models? From what I’m seeing, the models haven’t changed substantially, they’ve just gotten tighter. So, whereas 12 months ago, it was people with 640’s that had to pay an extra half point, today it’s 680 or 700….
I think that anyone in our business who values the relationships that are built, will realize that there are times when they need to take an active role in helping someone rebuild their credit accurately. The important thing is to be able to determine when to help and when to make a referral and step out of it. It also impacts the type of business you pursue and it’s why I don’t do FHA loans (check out my blog at http://straighttalkaboutmortgages.com/2008/07/09/why-ive-made-a-concious-decision-not-to-do-fha-mortgages/
Very good discussion!
Tom Vanderwell
I don’t like credit repair companies because the consumer already has all of this under their control should they choose.
Secondarily, I don’t like the unspoken implication that they can hound credit companies enough to get an honest report removed.
It’s unseemly.
Paul – Great to see you on here!
Tom – When I asked Chris [Johnson] for clarification on what to do with the people a Loan Originator comes across that need help with credit issues, his response from above, was “identity theft is the only one that I’d work with. THe rest–regardless of reason–is a danger and a waste, period”. I believe he is arguing that you shouldn’t point anyone in the “right” direction because he believes it will have a negative impact on your business.
It sounds like you disagree with this approach then? And you are happy to help these people if you have a resource available that you trust — and it won’t distract you from assisting your other clients that need more immediate assistance?
Chris Lengquist – This is going to get really confusing with another Chris on here…
I couldn’t disagree with you more with regards to the consumer having this all under their control should they choose. The Bureaus have done an amazing job convincing the public not to “waste their time” with hiring professionals to help them since they can do everything themselves. Unfortunately, the system is set-up so that it is very difficult for a consumer to handle this themselves. With the outsourcing of dispute resolution overseas, to the creation of an online dispute process that is used to skirt laws that regulate what the bureaus must do — it’s only gotten worse for consumers. Many come to us (or turn to great resources like Paul’s from above) because they’ve attempted to handle this themselves — and gotten no where…or worse.
Can a consumer, given the ability and time to study/learn the process, be successful on their own? Absolutely!
Most don’t have the time or desire to — and either sit and wait for the information to correct itself — or they look for professional help.
If only it were as simple as going to Experian’s website, filling out a form, and typing, “hey, these 3 accounts aren’t mine and belong to someone else…”.
-Chris [Rocks]
Chris Rocks,
Can you help me understand how your service is similar to other sites online? Are you an affiliate with pre-paid legal or some other service as the content, videos, and pricing is exactly the same as others? What role, if any, do you play in negotiating any items being removed/corrected on a credit report? I have plenty of clients that have had incorrect information reported, and have assisted them to get it removed. I would like to know how to speak with you directly, but would be interested in the answers to the above questions. Please advise. Thanks.
I don’t think I have seen this much traffic since the YSP blog that Todd did a while back! Good for all the dialouge!
As always generalizations spur controversy! Everyone here has extremely valid points: most credit reporting is accurate, most companies that are in the business to “help” do make money off of a bad situation, it does take alot of time for the originator and may not (in the end) come to any financial or future business reward, but genralizations aside, each case if different and an originator with a variety of clients (short and long term) will have consistent success if they take the time to assess each situation for its own merits.
Thanks for getting the thoughts going!!
Steve – I’d be happy to go into how my organization operates and answer any questions you have. Please contact me at 800-270-7198 x706 or by email at chris@caacredit.com.
This is meant t be an educational/informational resource and I don’t feel comfortable using it as a sales platform, so it’s best if we take this conversation offline…
Wow, there are some great, well-written comments here. And Chris, you represent your industry very articulately. I’m as against people trying to beat the system as the next gal, because the innocent bystanders end up footing the bill, in higher rates, lower returns on our investments, more bureaucracy to deal with, etc.
But there ARE similarities and differences to our legal system worth noting. Here they are:
Legal / judicial system:
1. Innocent until proven guilty
2. Defense advocates ensure rights of accused
3. Defense advocates strengthen system because prosecutors have to prove cases. Inspires more confidence that person found guilty is in fact guilty.
Credit reporting system:
1. Guilty until proven innocent
Since even a system where you are innocent until proven guilty requires advocates for the accused, I think that a system where you are guilty until proven innocent has a greater need for true advocates.
Expediant dispute resolution, better accuracy of information, identity theft mitigation, and incorporating offsetting circumstances into credit reporting / scoring would inspire more confidence in the system, at least on the part of the consumer. However, making it easy to expunge correct derogatory tradelines would do the opposite for lenders.
Chris, didn’t you have something going with that girl Jana?