Does Credit Repair Work?


Credit Repair

Most folks have heard of credit repair and credit repair companies.  Many credit repair companies do have bad reputations and the credit repair business is extremely regulated by every state Attorney General’s Office.  Credit repair companies do need a bond and business license to operate but do not have to have a special license or certification to be a credit repair specialist.  There are rules and regulations on how credit repair companies can charge depending on the state but in general,  credit repair companies cannot charge upfront fees on services they have not performed.  A credit repair company can charge an initial nominal processing fee but they cannot charge you for the services of credit repair in advance.  Credit repair companies can charge you a monthly fee as work is being performed.  A credit repair company nor any credit consultant can guarantee you a specific item will be deleted and cannot charge you for items that they try to get deleted but were not successful.

Can Bankruptcies And Foreclosures Be Deleted Off Credit Report?

I have witnessed bankruptcies, foreclosures, deed in lieu of foreclosures, and short sales be deleted from a person’s credit report.  Yes, public records including judgments as well as bankruptcies, foreclosures, deed in lieu of foreclosures, short sales can be removed from a person’s credit report as well as collections, late payments, charge offs, tax liens, and other derogatory items.  However, Child Support delinquencies cannot be deleted unless you have proof that the child support payments are not in arrears.  The reason being is because this is a judge’s order and is being reported directly by the courts.

Can I Qualify For Mortgage After Deleting My Bankruptcy And Foreclosure From My Credit Report Without The Waiting Period?

As mentioned above,  there are cases where you can get bankruptcies,foreclosures, deed in lieu of foreclosures, and short sales removed from your credit report.  I am not a credit repair specialist and do not know the mechanics on how certain credit repair companies can do it but I have witnessed dozens, if not hundreds of cases where people gotten their bankruptcies, foreclosures, deed in lieu of foreclosures, and short sales deleted off their credit report.  Unfortunately,  having a legitimate bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale removed from your credit report does not exempt you from the mandatory waiting period after a foreclosure, deed in lieu of foreclosure, short sale, or bankruptcy.

Automated Underwriting System

More than likely, you will get an approve/eligible per DU FINDINGS or LP FINDINGS because Fannie Mae’s and/or Freddie Mac’s Automated Underwriting System will only go off the items listed on your credit report and the chances are that your mortgage lender will also not pick it up.  However, when you complete your mortgage application, there will be a questionnaire where it asks you have you filed bankruptcy in the past 10 years, have you had a prior foreclosure, deed in lieu of foreclosure, or short sale before.  You need to be honest and mark YES on the box if you did have a prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale.  If you check NO and you know that the mortgage lender will not catch the prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale, you are committing mortgage fraud.  Mortgage fraud is where you try to deceive the mortgage lender and lie on your mortgage application with the intent on getting a mortgage loan and it is a felony which is punishable up to 30 years in the Federal Pen.  No mortgage in the world is worth the consequences of getting investigated, charged, and convicted with mortgage fraud.

Two Reasons Why People Go Through Credit Repair

The three major credit bureaus; Transunion, Equifax, and Experian; do make many errors with consumer credit reports.  If you have proof that a derogatory credit item does not belong to you or the creditor has misreported the information on your credit report,  federal laws mandate that the credit reporting agencies remove the inaccurate information.  If you have proof, I strongly recommend that you mail the three credit reporting agencies and/or creditors via certified mail with a letter and supporting facts.

Deleting Accurate Derogatory Information

Many folks with prior bad credit also try to delete accurate derogatory information off their credit report.  This method is how most credit repair companies try to attempt to remove derogatory information.  If the derogatory information contains an error, or errors, such as the wrong amount, the wrong date, duplicates, or other technicalities, then you can attempt to try to remove the derogatory credit item.  This is done by writting the credit bureaus which is reporting the derogatory information and stating that the item does not belong to you and for them to provide proof that the derogatory item is valid.  The credit bureaus in turn will contact the reporting creditor and request evidence validating the derogatory item and the creditor has 30 days to do so.  If the reporting creditor has no proof or if they do not respond to the three credit bureaus, then the credit reporting agencies needs to delete the disputed item.

Disputing Items With Credit Balances

You cannot have any credit disputes pending during the mortgage application process.   Mortgage lenders do not allow pending disputes on any item with an aggregate $1,000 credit balance that is non medical.  You can have open credit disputes with open balances which are medical disputes and you can have credit disputes with zero balance derogatory items and/or collection accounts.  If you want your mortgage application process to proceed, you need to retract the credit dispute.  Unfortunately, if you retract a credit dispute, this retraction will definitely lower your credit scores.  I recently had a mortgage loan applicant who has a credit dispute that needed to be retracted.  Her credit scores was at a 586 FICO.  After the credit dispute retraction, her credit scores has dropped to a 525 FICO credit score and she could no longer qualify for a residential mortgage loan.

Gustan Cho

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