Credit Repair and the FTC Smoke Screen
The FTC did not set out to do you wrong. Without a doubt, they are well intentioned and have your well being at heart. Unfortunately, the heavy-handed FTC campaign against the bad apples in the credit repair business has tainted the rest of the barrel and has unintentionally imposed a terrible cost on consumers.
The Credit Repair Conundrum
Credit repair is in a similar class with taxes and healthcare. All of these are of great importance and are somewhat shrouded in mystery. The more important an issue is, the more likely it is to evoke fear. There are few things as important to your financial wellbeing as your credit, and few things as complex. Millions of people ought to be seeking credit repair help, but when they encounter the FTC warnings at the outset of their efforts it is often enough to stop them in their tracks. The social cost of this delusion is enormous.
Credit Repair Good Guys
It is true that there are bad guys in the credit repair business. The last time I looked this was true of every industry without exception. As of the time of this writing the bad guys in the credit repair business are fewer than ever, and a significant number of credit repair good guys have emerged. These white knight companies deliver essential and valuable services in a professional manner to the great benefit of their customers.
The Prevalence of Errors
There are several reasons credit repair is an essential service in today’s world. The product produced by the credit bureaus is enormously influential. You might not think of credit reports as products, but that is exactly what they are, no different really from automobiles or computers. They are assembled, passed through a quality control process, and sold. Unfortunately, like many other products there are flaws.
The Crazy Cost of Errors
The flaws in the credit reporting system can be as dangerous as a manufacturing flaw in an automobile. Your life can depend on the quality of the product you buy and your credit report is no exception. About seventy percent of all credit reports contain errors. Credit report errors can lead to higher interest rates and loan denial; these are life-changing consequences.
Credit Repair Reality
Congress spent years debating the fearful impact of the credit bureaus on our lives. The legislation they hammered out is called the Fair Credit Reporting Act (FCRA). In a way this is a consumer protection law, but it is equally intended to protect the three national credit reporting agencies we refer to as the credit bureaus. It is true that congress was heavily lobbied by the credit reporting industry during the creation of the FCRA, but I can’t cry conspiracy. There are economic realities involved with running any big business and these must be respected.
Look Out For Yourself
Congress had little choice but to attempt to balance the need for credit-reporting accuracy with the economic restrains of quality control. The end result is simple. Credit reports are as accurate as they are going to get, and consumers’ better look out for themselves. The creation of AnnualCreditReport.com, the site where you can get your credit reports once a year for free, is a stipulation of the FCRA and an attempt by congress to provide us with an opportunity to manage our own credit repair efforts.
Overcoming Inertia
You just need to get off your butt. Inertia is natural when we are faced with any confusing task, but like jumping into the water it’s not so bad once you get into it. Get your credit reports. Start your credit repair project. There are numerous ways to do this. Not withstanding the deceptive advertising of dozens of websites that offer so-called free credit reports, AnnualCreditReport.com is the only site you can get your reports for free.
On the Other Hand
This is not to say that it is the best site to get your reports for free. On the contrary, in spite of my approval of the creation of the site, it’s really pretty difficult to maneuver. Personally, I’d spend a few bucks and get a simple tri-merged report. If you look carefully through the TrueCredit.com site (A TransUnion site) you can get a great tri-merged report without joining their monthly program, for $14.95.
Hire a Credit Repair Pro
Many people find the prospect of digging into the credit repair project just too much to handle. If you are busy and have enough going on in your life without taking the time to figure all of this out, just get on line and find one of the credit repair good guys. There is plenty of credit repair help available if you need it. Either way, it’s your credit, so please take care of it!
Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.
Friday, September 26, 2008
Monday, September 22, 2008
Credit Repair in a Hurry
Credit Repair and your Credit Reports
Credit repair is all about knowledge, and your credit reports are the key. There are three credit bureaus, Experian, Equifax, and TransUnion, and they each provide their reports in a different format. In addition, there are many tri-merged reports available which blend the information from all three credit bureaus in a different format. The tri-merged reports are designed to be user friendly and may be your best bet for credit repair.
The Real Score
There is another credit repair resource that gets less notice, but is arguably the most important. This resource is MyFico.com the website for Fair Isaac Corporation the creator and owner of the Fico credit score. The credit bureaus sell their own scores, marketing them with no visible disclosure that they are not the scores that lenders use. These bogus scores are deceptive and bear little resemblance to the genuine scores available at MyFico.com.
The Right Credit Repair Set Up
So, if you want to benchmark your scores, get the scores that count. Ah, but there is a twist. Although you should get your scores from Fair Isaac, their credit reports are the least useful for credit repair. So, I’m sorry to say, but if you really want to do it right buy your scores from Fair Isaac and a good tri-merged report for credit repair information purposes.
Proof Reading for Credit Repair
Once you have your credit reports it’s time to put on your reading glasses and get down to the business of squinting through all of the data that the credit bureaus attribute, often wrongly, to your life. I suggest that you clear your desk or kitchen table, get a pad of paper and a highlighter and make a note of everything you see that is even vaguely questionable. Here are some of the most significant things to look for.
Pushing it to the Limit
Credit card issuers often under report your high credit limits. This seems innocent enough; most people don’t think to look for this innocuous little tidbit, but it has the potential to knock 100 points off your score. Gasp. Check it out. The FICO scoring model places great weight on the relationship between your balance and your limit. If the credit card issuer erroneously underreports your limit your score may be artificially depressed.
Gone but not Gone
Another problem often overlooked are accounts that have been closed and paid but continue to report as open with balances. This is very common and can overstate your current debt load. It is not unusual to spot two or three of these accounts, ranging from mortgages to little store cards. You can easily eliminate these obsolete accounts for a nice little credit repair boost.
Ditching the Dupes
Duplicate accounts are as common as dandelions in the spring, and like old closed accounts that report as open, these bothersome little pests can put a dent in your scores. These accounts appear for a variety of reasons usually stemming from creditors reporting methods and occasional account number changes. Look carefully for these redundant accounts and remove them.
Collections are Iffy
Collections are the most questionable accounts on your credit report. Collectors buy, sell, and even trade debt regularly. Collectors that do not own a collection account, per FTC Fair Credit Reporting Act Staff Opinion Letters, must cease reporting that account. Unfortunately there are no incentives for them to do so, and hence these old erroneous collections can linger forever. Challenge them as part of your credit repair effort.
The Student Loan Solution
If you have student loans that have slipped into default it is time to make peace with your lender. Student loans are different from every other debt. There is no statute of limitation for collection of student loans and hence there is no hope of waiting until they go away. In fact, the situation will get worse with every day you delay. The good news is that you have awesome legal rights when it comes to your student loans including easy rehabilitation and consolidation programs. Call the Student Loan Ombudsman at (877) 557-2575. They are on your side.
Credit Repair Lifeline
Is this too much to handle? If you are too busy to manage your own credit repair project, hire a credit repair professional. This is far too important to ignore. You can’t afford to delay your credit repair project. Every single point on your credit score has an impact on your life, so take care of your credit and your credit will take care of you. Good luck!
Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.
Credit repair is all about knowledge, and your credit reports are the key. There are three credit bureaus, Experian, Equifax, and TransUnion, and they each provide their reports in a different format. In addition, there are many tri-merged reports available which blend the information from all three credit bureaus in a different format. The tri-merged reports are designed to be user friendly and may be your best bet for credit repair.
The Real Score
There is another credit repair resource that gets less notice, but is arguably the most important. This resource is MyFico.com the website for Fair Isaac Corporation the creator and owner of the Fico credit score. The credit bureaus sell their own scores, marketing them with no visible disclosure that they are not the scores that lenders use. These bogus scores are deceptive and bear little resemblance to the genuine scores available at MyFico.com.
The Right Credit Repair Set Up
So, if you want to benchmark your scores, get the scores that count. Ah, but there is a twist. Although you should get your scores from Fair Isaac, their credit reports are the least useful for credit repair. So, I’m sorry to say, but if you really want to do it right buy your scores from Fair Isaac and a good tri-merged report for credit repair information purposes.
Proof Reading for Credit Repair
Once you have your credit reports it’s time to put on your reading glasses and get down to the business of squinting through all of the data that the credit bureaus attribute, often wrongly, to your life. I suggest that you clear your desk or kitchen table, get a pad of paper and a highlighter and make a note of everything you see that is even vaguely questionable. Here are some of the most significant things to look for.
Pushing it to the Limit
Credit card issuers often under report your high credit limits. This seems innocent enough; most people don’t think to look for this innocuous little tidbit, but it has the potential to knock 100 points off your score. Gasp. Check it out. The FICO scoring model places great weight on the relationship between your balance and your limit. If the credit card issuer erroneously underreports your limit your score may be artificially depressed.
Gone but not Gone
Another problem often overlooked are accounts that have been closed and paid but continue to report as open with balances. This is very common and can overstate your current debt load. It is not unusual to spot two or three of these accounts, ranging from mortgages to little store cards. You can easily eliminate these obsolete accounts for a nice little credit repair boost.
Ditching the Dupes
Duplicate accounts are as common as dandelions in the spring, and like old closed accounts that report as open, these bothersome little pests can put a dent in your scores. These accounts appear for a variety of reasons usually stemming from creditors reporting methods and occasional account number changes. Look carefully for these redundant accounts and remove them.
Collections are Iffy
Collections are the most questionable accounts on your credit report. Collectors buy, sell, and even trade debt regularly. Collectors that do not own a collection account, per FTC Fair Credit Reporting Act Staff Opinion Letters, must cease reporting that account. Unfortunately there are no incentives for them to do so, and hence these old erroneous collections can linger forever. Challenge them as part of your credit repair effort.
The Student Loan Solution
If you have student loans that have slipped into default it is time to make peace with your lender. Student loans are different from every other debt. There is no statute of limitation for collection of student loans and hence there is no hope of waiting until they go away. In fact, the situation will get worse with every day you delay. The good news is that you have awesome legal rights when it comes to your student loans including easy rehabilitation and consolidation programs. Call the Student Loan Ombudsman at (877) 557-2575. They are on your side.
Credit Repair Lifeline
Is this too much to handle? If you are too busy to manage your own credit repair project, hire a credit repair professional. This is far too important to ignore. You can’t afford to delay your credit repair project. Every single point on your credit score has an impact on your life, so take care of your credit and your credit will take care of you. Good luck!
Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.
Tuesday, September 16, 2008
Credit Repair and Your New Life
Credit Repair and the Power to Change
Today is a good day to make a fresh start. There are a million ways to freshen up your life, organize your finances, and start getting your credit into shape. It doesn’t matter what your credit looks like at the moment. If you start your credit repair effort today you will reach your goals before you know it. All you need to do is put one foot in front of the next. Let’s get started. It’s a new day.
Putting Everything in its Place
Take a moment to evaluate your situation. An organized life is the foundation of credit repair success. Get a nice clean pad of paper and a pen and list all of your obligations. If you are ready for a fresh start you need to leave the unmanageable financial stress behind you. What does your list of monthly obligations look like? Do you need everything on the list? What can you do without? Think about reducing your monthly expenses. Credit repair and budgetary balance go hand in hand.
Getting Organized
Cutting back on your expenses can be difficult. For many people it can be an emotional challenge. But if you are really sick and tired of straining to make ends meet you will find a way. There is great strength in facing the reality of your own life and living within your means. It’s time to think outside of the box. You might be surprised to discover how well things will work out.
Some Cool Life Changing Tips
Your biggest expenses are probably your rent and your car payment. How much rent do you pay? Have you checked out other apartments or houses in your area? The market has changed a lot in the last year. There are lots of great properties available these days at bargain prices. You may save a bundle and get a great new place. How about your car? Take a ride to the local dealer and ask what they can do to trade you into a lower payment. You might be surprised what a good auto finance person can do. You could save some real money and still be rolling in style.
Credit Repair Clean Up Time
Once you are comfortable with your monthly payments it’s time to clean up your credit reports. Credit repair rule number one, give yourself the benefit of the doubt. Don’t make the mistake of believing that because you see it in writing that it is true. Credit reports are notoriously inaccurate. If you see derogatory information on your credit report that is even remotely questionable you should challenge it. If you have doubts about the credit repair process call a credit repair professional.
Building New Credit for Your Future
Your credit scores are based on the positive and the negative. A good dose of credit repair can go a long way towards getting rid of derogatory information. But without positive credit you won’t reach your credit score goals. If you don’t have open accounts you should open at least two new credit cards. If you have trouble getting approved at the moment, open a couple of secured cards. You won’t be denied and they are great credit repair and score building tools.
Making Your Credit Work for You
Once your credit repair program is underway, the old negative information is falling off, and you have your new credit cards open, it’s time to work the system to insure that your credit scores are going the right direction, up. It’s easy. Here is the key. Keep those new cards active every month and keep the balances below twenty percent of the limit. Read that again, if you have a $500 limit, keep the balance under $100, that’s twenty percent of your limit. Watch the magic happen.
Credit Repair and Building Wealth
So, you’ve gotten your expenses down, your bills are all being paid on time, and your credit repair is paying off. Now it’s time to take the next step. It’s time to start saving. You’ve been writing checks and paying your creditors every month. Open a saving account and start paying yourself for a change. Set aside something just for you and start building wealth. This is the most empowering thing you can do. Savings gives you power and strikes the death blow against financial stress.
It’s a Great Day
Make today a great day. There is nothing better than putting your feet on the right path. Can you feel the relief just thinking about it? Organize your life, evaluate your obligations, streamline your expenses, and put your credit repair plan in to action. Your life will change right before your eyes. You can do it! Good luck!
Today is a good day to make a fresh start. There are a million ways to freshen up your life, organize your finances, and start getting your credit into shape. It doesn’t matter what your credit looks like at the moment. If you start your credit repair effort today you will reach your goals before you know it. All you need to do is put one foot in front of the next. Let’s get started. It’s a new day.
Putting Everything in its Place
Take a moment to evaluate your situation. An organized life is the foundation of credit repair success. Get a nice clean pad of paper and a pen and list all of your obligations. If you are ready for a fresh start you need to leave the unmanageable financial stress behind you. What does your list of monthly obligations look like? Do you need everything on the list? What can you do without? Think about reducing your monthly expenses. Credit repair and budgetary balance go hand in hand.
Getting Organized
Cutting back on your expenses can be difficult. For many people it can be an emotional challenge. But if you are really sick and tired of straining to make ends meet you will find a way. There is great strength in facing the reality of your own life and living within your means. It’s time to think outside of the box. You might be surprised to discover how well things will work out.
Some Cool Life Changing Tips
Your biggest expenses are probably your rent and your car payment. How much rent do you pay? Have you checked out other apartments or houses in your area? The market has changed a lot in the last year. There are lots of great properties available these days at bargain prices. You may save a bundle and get a great new place. How about your car? Take a ride to the local dealer and ask what they can do to trade you into a lower payment. You might be surprised what a good auto finance person can do. You could save some real money and still be rolling in style.
Credit Repair Clean Up Time
Once you are comfortable with your monthly payments it’s time to clean up your credit reports. Credit repair rule number one, give yourself the benefit of the doubt. Don’t make the mistake of believing that because you see it in writing that it is true. Credit reports are notoriously inaccurate. If you see derogatory information on your credit report that is even remotely questionable you should challenge it. If you have doubts about the credit repair process call a credit repair professional.
Building New Credit for Your Future
Your credit scores are based on the positive and the negative. A good dose of credit repair can go a long way towards getting rid of derogatory information. But without positive credit you won’t reach your credit score goals. If you don’t have open accounts you should open at least two new credit cards. If you have trouble getting approved at the moment, open a couple of secured cards. You won’t be denied and they are great credit repair and score building tools.
Making Your Credit Work for You
Once your credit repair program is underway, the old negative information is falling off, and you have your new credit cards open, it’s time to work the system to insure that your credit scores are going the right direction, up. It’s easy. Here is the key. Keep those new cards active every month and keep the balances below twenty percent of the limit. Read that again, if you have a $500 limit, keep the balance under $100, that’s twenty percent of your limit. Watch the magic happen.
Credit Repair and Building Wealth
So, you’ve gotten your expenses down, your bills are all being paid on time, and your credit repair is paying off. Now it’s time to take the next step. It’s time to start saving. You’ve been writing checks and paying your creditors every month. Open a saving account and start paying yourself for a change. Set aside something just for you and start building wealth. This is the most empowering thing you can do. Savings gives you power and strikes the death blow against financial stress.
It’s a Great Day
Make today a great day. There is nothing better than putting your feet on the right path. Can you feel the relief just thinking about it? Organize your life, evaluate your obligations, streamline your expenses, and put your credit repair plan in to action. Your life will change right before your eyes. You can do it! Good luck!
Tuesday, September 9, 2008
Credit Repair Quick and Easy Tune Up
Your Credit Score Matters
One little number determines the interest rate you pay on every loan you take. And your interest rate determines your payment, thereby impacting your budget and the quality of your life. This is important. Every point of your credit score matters. So pay attention. Credit repair can pay dividends that last for years to come.
Don’t be Silly
Too many people ignore their credit. This is a big mistake. Small precautionary measures can make major differences in your credit scores, just as silly oversights can plunge your scores into negative territory just when you need them the most. It does not matter if your credit is good or bad. Little changes in your behavior prior to applying for a loan can make life-changing differences in your life for many years to come. It makes perfect sense. A once of credit repair prevention is worth a pound of cure.
Look at your Credit Reports
Knowledge is power. And in the case of credit repair, knowledge is money. Before you apply for a loan take the time to see what a lender will see. The credit reporting system is seriously deficient. Quality control is sacrificed to cost saving at the credit bureaus daily. Congress recognized this unfortunate fact and mandated free access to your three credit reports once every twelve months so that you could catch and correct inevitable errors. Get it? You must be vigilant.
How to Get Your Credit Scores
Lenders base their lending decisions on credit scores. But not just any scores. The credit bureaus sell a special credit score to lenders called the FICO score. The credit bureaus however, do not sell these important scores to consumers. If you purchase credit scores from the credit bureaus you will be buying their own proprietary scores that have no resemblance to FICO scores. Ouch! But have no fear. Go to the website of Fair Isaac Corporation, the inventor of the FICO score model where you can purchase all three FICO scores for fifty dollars total. Not cheap, but it is an investment in your own life.
The Credit Repair Deep Freeze
If you are getting a loan in the near future now is the time to limit your credit activity. New accounts will hurt your scores, at least temporarily, and inquiries won’t help either. Try to remain alert. Many people make the error of buying new furniture before closing on their new mortgage, and financing the whole package. This could cost you fifty points on your score. And watch out for store card point-of-purchase offers. When a clerk asks if you want to save money by opening a new account, just say no. It’s great to save money, but if you need your credit scores it’s best to lay low for the moment.
Get Your Balances Under Control Now
Credit cards have a major impact on your credit scores. All of your accounts matter, but those little pieces of plastic in your wallet can swing your credit score dramatically in either direction, so take heed. If you make the mistake of applying for a loan at the unfortunate moment that a credit card is maxed out your scores may suffer a penalty of over one hundred points. That’s right! So now is the time to get those balances down. The optimal balance for credit repair purposes is under 20% of the limit.
Credit Repair and Rapid Rescore
If you have made mortgage application and been told that your scores are too low, there is still hope. Mortgage brokers have access to an amazing credit repair tool called Rapid Rescore. You cannot do this yourself. This process was developed exclusively for mortgage originators to allow potential homebuyers a chance to prop up their scores at the critical moment. To the best of my knowledge no other industry offers this awesome opportunity. Here’s how it works.
Rapid Rescore Credit Repair Magic
If, after making mortgage application, you realize that you should have paid down your credit card balances, there is still time. Just contact your credit card company and tell them that you want to pay down your balance in the quickest possible way. They will instruct you accordingly. Once the payment has been processed, contact the credit card company and ask for a balance confirmation letter. Give this balance letter to your mortgage broker to do a Rapid Rescore. Within about three days your scores will be recalculated based on the new lower balances. Credit repair magic!
Calling a Credit Repair Professional
If in doubt, call a credit repair expert. There are a wide variety of ways to bolster your credit scores. Hiring a credit repair professional will insure that every possible option is considered and pursued in a proper and effective manner. When every point counts make sure you take the right steps and you will come out ahead!
Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.
One little number determines the interest rate you pay on every loan you take. And your interest rate determines your payment, thereby impacting your budget and the quality of your life. This is important. Every point of your credit score matters. So pay attention. Credit repair can pay dividends that last for years to come.
Don’t be Silly
Too many people ignore their credit. This is a big mistake. Small precautionary measures can make major differences in your credit scores, just as silly oversights can plunge your scores into negative territory just when you need them the most. It does not matter if your credit is good or bad. Little changes in your behavior prior to applying for a loan can make life-changing differences in your life for many years to come. It makes perfect sense. A once of credit repair prevention is worth a pound of cure.
Look at your Credit Reports
Knowledge is power. And in the case of credit repair, knowledge is money. Before you apply for a loan take the time to see what a lender will see. The credit reporting system is seriously deficient. Quality control is sacrificed to cost saving at the credit bureaus daily. Congress recognized this unfortunate fact and mandated free access to your three credit reports once every twelve months so that you could catch and correct inevitable errors. Get it? You must be vigilant.
How to Get Your Credit Scores
Lenders base their lending decisions on credit scores. But not just any scores. The credit bureaus sell a special credit score to lenders called the FICO score. The credit bureaus however, do not sell these important scores to consumers. If you purchase credit scores from the credit bureaus you will be buying their own proprietary scores that have no resemblance to FICO scores. Ouch! But have no fear. Go to the website of Fair Isaac Corporation, the inventor of the FICO score model where you can purchase all three FICO scores for fifty dollars total. Not cheap, but it is an investment in your own life.
The Credit Repair Deep Freeze
If you are getting a loan in the near future now is the time to limit your credit activity. New accounts will hurt your scores, at least temporarily, and inquiries won’t help either. Try to remain alert. Many people make the error of buying new furniture before closing on their new mortgage, and financing the whole package. This could cost you fifty points on your score. And watch out for store card point-of-purchase offers. When a clerk asks if you want to save money by opening a new account, just say no. It’s great to save money, but if you need your credit scores it’s best to lay low for the moment.
Get Your Balances Under Control Now
Credit cards have a major impact on your credit scores. All of your accounts matter, but those little pieces of plastic in your wallet can swing your credit score dramatically in either direction, so take heed. If you make the mistake of applying for a loan at the unfortunate moment that a credit card is maxed out your scores may suffer a penalty of over one hundred points. That’s right! So now is the time to get those balances down. The optimal balance for credit repair purposes is under 20% of the limit.
Credit Repair and Rapid Rescore
If you have made mortgage application and been told that your scores are too low, there is still hope. Mortgage brokers have access to an amazing credit repair tool called Rapid Rescore. You cannot do this yourself. This process was developed exclusively for mortgage originators to allow potential homebuyers a chance to prop up their scores at the critical moment. To the best of my knowledge no other industry offers this awesome opportunity. Here’s how it works.
Rapid Rescore Credit Repair Magic
If, after making mortgage application, you realize that you should have paid down your credit card balances, there is still time. Just contact your credit card company and tell them that you want to pay down your balance in the quickest possible way. They will instruct you accordingly. Once the payment has been processed, contact the credit card company and ask for a balance confirmation letter. Give this balance letter to your mortgage broker to do a Rapid Rescore. Within about three days your scores will be recalculated based on the new lower balances. Credit repair magic!
Calling a Credit Repair Professional
If in doubt, call a credit repair expert. There are a wide variety of ways to bolster your credit scores. Hiring a credit repair professional will insure that every possible option is considered and pursued in a proper and effective manner. When every point counts make sure you take the right steps and you will come out ahead!
Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.
Tuesday, September 2, 2008
Credit Repair and the End of Authorized User Accounts
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.
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.
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