This post is the third in a series where we are examining the use of credit repair companies.
Millions of Americans who have gone through the short sale or foreclosure process are dealing with credit issues today, and many of these are people who traditionally have had great credit. Dealing with the restoration of their credit is new.
I want to see whether or not "credit repair" is really something our recovering customers should pursue, or if it's just an evil industry geared to taking advantage of people undergoing tough times.
Examining The Benefits Of Using Credit Repair Companies
I introduced a real client ("John Smith," a fictitious name) that is currently working with one of the credit repair companies that has been recommended to me by my peers.
Once you have caught up to our present post, you might find "John's" progress illuminating.
Choosing To Work With Credit Repair Companies
Of all the credit repair companies that we reviewed, John chose to hire the US Consumer Credit Restoration Association and specifically purchased their Platinum level service in order to expedite the process.
John hopes to buy a home in Tallahassee as soon as possible in order to take advantage of low interest rates before they return to historically normal levels. If they are able to save him six months or more in the credit restoration process, then he feels the fee he has paid them is very small considering how much he will save in mortgage interest over time.
As a reminder, John first purchased a credit report on April 1, 2013 and was advised that his credit score was 568.
His goal is to add 100 points to his credit score as soon as possible so that he can qualify for a home loan.
Currently, the USCCRA has sent out about 80 letters on his behalf, and they have uncovered numerous accounts that were reporting less than favorable information about his past. They have initiated disputes on many of these, and this is where the whole credit repair business gets interesting.
I am not an expert in credit repair, and frankly I do not wish to become one. But I was able to see some of the letters being sent to John by lenders, and often times they advised him to do something that would have not been in his best interest. The people at the USCCRA told John to send all communications first to them, and they would prepare the responses.
I believe John's next credit report update (in about 2 weeks) is going to demonstrate immediate improvement, as the USCCRA will hold the lenders to the letter of the law (the Fair Credit Reporting Act). Over the next four or five months, I'm starting to believe that John's credit score will return to "lend-able" levels.
John is anxiously awaiting his next report, hoping to see a movement north of 600. Considering he typically had a credit score above 700, you can imagine his frustration.
In our next blog post in this series about the value of credit repair companies, we will examine John's "2 Month" credit report (the changes that occurred after hiring the USCCRA).
Joe Manausa, MBA is a 27 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.