In the wake of the credit market meltdown, the need for higher credit scores to meet the new conditions of the market is painfully obvious. The days of 100% financing have long past and every day you hear of lenders making the conditions for loan approval tighter and tighter. Due to these increased restrictions more and more potential clients are being referred to and placed aside as “dead” leads. The astute loan originator should be looking to build a pipeline of future prospects and assist them with their credit picture for a better chance at a future loan approval.
Think about it for a moment: How many people have you turned away recently because of derogatory trade lines? Instead of tossing aside these seemingly “dead” leads, assist them with their credit. Instruct them to work on it after doing the proper research, or hire a reputable credit repair company that has a high level of functionality and producing proven and effective results.
If you wish to help them yourselves or request them to do repair on their own credit refer them to free sites with a ton of information that can assist them with the dispute process. BrokenCredit.com is one of the leading “do-it-yourself” credit repair websites and has been providing free information about all subjects having to do with credit. BrokenCredit.com has over 1,200 articles that have been written about different credit-related subjects including: credit reports, credit scores, debt settlement, mortgage loans, loan modifications, short sales, avoiding foreclosure, etc…
If you decide to utilize a credit repair company then do your homework first. They should obviously be able to provide you with recent effective results, which some post directly on their website. The company should also offer the ability for you to enroll as a “broker” or “affiliate” of theirs and give you a username, password, and a backoffice to track the client’s progress. Many loan originators appreciate an automatic e -mail update to keep them posted on whether or not the client is ready for prime financing.
You will want to make sure the company you choose is charging the clients within the guidelines of the law. Charging a total upfront fee is a violation of the Credit Repair Organizations Act (CROA) and some have disguised this violation with “membership “or “consultation” fees. Unless they are exempt from the CROA then payments with an initial setup charged after the setup has been performed and a non-obligatory monthly fee billed in arrears is the preferred form of payment. Some helpful tools in researching potential credit repair referral programs is by seeing if they are members the National Association of Credit Services Organizations (www.nacso.org).
The National Association of Credit Services Organizations (NACSO) is the resource to turn to for objective, unbiased information on credit repair companies. If the company you are contemplating working with has the NACSO “Standards of Excellence” seal the n they have passed a meticulous application for their enrollment process. Requiring the company to meet these high levels of standards assists the prevention of fraudulent activity throughout the credit services industry. You will be able to identity a member by the logo appearing on the company’s homepage.
Another point to touch on is how they will be accepting clients into their program. Some credit repair companies will take on any client at any time, no matter how recent their derogatory items are and how tough their financial situation is. A reputable and honest credit repair company will not take on a client without first making sure they have derogatory items with at least six months since the “date of last activity”, they can afford their current expenses, and they can afford the services of the credit repair company. If they don’t meet these three minimum requirements then they are not viable candidates for credit repair and should wait until they are financially stable to take on the commitment.
A successful credit repair company is an effective credit repair company so having proven results is absolutely mandatory. What it all comes down to is whether or not the negative items on the credit report are meeting the requirements that are outlined by the law, the Fair Credit Reporting Act (FCRA). If they aren’t or they’re not verified within a reasonable amount of time, by law, they have to be deleted.
Whether you decide to handle it yourself with the client, or outsource the work to your affiliated credit repair company, make sure that the proper research has been done and the client’s best interest is the main focus. The market will have to change eventually and those who have the highest level of patience and perseverance will find themselves happy and successful!
Brian C. Aber
Vice President of Marketing