Improve your client's credit scores and reclaim dead filesSherene Costanzocredit restoration, debt management, credit scores
Do you ever wonder what happens to those dead files you throw to
the side because the potential client does not qualify for a loan
due to a low credit score? Are those potential clients ever
financed? Was there any way you could benefit from those files you
tossed aside? The client only needed a few more points!
An individuals credit score is a significant ingredient when
financing a home. A person can improve their credit rating in
several ways. Of course, this wont happen overnight, but it can be
done in as little as 30 days, and unlike re-scoring, no proof is
required. The client can go through the credit restoration process,
a process that can be handled by a credit restoration company. For
most clients, this process can be time-consuming as well as
confusing. In that case, using a credit restoration company would
be extremely beneficial to them.
The consumer is protected under the Fair Credit Reporting Act, a
law that states the consumer has the right to question any
unverifiable, inaccurate or erroneous information reported on their
credit file with any of the three major credit bureaus (Equifax,
Experian, TransUnion). This includes: collections, late payments,
charge-offs, judgments, tax liens, foreclosures, garnishments and
bankruptcies. The credit bureaus have 30 days to verify the account
in question with the original creditor. If the original creditor
does not verify the account within 30 days, the item or late
payments must be corrected or deleted from the consumer's credit
file. At this point, the score will be adjusted immediately with
the three major credit bureaus.
The mysterious credit score
The credit scoring system became popular in the 1980s to aid
lenders with measuring the risk associated with a borrower. Twenty
years later, the scoring system remains strong among the home
lending industry. The score can fluctuate daily and can affect a
borrower's interest rate or determine whether they qualify for the
loan at all. The Equal Credit Opportunity Act protects consumers
from discrimination when it comes to credit scoring. Scoring models
are prohibited from using factors, such as race, sex, marital
status, nationality or religion.
Although the score appears mysterious, it is actually a complex
mathematical formula of several factors that analyzes an
individuals credit report. In most credit scoring models used,
these factors are assigned a weight that measures how significant
they are in predicting credit-worthiness and risk to the lender.
Knowing what these factors are is the first step to improving an
individual's credit rating. These include credit history, payment
history, account balances and amount of debt outstanding, number
and types of accounts established, derogatory accounts, and
inquiries for new credit. Next, it is important to determine which
of these factors may be impacting the score. There are several ways
that a client can improve these categories. Positively changing
these factors will trigger the score to increase.
It is practically impossible to determine how much one specific
action will affect the score. The credit score is based solely on
the information contained in an individual's credit report. A
change of one factor can influence the score, however, the amount
of impact depends on how it relates to other factors and history
included in the report. For example, a person with a long credit
history and several positive accounts will be affected less by five
late payments than a person who has just recently established
credit, only has five accounts total and all five accounts
reporting late. The key is to change the factors that help increase
the score, which in turn, will increase the chances of boosting the
score.
However, it is extremely important to remember that building a
good credit history over time by paying bills on time, having a
variety of accounts established and keeping your balances below 40
percent of your credit limits, is your best assurance to having and
maintaining excellent credit.
Benefits to the loan officer
How can this process benefit you as a loan officer? Its very
simple! Instead of tossing these files to the side, make them
potential clients by referring them to a reputable credit
restoration company. Make sure to follow up with them; this will
assure that they will come to you when they are ready for
financing. There is no guarantee you will close a loan with any
person, but with a minimal amount of effort you can set potential
clients on the path to credit repair. The more you refer, the more
chances you have of gaining new clients. Just do the math! For
example, you average a commission of $1,000 per loan. If you refer
10 people per month to a credit restoration company and five of
them close a loan with you, that is five extra loans a month. You
can earn an extra $5,000 per month. Its just that simple!
As with any business, it is very important to use a reputable
company that you know provides excellent service, is honest, loyal,
reliable and trustworthy.
Sherene Costanzo is vice president of Credit Consultants
Inc. She can be contacted by phone at (888) 522-7007 or e-mail
[email protected].
