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Proposed amendments to Regulation Z

National Mortgage Professional
Dec 08, 2008

Getting involved in credit repairBrian C. Abercredit bureaus, Credit Repair Organizations Act, Fair Credit Reporting Act The credit industry, as a whole, is one of the most important industries in existence. With loans, insurance and even employment taking individuals' credit pictures into consideration, the credit industry is getting bigger every day. The credit bureaus make money each time credit information is pulled. People with low scores or damaged credit have their credit pulled dramatically more often than those with good credit. Credit bureaus are fundamentally opposed to credit repair companies for one simple reason, it costs them money! Think about it for a minute: If a consumer dispute by a consumer or a credit repair company is going to add overhead to the credit bureaus operations and if the dispute process is successful, then the consumer will not be applying for credit as often. With this reducing the credit reports sold by the credit bureaus, is it any wonder that the credit bureaus would create bad press about credit repair companies? A lot of the negative stigma in the credit industry about credit repair companies is hyped up by none other than the credit bureaus themselves. You would think that instead of putting all of this time and effort into defaming an entire industry that they would just learn how to do their job better. As more than 79 percent of consumers have errors on their credit reports, it shows that the credit bureaus only do their job right less than 21 percent of the time. While some Mortgage Brokers handle the credit repair themselves, others wish to save themselves the time and inundating processing by referring them to a professional credit repair company. These businesses or credit services organizations are helping consumers get back on track by assisting in the removal of unverifiable and inaccurate negative items from their credit reports. Brokers tend to prefer credit repair companies that allow 24 hours a day, seven days a week tracking for both them and the client to maintain a grasp on when they are ready for prime financing. Consider this: As a loan originator, you are paid to originate loans. The more loan volume you write, the more money you make. A simple business concept called "leverage" dictates that the way to make the most money is to spend your time doing the things that generate the most income for your business. For you, that means meeting with clients and taking applications—not processing loans, handling the underwriting, or repairing your client's credit score. Not to mention that many brokers who attempt to do credit repair on their own do not realize that all the advice they give or administer must be 100 percent correct or they are violating the Credit Repair Organizations Act. A complete understanding of the ever-changing laws, understanding how the credit bureaus operate and an arsenal of aggressive tactics are crucial in providing effective credit repair. Focus on the things that pay you the most money for the time you spend doing them and delegate the other tasks to people who are proficient at those activities. If you are going to attempt the credit repair for yourself or your clients, then do your homework! I recommend going to BrokenCredit.com and figuring out the best way to dispute your negative item. Make a plan and stick to it, as credit repair is not something to undertake halfheartedly. It all comes down to whether or not the derogatory items are meeting the requirements within the Fair Credit Reporting Act to be continuously reported; if they aren't or they're not verified within a reasonable amount of time, then by law, they must be deleted. As is apparent in today's market, every industry has people who do not operate in the most professional manner. Operation Clean Sweep has done a great job with removing the unscrupulous companies and also making sure that all companies currently operating are meeting the federal and state requirements. Another organization, the National Association of Credit Services Organizations (NACSO), is spearheading the issue and aiding in the prevention of fraudulent activity within the credit services industry through self-regulation. If the company you are considering working with has the NACSO "Standards of Excellence" seal displayed on their Web site, then they have passed a rigorous application and enrollment process. NACSO does not compare businesses against one another, but rather evaluates businesses against their Standards of Excellence—and their standards clearly speak to the quality and capability of a credit repair company. So don't believe the hype the credit bureaus would like you to believe. Credit repair is a necessary tool for the capable and attentive loan originator. As long as you make sure the company you are utilizing is compliant with the laws, posts recent effective results and is, preferably, a member of NACSO, then you and your clients should be well taken care of. You don't send your clients to a credit repair company because there is nothing else do with them, but more so because you care enough to do so. Brian C. Aber is a senior account executive with HTDI Financial and sits on the board of advisors for the National Association of Credit Services Organizations (NACSO). He can be reached at (877) 877-4834, ext. 704, e-mail brian@htdifinancial.com or through his Web site, www.increaseyourloans.com.
Published
Dec 08, 2008
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