What you should know about Credit “Repair”.
Credit repair is a term that gets thrown around a lot. Unfortunately, there have been many practitioners that sell the “quick Fix” approach. Some of these quick fixes may actually hurt your long-term credit scores, and some get information off your record, but only temporarily.
If you want to improve your credit I suggest you tackle the problems head on.
First, deal with any erroneous information. Sometimes collections and other derogatory items are reported more than once or have an incorrect status or amount on them. Collection accounts can be sold, and each time they are sold they can create a new entry. You might not have any idea who the original creditor was. You can all and find out. Of course, keep in mind that these company’s goal is to collect the debt, and they will definitely try to do that. They may even offer you a discount to settle the debt. If you do take the deal the account will report as “Settled for less than full amount” While this is a less than perfect situation, it does end the attempt to collect, and the collection will no longer be an ongoing item. It will start to age at that point and will eventually drop off you credit completely. 2-year-old settled accounts have far effect on your credit scores than any current delinquencies.
If an account was discharged in a Bankruptcy, it should report as such. This means you no longer owe the debt, and again, it starts to age. The BK itself may stay on your credit for 10 years, and there are waiting periods for different types of loans, but it may be possible to get financing after as little as a year, depending on the circumstances. For most mortgages the waiting period is 2-5 years unless there are extenuating circumstances. Keep in mind that what you think are extenuating circumstances and what the lenders think are extenuating circumstances may be two different things. Let’s just say that they are not generous in that regard.
Your credit scores are largely based upon the most recent 2-3 years of your credit history. If you had a series of 30-day late payments due to a financial difficulty but got caught up and have made consistent payments over the last few years you may be pleasantly surprised at what your credit scores look like.
Conversely, if you have a current 30-day delinquency even on a small account you could be looking at a 50-point hit. Just bringing that account current could get you 30 of those points back.
Credit is a complex subject. Don’t be afraid to ask for help. Most mortgage professionals will be willing to take a look at your report and give you some free advice. It will be up to you to follow through, of course, but knowing where you are and which direction to go can make a big difference. I would use paid professionals only if your case is severe or if there are legal issues involved.
If you would like me to review your credit get in contact with me. Leo Linn