Credit Re Scoring Vs Credit Repair

By Kurt Real Estate Nov 23, 2019

“Credit re-scoring” is a viable option provided for consumers who have disputed, won, and/ or resolved past credit issues and subsequently need to boost their FICO scores to purchase a home. The resolution can take days, weeks or even months depending on the commitment and flexibility of the borrowers and the coaching provided by their loan officer.

Re-scoring is a 2 step methodical process developed in conjunction with and through the 3 national credit bureaus. Companies providing re-scoring services, known as intermediaries, are licensed by the bureaus to directly interface between the bureaus and the consumer/borrowers.

Step 1: The consumer must obtain written proof (on letterhead) from the creditor, with the consumer’s account number, the creditor’s representative info (name-phone number-title) and a signature so that the intermediary can easily verify the accuracy of the correspondence. The correspondence must specifically state (from the creditor) the corrective action to be taken by the bureau on behalf of the borrower. Typically it is the removal of any derogatory info presently listed on their credit report (thus dragging down their score). Upon verification by the intermediary, the changes are submitted to each bureau for correction.

Step 2: The borrower’s credit info is then updated and a new credit report complete with new scores, thus completing the re-scoring process. This happens in 5-7 days & costs $75 per derogatory item per bureau.

Why Credit Repair Firms Fail

Nine time of out ten credit repair firms do more harm than good. Credit repair firms cannot access the repository data directly, do not have the ability to interface with the bureaus directly, or to do their own investigation or issue their own updated credit reports. In other words they have no standing with the national credit bureaus. Repair companies simply file disputes (via the basic consumer model). Filing the dispute(s), temporarily raise the credit scores, often giving the borrower false hope…until the bureaus conduct their investigation. If the derogatory items are found to be valid, the credit score(s) return to the (original) lower credit scores. Now the borrower is stuck with a re-mark, entered on their report titled: “Consumer disputes bureau’s finding.”

In accordance with Fannie/Freddie/FHA regulations, that “re-mark” must be removed (before COE) and will take up to 60 days. By that time the credit repair company has collected its fee and moved onto their next victim while you’re left scrambling to save the transaction. The key to a successful re-scoring process is for a borrower to obtain a mortgage-generated credit report (not a consumer freebie from the bureaus) and begin the process 60 days before they begin searching for property.