Considering Credit Repair

Credit repair is on many people’s minds these days. Lender’s everywhere have clamped down on their lending guidelines. A significant number of people who had no problem getting financing even one year ago are discovering there are no options available to them today. More and more people are turning to credit repair to optimize their credit scores. If you are considering starting a credit repair effort you may be wondering if you should attempt it on your own, or hire a credit repair service to manage the process. It’s worth considering.

Measure the Complexity

There can be great satisfaction from undertaking a task and completing it successfully. Many people would rather repair their own automobile than hire a mechanic. Do it yourself opportunities are everywhere and range from simple tasks like preparing your own dinner to more complex jobs like building your own home. How much do you want to undertake? How much time do you have? Are you up to the job? Whatever the project, you should consider the complexity before deciding.

It Can be Done

Do it yourself credit repair is manageable, but it may be more complicated than you think. Given the enormous importance of your credit you owe it to yourself to examine the road ahead before embarking on your journey. You do not want to find yourself half way to the goal and unable to continue. Let’s take a few minutes and examine the credit repair road map.

Be Prepared

The first objective of credit repair is to make your credit reports as error-free as possible. Cleaning up your credit report is a unique task and involves understanding the language of the credit bureaus and the body of law that governs them. Without proper knowledge your efforts will fail. This is not an obstacle to your credit repair success, but like so many other do-it-yourself jobs you must make some effort before beginning.

More Than Meets the Eye

Many people make the mistake of thinking that credit repair is as simple as looking for unfamiliar information and asking the offending credit bureau to correct it. In fact, the vast majority of credit reporting errors will look completely familiar but still should not be present on your credit report as a matter of law. For example, let’s look at the chain of events that occur when a consumer defaults on a credit card.

A Credit Repair Case Study

If you were to cease payments on a credit card you would legally be in default on the day you missed your first scheduled payment. Typically, the creditor will turn the account over to a collector as soon as you are 180 days behind, and for accounting purposes, write off the bad debt. The collector, after meeting the legal notice obligations will report the debt to the credit bureaus, creating a new derogatory account on your report. If the collector fails to collect they are likely to resell the account to another collector who will repeat the process yet again, and so on. All of these events are based on your original legitimate failure to pay, yet is it now likely that a series of serious reporting errors have occurred. All of which can be cleaned up with a bit of knowledgeable credit repair. Let’s look.

The Issues Add Up

If you were to examine your credit report after the above events took place you would probably see three derogatory items on your report. The first would be the original creditor reporting your default along with a past due balance, the second would be the original collector, still reporting your collection, and the third would be the new collector reporting the same account again. Two of these derogatory items are erroneous.

Hidden Credit Repair Opportunities

It’s time for credit repair. Once a creditor sells a defaulted account to a collector they are no longer supposed to report a past due balance. This can be removed with a little credit repair effort. And a collector who no longer owns a debt is supposed to withdraw the reporting from your credit report altogether. Ditto on the removal. Eliminating these two errors alone can have a dramatic impact on your credit score.

Make Your Choice

The point being that these types of errors are clearly generated from genuine events and hence will be familiar, yet have no proper business on your credit report. Credit repair is very detail oriented and must be done in a patient and informed manner. If you are going to attempt the process on your own, please take the time to educate yourself. Otherwise, you may consider hiring a credit repair professional to manage the job on your behalf. Think carefully and decide wisely. You can succeed. Good luck!

Copyright © 2008 Ian Webber. All Content. All Rights Reserved.

Are you part of the sub-prime home mortgage refinance scenario? Then it’s time to take a good hard look at current trends.

Rising real estate costs

The real estate market has seen a steep rise in the price of houses – with the result that the average home buyer cannot afford to spend such a high sum on owning a new home. Even those persons who are making monthly payments towards the home mortgage refinance are finding it increasingly difficult to cope with rising prices. Interest rates have shot up, further tipping the scales against the homeowner’s favor.

Why the sudden rise?

There are many reasons why interest rates and associated real estate expenses have escalated. For starters, the sub prime market borrowers typically comprise those who have already been rejected as per other more stringent eligibility criteria in the prime market. This means the sub prime home mortgage refinance lenders offer them loans at relatively easier criteria – some of them may even imply lesser documentation and background checks on the borrower. Even those borrowers who have a relatively lower credit score maybe approved under the sub prime market home mortgage refinance lending process.

The real estate segment is hurting

Delinquencies and default patterns are at an all time high. Foreclosure and Real Estate Owned is a common phenomenon these days in the home mortgage refinance scenario. Why this is happening can be predominantly attributed to the re-adjustment in rates. Usually the sub prime home mortgage refinance lenders attract borrowers with a low promotional rate. When this rate shoots up after the promotional stage, it’s a nightmarish situation for borrowers and lenders. The borrower finds it impossible to pay up and the lender finds it virtually impossible to recover the money. This is also known as predatory lending – it’s quite similar to hunting for a prey by luring with attractive rates of interest. Once the unsuspecting customer has been caught in the web, there’s no escape and the home mortgage refinance lender extract every possible penny from the borrower. What this means from a long term perspective is that investors lose trust in the home mortgage refinance lending company. This can affect the prime market and potentially qualifying borrowers may not qualify in the prime market. This way home sales deteriorate and real estate suffers.

Growing competition

With the recent decline in home sales, most home mortgage refinance lenders are skeptical on future profit margins. They prefer to be less optimistic about the future trends in the sub prime market. However this has not stopped lenders from fiercely competing with each other. In fact, competition has now escalated because in the dwindling home mortgage refinance market, every lender wants to make a quick buck or two.

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