Thursday, November 29, 2012

Credit Repair Myths Explained

The following 5 myths about credit repair that need to be understood without hype or sales pitch before paying a dime:
  1. "Credit repair companies are scam artists out to fleece the consumer."  Not true.  Reputable companies that are members in good standing with the congressional lobbying and representative group for this industry with the National Association of Credit Services Organization are well above board.  The industry group maintain a strict adherance to laws and governance of their industry to make sure there are no scams taking place and that scammers are identified and not allowed in their group.  Of the seemingly thousands of credit repair companies registered in the US, there are less than 200 members of NACSO in good standing.  Look for NACSO membership before engaging a credit repair company or law firm.
  2. "Credit repair companies that charge up front are not allowed to do so and any company that does so is a scam."  Not true either.  Under the guidelines established, credit services organizations or affiliated representatives that operate as for-profit enterprises can not charge up front for services.  Nonprofit organizations that provide services are allowed to charge for services in conjunction with financial education or counseling services and quite legitimately charge for their services such as the United Credit Education Services organization has done for the last 10 years.
  3. "Any credit repair company that promises to remove derogatories is just doing what you could do yourself."  Technically true.  But you would have a lot of work to do on your own. First you would have to sign up with your bank or credit card company to pay to pull trimerge credit reports each month or pay for continuous monitoring and keep tabs on all 3 bureaus of your credit report every month.  Then for every derogatory that shows up, you would have to generate a letter of dispute, sign it with evidence of your dispute and your authenticity of submitting the specific dispute, and send the letters to each specific bureau each time some derogatory shows up.  Then you have to mail them off, physically await reply and repeat this process every month to remain vigilant and hope you don't miss some derogatory, or that you don't forget to do this one month when you're on vacation or busy  working or travelling.  There are a few reputable companies that provide this service with automated software that does all this for you (at
  4. "Any disputed item still counts against you for buying a home by underwriting in residential mortgage applications."   True only if the derogatory is not erroneous and there is a balance still outstanding.  If there remains a balance outstanding on a derogotary account (even if it is still outstanding from a charge off that has been removed from the credit report) as well as the monthy payment do count in the debt to income ratio that is used to calculate the loan applicant's ability to meet the borrower's total debt to income ratio for underwriting.  Any loan officer who doesn't factor this should know better as your originator and should not submit a loan application to underwriting without first factoring total debts (including those that are not showing up or are possibly erroneous and should assume them to be included for the underwriting formula) to ensure a smooth closing.  If the debts are erroneous, they will not count, but an originator would be wise to inform the borrower or applicant of derogatories reporting and include them in the total debt to income.  So it really does not matter, and the fact that erroneous derogatories are disputed and deleted, only elevates the credit score of the applicant. 
  5. The final myth about credit repair services by nonprofits or as part of credit counseling services is that "legitimate credit repair services are free or close to free when the borrower does the work themselves and stays vigilant with their credit reports."  Completely false!   Any legitimate credit repair service will charge you upwards of a few hundred dollars to a few thousand dollars (usually attorneys charging minimum fees for their billable time) for a legitimate service.  The most reputable I would recommend to family and friends is United Credit Education Services which only charges $499/yr (or $199 up front and $39/month for a year's service).
To learn more contact a United Credit Education Services representative at or at 301-259-1721.


  1. It is true that not all credit repair companies are scam artists. There are many credit repair companies that will really help you in resolving your credit problems. But the main aim to avoid the credit repair agencies is to save one’s hard earned money. If you go for self help credit repair tips to resolve your credit situation, then you won’t have to pay any fees to anyone. Yes, it is true that it will take quite some time to get your scores improved if you take help of the self help credit repair tips. Now it will be completely your discretion as to which option you would like to go in for.

  2. I personally would go with a service that is professional and fairly priced like United Credit Education Services at $399 for a year's service to turn around anyone's credit score and keep it the highest possible.

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  4. Credit repair is critical to saving money on insurance, loans, and credit cards, but that's not the only reason to repair your credit.
    Credit Repair

    1. Agreed! I see it every day and know first hand that many people over 50 looking for work are also scrutinized in background screens that weed out high risk/poor credit candidates.

  5. Credit repair is critical to saving money on insurance, loans, and credit cards, but that's not the only reason to repair your credit. A better credit score opens up new employment opportunities, even promotions and raises with your current employer. If you dreams of starting your own business or just want the security of knowing you can borrow money when you want to, you should repair your credit sooner rather than later.

  6. I agree. The ease with which funds can be allocated for applicants with a 730+ FICO score is incredible. They are basically no-doc loans for any purpose. While someone with less than 730 FICO has to submit a business plan, 5 years of financials on the business being acquired to show cash flows from operations are high enough to service the loan, comparable sales of real estate in the area, etc.