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"We've never seen a legitimate credit-repair operation."
Steven Baker, Director, Federal Trade Commission Chicago Regional Office
What You Should Know
Credit Technologies has worked with mortgage lenders since 1990 and has seen firsthand how disreputable credit repair companies can harm borrowers and delay loan closings. We believe it is our responsibility to inform our clients about these risks.
Consumers can obtain free copies of all three credit files in minutes at AnnualCreditReport.com, and if errors are found, dispute them online at no cost. Despite the phenomenal claims made by most credit repair companies, all they do is dispute trade lines in the name of the consumer.
The filing of a consumer dispute is the only method anyone other than the creditor, a credit reporting agency, or the repository itself has to affect change in any repository file. A credit repair company cannot do anything the consumer cannot do themselves for free and faster. In fact, credit repair companies are prohibited access to Experian, TransUnion, and Equifax.
How to Obtain Your Credit Reports
Online
AnnualCreditReport.com
A Warning for Mortgage Professionals
Over the years, we have seen many audits conducted by the repositories that result in the termination of that broker or lender's access to credit data. These audits are often triggered by borrowers who, at the recommendation of credit repair companies, frivolously dispute items contained in a credit report provided to them by a mortgage broker.
The repositories monitor patterns on disputes received, matching them to recent inquiries into that consumer's credit report. Each individual repository (Experian, TransUnion, and Equifax) regularly publishes its own alerts list of mortgage companies and individuals barred access to that repository's database.
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Risk of Losing Credit Access
Due to the predominant requirement of the three-bureau merge credit report within the mortgage industry, all mortgage company end-users should be acutely aware of the ramifications of engaging in prohibited credit repair activities. Engaging in such activities may result in you or your company being added to any or all three repository alert lists, preventing access to tri-merge credit reports and severely hampering your ability to originate mortgage loans.
Before You Recommend Disputes
Before recommending your applicant disputes items on his/her credit report (either directly or through a credit repair company), talk to your credit reporting agency first. Here are a few reasons why:
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Removing an item (even if derogatory) can cause a drop in the FICO score, or worse, that item might have been part of the minimum required to produce the FICO score. Once removed, you have lost your FICO score entirely.
2
You cannot un-ring a bell. Unless you are certain of what you are dealing with and the resulting change on the credit score, have your credit reporting agency confirm your actions will provide the expected results.
3
If you are looking at a tri-merge report, you do not know what is being reported by each repository. In many cases, you cannot tell which items to dispute through which repository. The merge logic used to produce the report might be responsible for the error.
4
If your borrower disputes any trade line, that item is locked from any further actions until the dispute is resolved. It might have been possible through rescoring tools to correct the item in as little as 24 hours. This is no longer an option once a dispute is lodged.
5
There are faster options than filing a dispute, such as e-OSCAR, whereby the trade line can be updated in minutes.
Credit Repair Danger Signs for Consumers
Besides the monetary risks associated with credit repair, the actions of a credit repair company can damage your credit score. Most credit repair companies simply dispute every derogatory item appearing on your credit report. Those creditors that verify the disputed items often update the data reported to the repositories, including the reporting dates. The result of frivolously disputing trade lines often results in lowering your FICO scores.
The dispute process also means you are providing your current address to creditors, which can result in new collection contacts and phone calls.
Warning Sign
Charging Up-Front Fees in Violation of Federal Law
Many credit repair firms violate federal law by requiring up-front fees often disguised as account set-up or analysis fees. Some require you to purchase a training manual for hundreds of dollars just to access free credit repair.
Credit Repair Organizations Act, Public Law 90-321, Section 404(b): No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed.
Warning Sign
Does Not Accept Credit Cards
This is an important warning sign. It often means the firm is unable to gain approval to process credit cards (a physical inspection and positive financial history is required). Companies with questionable pasts or practices instead will often require you to pay using a third-party processing company, check by phone, ACH/direct debit, or other means which may provide less protection in the event of fraud.
Warning Sign
Web-Based Only (No Physical Location)
Do your homework on any credit repair firm before sharing confidential credit data or credit card information with them. You can verify how long their website has existed using any domain lookup tool. You will often find that although they may claim to have been in business for decades, their websites are newly formed. Many credit repair companies found on the Internet are simply reselling services provided by other companies.
The Right Way to Improve Credit
Legitimate credit improvement comes through verifiable processes. Credit Technologies Score Express service works within bureau guidelines to identify and correct errors, update trade lines, and request rapid rescores, all through documented, FCRA-compliant procedures.
Unlike credit repair companies, CTI Score Express analysts work directly with the credit bureaus and can deliver measurable results (23.9-point average FICO increase) in under 72 hours, with a verifiable paper trail.
For Lenders: Protecting Your Pipeline
When borrowers engage disreputable credit repair companies, it often results in temporary disputes that lock accounts, delay closings, and create compliance headaches. Educate your borrowers about the difference between legitimate rapid rescoring and credit repair schemes.
If you suspect a borrower has engaged a credit repair company, contact Credit Technologies at 800.445.4922. Our team can advise on the best path forward.
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