What To Know When Seeking Credit Consulting.
In general, it’s pretty easy to tell if your credit score needs some work. It is even easier to find a credit repair company that is willing to accept a monthly fee from you to help dispute the negative items that are affecting your score. Unfortunately, repairing your credit runs much deeper than getting collections and public records deleted from your score. Sure, those items can have a significant impact, but there are many other factors you need to be aware of in order to maintain and continue building your score.
When it comes to disputing the derogatory items on your credit, there are some accounts that are better left untouched. Depending on the status of the account, disputing it can sometimes do even more harm to your score, dropping it lower than what you started with. It is important to have credit consultants that are walking you through your entire report and discussing each account with you to determine which items need to be paid/settled and which items should be disputed. Credit reporting is not always accurate and requires clarification in many instances. If your credit consultant is not asking you questions, this should serve as a red flag.
It’s not all about the negative. A credit score can be calculated from simply having negative history. However, if you clean up all of that negative history and don’t have any revolving credit history, you can end up with no score at all. Simply deleting negative items is not a long-term solution to fixing your credit. Having a variety of different types of credit and knowing how to manage those accounts is the key to having great credit. Managing your credit is not always as intuitive as it probably should be. Be sure to consult with someone that is not only willing to help with the items that are poorly affecting your score, but also teach you how to build and improve positive history.
Not all credit reports are created equally. In fact, your credit report is like your financial fingerprint; everyone’s is unique. Derogatory items can affect your score’s capabilities. Depending on the frequency and history of the derogatory item(s), your score has the potential of being capped within certain tiers of the credit score range. There are certain thresholds that must be reached in order to achieve better interest rates, homebuyer incentives, types of loans you qualify for, etc. In some cases, certain derogatory items will not allow you to cross certain thresholds for a certain amount of time until you have demonstrated enough positive history to overcome the negative. For example, having excessive late payments can keep you capped at a certain score for a considerable amount of time. In this scenario, it is important to remember that only positive history will release the score cap. Don’t give up!
If you are looking to purchase a home, but your credit isn’t quite there yet, be careful when you commit to a credit consultant. Often times, home buyers are on a timeline and if your credit consultant isn’t advising you correctly, this has the potential of throwing off that timeline significantly. There are many factors on a credit report, unrelated to your qualifying credit score, that if found, can keep you from getting through the underwriting process for a mortgage loan. In other words, working with a credit repair organization that is not familiar with the lending and underwriting guidelines of the mortgage industry may land you with a qualifying credit score, but still unable to purchase a home because of items that still exist on your credit report. In some cases, a lender can help determine what these issues might be, but most likely won’t be caught until much later.
Your credit score will go up when items are in dispute. If you have access to credit monitoring during the dispute process, you’ll notice that your scores will often times jump up while accounts are in the dispute process and then change again based on the outcome of the credit bureau investigation. This occurs because the points being lost from the negative item being disputed become neutral during the investigation. Be aware that this happens with every dispute and that the temporary uptick in your score is not a result of your credit repair company, but rather a product of every dispute.
If you’ve attempted to apply for credit and been denied, it is best to take a look at how you can improve your scores before applying for credit again. If you don’t, odds are you’ll be denied by the next creditor as well and you’re losing up to 7 points every time a creditor pulls your credit. Not every credit repair company is going to address all of the variables that contribute to the overall health of your credit score. Call Tru Path Credit today to schedule a free consultation at 385-419-0878. We offer a well-rounded perspective of your credit file and provide you with all of the tools you need to continue building your credit for your future.