As most of you know, short sales do negatively affect your credit. With regard to your FICO Scores, the credit ramifications are very similar to that of a foreclosure. In fact, the largest difference between the two on your credit report is the ability to obtain a mortgage. After a short sale, it is possible to obtain a mortgage in as little as 24 months (or even sooner, more on this later) whereas with a foreclosure, it typically takes 3-7 years for people to qualify for a home mortgage.

Moreover, if you’ve gone through any of the above scenarios, most likely your credit report is riddled with 30/60/90 day late payments which further reduces your FICO score, especially 90 day late payments (which has often been said to be as bad as a short sale or foreclosure itself).

So here is the question of the day:

Can Short Sale Credit Repair & Foreclosure Credit Repair Companies truly REMOVE these items from your credit report?

Many believe that this is not possible simply because of the fact that the items are negative. Well, as a nationally recognized short sale expert, I am here to tell you that this is far from the truth.

Within the Fair Credit Reporting Act, there exists a loophole that attorneys have taken advantage of for years on behalf of their clients. The key to removing negative items from your credit report is not to question the accuracy of the items, but rather, how verifiable the items are, according to FCRA requirements.

This is not something that people should try on their own. There is a specific list of items that must be documented in the event of these kind of disputes, and without proper knowledge of what these items are, creditors will not take you seriously. This is why attorneys are best known for this line of work. There are multiple, virtually unknown resources out there that have been proven to reduce & eliminate the typical consequences of a short sale & foreclosure. I highly suggest taking advantage of these built in “short-cuts” within our system.

Now Pay Close Attention –

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Credit Repair and BBB Reports

Thinking about repairing your credit? If so, you have two options: do it yourself or hire a company to handle it for you. If you choose to hire a company, make sure you do a little research. Focus on items that the company itself does not create.

Testimonials are nice, but no company is going to print a bad one. Many are just made up. Also, membership in organizations may be beneficial, but sometimes organizations are created by companies just to help make them appear legitimate. Some deceptive companies try to trick potential customers into feeling comfortable. Separate websites are created and professional logos are presented all in an effort to make the alleged third party organization appear legitimate. Suprisingly, several companies use this deceptive tactic so always confirm that the organization is independent and credible. One organization that is definitely independent and credible is the Better Business Bureau.

The Better Business Bureau (BBB) is a great source of information. Before working with any credit repair company, you should check their BBB reports. In the same way that your own credit reports are designed to inform potential lenders of your credit risks, BBB reports are designed to inform potential customers of the potential risks of working with a particular company. To view a BBB report, visit www.bbb.org. By visiting the site directly, you can be assured that the information you are receiving is correct and accurate.

There are two major legitimate companies that operate in the credit repair industry: Ovation Credit and Lexington Law. If we look at their BBB reports, we can learn about other client experiences.

Ovation Credit is listed as an accredited business. If a business has been accredited by BBB, it means BBB has determined that the business meets BBB accreditation standards, which include a commitment to make a good faith effort to resolve any consumer complaints. Ovation Credit has an A- rating. (Think of school, A is best, F is worst) Ovation Credit’s report has the following information:

Ovation Credit’s BBB report shows that the BBB processed a total of 8 complaints about Ovation Credit in the last 36 months. Of the total of 8 complaints closed in 36 months, 1 was closed in the last year. Here is a breakdown of the complaints:

Service Issues(2 complaints)

Credit or Billing Disputes(2 complaints)

Product Quality(1 complaints)

Contract Disputes(1 complaints)

Guarantee or Warranty Issues(1 complaints)

Repair Issues(1 complaints)

Lexington Law is not listed as an accredited company. We were surprised to see that. Lexington Law also has an A- rating. Lexington Law’s BBB report shows that the BBB processed a total of 283 complaints about Lexington Law in the last 36 months. Of the total of 283 complaints closed in 36 months, 89 were closed in the last year. Here is a break down of the complaints:

Advertising Issues (6 complaints)

Billing or Collection Issues (95 complaints)

Contract Issues (14 complaints)

Customer Service Issues (24 complaints)

Delivery Issues (4 complaints)

Guarantee or Warranty Issues (25 complaints)

Product Issues (1 complaint)

Refund or Exchange Issues (73 complaints)

Repair Issues (3 complaints)

Sales Practice Issues (9 complaints)

Service Issues (29 complaints)

Both companies have tens of thousands of credit report repaircustomers, so it is fair to compare their reports directly. Also, any company that handles that many clients will have some BBB complaints. That’s consistent with the old saying that you can’t please all the people all the time. However, based on these reports, it appears that there is a greater chance that you will have a better experience with Ovation Credit over Lexington Law.

Of course, this is just one criterion and there are more companies out there that you may want to consider. Just be sure to check BBB reports as a source for information when considering any company.

Of course you don’t want to make any late payments on your credit cards or loans and affect your credit report and score unless you absolutely have to, but what happens if you’re unable to avoid it? It all depends on whether you’re 30, 60 or 90 days past due. If it’s only one late payment you may be able to dispute it and get it removed from your credit report but if it’s more than one that may be difficult to do. And it depends on whether it’s currently past due or long term past due, and other factors.

Understanding how FICO credit scoring works for late payments will help you avoid late payments and understand which late payments will show up for the long term and which payments won’t.

Put simply, FICO credit scores are used by credit card companies, loan and mortgage companies, utility and insurance companies etc., to predict how reliable you’ll be as a customer and how much they can trust you make the payments.

If you’re 30 days late on a payment it will affect your credit score only when it’s reported to the credit bureau. The same applies to 60-day late payments. However these are considered short term and may not cause any lasting damage to your scores. If this happens over and over then this will not be the case. Also a one time late payment of 30-60 days may never be reported to the credit reporting agency. You can avoid a lot of worry by finding out if the creditor reports a currently 30 or 60-day late payment or not. Many do not.
If you’re 90 days late it’s another matter. This can damage your credit report and score for seven years, unless you can get it removed. If it was in error or you had some special circumstances and your credit history has been good then it is worth a try by writing a letter to the credit report company. The three main credit bureaus are Experian, Equifax and Trans Union.

Credit card companies and other creditors look at 90-day or 120-day late payments as a red flag. They can no longer trust you to make your payments on time so your credit score will go down. Their purpose is to determine whether you’ll be able to make your payments on time or at least before 90 days have passed. It doesn’t matter if the payment was for $25 or $1000, they will look at it the same way.

Also sometimes late payments may cause a rise in the interest rates on your credit cards.

If you can avoid making any late payments you’ll dramatically improve the scores on your credit report. And if you haven’t gotten your copy of your personal, annual, free credit report online yet then get one now. Study it and then find out how your current creditors look at late payments. Call them up and find out if they report a 30 or 60-day late payment to the credit reporting agency.

Best of all find some emergency ways to completely avoid making any late payments. Try making your payments online a few days early to avoid payments getting lost in the mail. If at all possible find things you can sell or do some small part-time work from home and try to make a small emergency fund.

Do anything you can to avoid making a late payment. But if it happens, make it as soon a possible so it doesn’t go into a 90-day problem. Ninety days is the point where it’ll be difficult to turn things around and seriously affect your credit report and score and future borrowing opportunities. It’s best to spend a little time learning about credit reports, how you can fix or repair your credit report and scores now and how you can raise your credit scores fast. You may be doing some things you had no idea would cause your scores to drop.

Assuming you already have a copy of your annual credit report you may have already found some errors that should be removed. Errors should always be a big concern because they can and probably have affected your credit score, also called a FICO. You can repair your credit with a little bit of help.

It may seem like a lot of work but it’s really easy. The hardest part is actually sitting down to do it. You’ll need to check all three credit bureaus to make sure the same error isn’t on all three but if you just have one credit report, start with that one.

First make a list of any and all errors that you find on your personal credit report. These could be in the form of personal information such as birth date or more likely there will be information that you know not to be true such as late payments or no payments recorded etc. If you think there is any possibility that you could be wrong check your past history with the creditor in question first.

You want to make sure you are right before you make the request to have any information removed from your credit report.

You will be sending the letter only to the credit bureau mentioned on the report, which would be Esperian, Equifax or TransUnion. You don’t want to sound angry in the letter, just be matter-of-fact, straightforward and business-like. Just outline the facts – name of creditor, dates, and the error(s) or problem(s) you’re finding on the credit report.
Here is a sample letter:

Date:

To whom it may concern at Esperian (or other credit bureau):

I recently acquired a copy of my credit report and found some errors that I’d like to dispute. I am enclosing documentation to prove the information is incorrect and would like a correction. I value my good standing and good credit history and want to maintain a good credit rating and credit score.

Name the creditor along with the reference date including the month, day and year if possible.

The error(s) I have found are:

I’m including copies of my payment record, with a (cancelled check or online payment print-outs or any other documentation that you have).
I would appreciate any attention to the matter as I would like my credit report to be accurate. I’m sure you understand that credit bureaus need to include only information that is accurate in my file.

Thank you for taking a look at my letter and file and hopefully making the necessary corrections so I can continue to maintain my good credit standing. Please let me know that my file has been reviewed and what action has been taken. I would also like a copy of my corrected credit report sent to the enclosed address. Thank you.

Sincerely,

Besides your full name as shown on the report, include you mailing address, a copy of the report that you have, your social security number, driver’s license photocopy and any other documentation such as a cancelled check or online payment confirmations.

Make a copy of the letter for yourself and a copy of any enclosures with the letter. Send the dispute letter by certified mail with a ‘return receipt’ requested. Then make sure to get the free credit reports from the other two main credit bureaus or reporting agencies to make sure they don’t have the same incorrect information. You can get free instant credit reports from the other two online.

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