Thinking About Credit Repair? What to Know Before You Hire Anyone

Years ago, before one of my own mortgages, I decided to take a hard look at my credit report. I found items I didn't recognize, some of them very old. I worked with Bob Willis and his company, Credit Repair Resources, on a short program to address them, and it helped move my score into a higher bracket before I applied.

Bob is an attorney who spent years suing credit bureaus, debt collectors, and creditors under consumer protection laws. His company's approach is built on that experience. He's also a longtime friend, and I've sold him two homes.

When I interviewed him on my show, Best Advice Ever, we talked about how credit repair actually works and how to avoid getting burned. If you're getting ready to buy a home and your credit isn't where you want it, here's what you should know.

Can you fix your credit yourself?

Yes. Bob is the first to say so. But he compares it to changing his own oil. He can do it, but it will take him longer than it should, he has maybe a 50-50 chance of getting it right, and he's definitely going to make a mess.

With an oil change, the mess is fixable. With credit, you may only get one good shot. Bob calls it a Barney Fife situation, after the deputy who carried just one bullet. If a dispute is handled badly, it's harder for anyone to clean up afterward.

Bob also says most people who try to do it themselves quit partway through. Credit reports are confusing, the process is frustrating, and emotions run high.

It's a lot like selling a home on your own. You can do it, but there's a lot you don't know you're missing.

What has to be true for something to stay on your report

Bob uses a three-legged stool to explain it. For an item to stay on your credit report, it has to be accurate, timely, and verifiable. If any one of those legs is missing, the stool falls, and the item has to come off.

That doesn't only apply to mistakes or accounts that aren't yours. An item can be real and still fail one of those tests.

Why collection accounts are often challenged successfully

Here's something most people don't know. When a creditor "charges off" an account, that's an internal accounting move that gives the company certain tax advantages. It doesn't mean you no longer owe the money. The creditor may then sell or assign the debt to a collector.

From his years in litigation, Bob learned that when collectors buy debts, they often don't get a stack of paperwork. They get a list: name, address, Social Security number, and balance. Bob calls them travelers without luggage. They're trying to get somewhere, but they don't have their stuff.

So when a collection account is challenged and the collector is asked to show how the balance was calculated, including fees, interest, and actual charges, they often can't. If they can't verify it, it has to come off the credit report.

One important distinction: that doesn't erase the debt. You may still owe it. There's a difference between owing a debt and a company being able to report it.

How long credit repair really takes

This is Bob's biggest pet peeve. Plenty of people on social media promise to fix your credit overnight or in 30 days. Bob's advice: don't walk away from them, run.

Creditors and bureaus have 30 days under the law to respond to disputes, and a proper process involves several rounds. Bob says his clients are typically with them for four to six months. Anyone promising a much faster fix is either not telling you the truth or doing something illegal.

Two illegal shortcuts to watch for:

• Getting a "new" Social Security or credit number. That's illegal.
• Letter jamming. Flooding the bureaus with disputes so they can't respond in time, which can knock items off temporarily. Bob says it's illegal and doesn't work long term.

Red flags when choosing a company

If you decide to hire help, Bob suggests looking for a few things:

• No fees in advance. Under federal law, credit repair companies can't charge you before they've performed the services. Be wary of anyone who asks you to pay up front.
• Honesty about what they can and can't do. A good company will tell you what they think they can help with and what they doubt they can. Bob's company does a free review first and turns people away when it doesn't think it can help.
• A clear lane. Credit repair isn't the same as debt settlement or debt relief. Know what you're signing up for.
• Real people. Some companies just have you upload disputes into a system. Bob's team starts every client with a 20 to 30 minute call to go through the report item by item and explain the why behind it.
• No promises that sound too good to be true. Nine times out of ten, they are.

What the process looks like

At Bob's company, it starts with a free credit review. If they think they can help, they explain what they'll do. After you sign up, a case manager goes through your report with you. Then they send rounds of letters, first to the bureaus and then to the creditors, reviewing each response before the next step.

Bob said his clients pay about $1,100 on average, broken into payments as each stage is completed, and clients can cancel at any time. Smaller cases with only a few items cost less, though they don't necessarily move faster, because the bureaus and creditors still get their full response time.

Bob was also clear that while he's an attorney, the letters go out on behalf of his company, not as legal representation of the client.

Start before you need it

The best time to work on your credit is before you're ready to buy. If you haven't looked at your credit report in the past year, look this week. If you find problems, a four to six month timeline is much easier to live with when you're not trying to close on a house next month.

When a buyer we're working with needs help with credit, we connect them with someone we trust. With the buyer's permission, Bob's team keeps us updated along the way, so we can pick right back up when the buyer is ready.

If you're thinking about buying in Northeast or central Ohio, schedule a time with me or someone on our team at 21mike.com. You can learn more about Bob's company or request a free review at CRR760.com.

Want to hear the full conversation? Watch my interview with Bob Willis on Best Advice Ever.

Mike Ferrante
The Mike Team at LPT Realty
www.21mike.com
Google Business Profile: https://g.page/r/CSQoYzel0Z68EAE
+1 (216) 373-7727