Can a Credit Repair Specialist Help Me Get a Mortgage?

By Gina Pogol
Mortgage Credit Problems Columnist

Cliff Asks: Dear Gina, I filed for bankruptcy a couple of years ago and my credit score still looks awful. I missed out on the home buyer tax credit, but would still like to take advantage of low prices on property and today's low mortgage rates. Can a credit repair company help me get a mortgage today?

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Gina Says:

Dear Cliff,

Sorry about your mortgage credit problems. Yes, certain kinds of credit repair can help you. You indicate that your credit score "still looks awful." But you have not said why. Have you continued to pay your bills late or accumulate collection accounts? Have you not re-established a decent credit history? Or (as is often the case) are the accounts discharged in your bankruptcy still showing up as delinquent? That can really hang you up when you try to buy a home or refinance a mortgage.

If your problem is inaccurate or outdated information, a credit repair firm could help you. You can also get these kinds of errors fixed yourself.

The DIY approach:

  1. Notify the credit bureaus (Experian, Equifax, and TransUnion) in writing about the accounts that were discharged in your bankruptcy. They should not be reported as delinquent now and should be closed out. Write a letter requesting that these tradelines be corrected.
  2. Include copies (NOT originals) of your bankruptcy discharge, showing the accounts that were written off.
  3. Include a copy of your credit report and circle the inaccurate accounts.
  4. Send your letter by certified mail, "return receipt requested," so you can document that the credit bureau received it.
  5. Keep copies of your letter and enclosures.

The bureaus must investigate your dispute(s) within 30 days. They must forward the information to the creditors as well. The creditors should collaborate your dispute and correct the credit data.

If your score is low because you haven't re-established credit, try getting on a friend or family member's accounts as an authorized user. You don't actually use his or her credit; in fact it's probably better if you don't even know what the account number or creditor is. As long as your family member makes the payments to that account on time, it improves your credit score as well.

Outside Help

If your credit is still bad because of poor money management skills, contact a reputable credit counseling or debt management service. They can help you get your payments under control and develop good payment habits. A good credit score eventually follows.

Firms called rapid rescorers can fix inaccurate information in a hurry. Rapid rescoring services are not shady characters; they are legitimate services that can indeed get your score increased. Usually offered by independent credit reporting agencies, these services are used by mortgage lenders or brokers who are trying to help their borrowers. You cannot approach a rescoring service directly; your lender has to do it for you.

Finally, derogatory information that is accurate can sometimes be removed by the creditor in a process called re-aging. You or a credit repair firm must contact the creditor and ask. When a delinquent account is re-aged, it's no longer considered past due by the creditor or credit bureaus. The creditor simply reclassifies the account as "current" and it gets reported that way in the next reporting cycle. If you're two months behind on a credit card account, for example, and you can convince the company to re-age your account, it would be as if those two months never happened. Normally, someone with a good history with that creditor would be more likely to get this done; if you have a spotty payment history with a company it's less likely to help you.

Good luck!

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