The Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173) is a piece of legislation proposed by U.S Senate Banking Committee Chairman Chris Dodd that is part of President Obama’s financial regulatory reform plan of 2009.  While much has changed and will continue to change with this act before passage, it aims:

To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end “too big to fail”, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.

Some key provisions of this legislation include:

Free Credit Scores

Consumers will have the right to a copy of their credit score if they were turned down for a loan, or if they were offered a rate other than the rate that the lender gives its best customers.

Mortgage

Lenders will not be allowed to pay mortgage brokers a commission based on an interest rate for a home loan to remove the incentive for mortgage brokers to put borrowers into a high interest rate loan; prepayment penalties will be limited or prohibited, depending on the type of loan; and before a loan is approved, lenders will be required to determine if a borrower can realistically can pay the mortgage payments, insurance and property taxes.

Interchange Fees and Use of Payment Cards

Stricter limits will be imposed on “Interchange Fees” — fees that banks charge retailers when a customer pays with a debit or credit card – for debit card purchases only.

Loans

A newly-created federal agency called the Bureau of Consumer Financial Protection will have the authority to regulate mortgages, credit cards, payday lenders, check-cashing companies and lenders that provide private student loans.

What’s the Dispute?

 

So many credit repair companies in today’s market offer a credit report dispute service, unlimited disputes or enforcement of the FCRA ( Fair Credit Reporting Act) by forcing the information off the credit bureau with response time limitations. So what does all that mean?

 

The controversy that remains with the “credit repair business” is that the dispute process is sold as the total problem solver for the client and it is so great that the three credit bureaus even provide suggestion templates for the dispute, right? Well, not quite.


The question is what is the client trying to accomplish?
Is there an erroneous item(s) on the file that needs to be corrected or is the entire file going to be disputed? The dispute process need to be entered with strategy as underwriters in today’s marketplace look for reasons of disputing if the item remains. The credit repair business as a whole has relied on the dispute process and will go so far as to say “We can remove Bankruptcies,Tax Liens, Judgments and Foreclosures,etc.” but does that mean that they go away? Of course not, in many cases it only will resurface later when the client tries to buy a home, apply for credit or open a business. Items on a credit report can be removed legally and with correct process, but you cannot rely on one strategy. In many cases, items need to be settled and settled correctly to not lower scores. There is a strategy and understanding of how the scoring models work and react through a credit restoration process. Even removing old collections can eliminate a score if there is no other good credit on file. I cannot tell you how many files I have seen where collections  were disputed, deleted and then reappeared later because the collection sold again and was reported “again”, killing the credit score. Remember, the burden of proof falls on the reporting creditor listed on the bureau. You must solve the problem with the correct process, strategy and clients’ cooperation.

 

It will not surprise me to see “credit repair” companies emerge at a rapid rate within this stressed, fragile economy. However look at the services they offer and are they truly helping their client or only creating a business to make money. Do they have the experience to serve the client? The dispute process has a function, but it does not solve the problem all of the time. Only addressing the problem areas with a permanent solution and implementing a strategy will get the job done and justify the client’s investment. Many clients may need help of a CPA, or an Attorney to resolve matters, and they need to establish new credit the correct way.

If you “Google” credit repair, you will be overwhelmed with information, but do companies on the internet offer correct information, real solutions, a real strategy and proper steps to recovery? Research the company and find out about the people who operate it. Do they have an office? Are they licensed? Do they have the credentials and what is their success track record? By the way, how do they do it for $199 down and $59 a month and what does that provide the client?

Unfortunately, scams are running rampant these days and people need help and quick. Many times people forget the “to good to be true” phrase.

Experts base their business on education, referrals, relationships and creating the very best client experience through solving problems. Credit consulting is a profession and deserving the trust of the client or a referral partner is a two part component, one part integrity and one part competence. You cannot have one without the other. If you have questions regarding credit, please call us. We are not in the volume business but rather the experts in solving our clients specific credit issues.

Harry Snedden

President of ScoreCrafters, LLC

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