As regulators battle credit repair firms, one company is promising that anyone can start a credit repair business for less than $50. Two companies have identified how much credit scores can be impacted by factors such as loan modifications, late payments and over-extension.
A Dec. 10 press release from A New Horizon, a Florida firm that peddles debt-management services to consumers, said data revealed by FICO indicate that late payments impact credit scores by between 60 and 110 points, while utilizing a high proportion of available credit can impact scores by between 45 and 125 points. Negotiated debt settlements can leave scores between 45 and 125 points lower, and bankruptcy will knock them down between 130 to 240 points.
Loan modifications can impact a borrower’s credit score by 50 to 100 points, a recent statement from Wilson & Associates PLLC said. But a new code in reporting the status of a borrower’s mortgage to the credit bureaus will lessen the impact of a modification. The code identifies modifications done under the Home Affordable Modification Program.
In a Dec. 23 notice, the Federal Trade Commission said the maximum that reporting agencies can charge consumers for an extra copy of their credit report has been lowered to $10.50 from $11.00. The commission is required under the Fair Credit Reporting Act each year to revise the maximum based on the change in the Consumer Price Index.
The move followed a letter last month to the FTC from 43 state attorneys general calling for tougher restrictions on firms that advertise free credit reports but actually require the purchase of other products or services, a news release from Illinois Attorney General Lisa Madigan said. Madigan explained that Equifax, Experian and TransUnion are already required to provide consumers with one free copy of their credit report a year under the FCRA. Prospective borrowers can obtain the free copy through www.AnnualCreditReport.com.
But consumers who respond to ads — such as those from Experian-owned FreeCreditReport.com — are often automatically charged for credit monitoring services, the letter said. Consumers are given just seven days to cancel. The states want more clear language about potential charges in television, radio and print ads. They also want the firms to be required to “clearly” direct consumers to the official Web site — AnnualCreditReport.com.
For just $47, anyone can start a credit repair business, according to Credit4profits.com.
“Credit4profits.com provides a complete credit repair business kit to help anyone get started with minimal efforts,” the company recently said in a news release. “No classes are necessary, and there is no special licensing required to get started.”
Maryland’s Department of Labor, Licensing and Regulation announced on Dec. 8 that Metropolitan Money Store Chief Executive Officer Jennifer McCall was sentenced to 135 months in prison. McCall operated a scheme where delinquent borrowers were allegedly promised that foreclosures would be prevented and their damaged credit would be repaired. McCall, who was not licensed to provide credit repair services, was ordered to pay $17 million in restitution.
Additionally sentenced were co-defendants Wilbur Ballesteros and Ronald Aaron Chapman Jr., who were both also ordered to pay restitution. The statement indicated that McCall’s husband, Clifford McCall, as well as Joy Jackson and her husband Kurt Forham, created two firms to help carry out the conspiracy. In all, 10 defendants have pleaded guilty in the scam.
Standard & Poor’s Fixed Income Risk Management Services will collaborate with Experian to provide more detailed loan-level data for international investors of residential mortgage-backed securities, a recent statement said. In the first phase of the partnership, Experian Capital Markets will link consumer credit data to S&P’s US RMBS Edition loan-level data-feed product.
FundingSuite enables originators to mine data from previously purchased credit reports, Cogent Road said in a Dec. 15 statement. A feature in FundingSuite, “client insight,” provides “a real-time understanding of the typical applicant credit profile in any area of their market.” Some of the available data includes average credit scores and average payment amounts for prospective borrowers in a given geographic area.
One report that is part of FundingSuite identifies previously declined borrowers whose credit scores were inaccurately calculated and could be improved.
The San Diego-based company previously announced enhancements to AVAIL, its automated applicant recovery management system. Cogent said the system enables originators to provide ongoing mortgage-qualifying services to prospective borrowers.
Three database sources utilized by ID Verify Plus to verify social security numbers are credit repositories, the Social Security Administration and the Office of Foreign Asset Control, Informative Research announced on Jan. 6.
Users of TransUnion’s Express Portfolio Review have a choice of 17 scores and more than 200 credit attributes, a recent statement said. The Chicago-based operation noted capacity for the application has been increased to 300,000 records per job, while results are returned within 48 hours.
