Sub2 - Our Payment helping sellers FICO score? Any credit repair specialists?

Question

Hey, I posted this in the innovative strategies forum but didnt get any bites.  I tried to get it moved here but no luck, so, sorry for double posting.

One benefit that we talk about when selling a seller on the idea of selling Sub2 (wow that was a lot of the word "sell"), is that our bringing their loan current and subsequently making timely payments for years to come will raise their credit score. Does anyone know how long this will actually take?   Or the actual benefits they will see from our bringing their account current and paying on time?
Are there any credit specialists out there who can give us a rough idea of how much impact say a year of on time payments would have on a persons credit score after they have been negligent?

Thanks

Daniel Berman · Answer

The problem with the credit repair service (mycreditlocker) that was mentioned in the previous post is that it can end up doing people more harm than good.

First, when you dispute online (part of the package they promote, on the website), you effectively give up one of your most valuable rights under the Fair Credit Reporting Act, because you can't use certified mail/return receipt to prove the delivery date of disputes. This is critical, with regard to the 30 days that the bureaus are allowed to investigate the dispute.

Second, by using template letters, you vastly enhance the likelihood of triggering a "frivolous or irrelevant" response from the credit bureaus. You effectively have only one chance at disputing a particular item, because the dispute will be recorded by the bureau, which will not be willing to entertain another dispute. So this can be a terrible waste of a valuable option.

Third, the "tri-merge" report is a bad idea, because you want to see your separate reports from the individual bureaus, to leverage any differences to your advantage. For example, to simplify for purposes of illustration, if your credit profile is strongest at Bureau A, then you should apply for credit with creditors that access credit info at Bureau A.

In sum, you can get better results for yourself while at the same time saving money, by avoiding these kinds of offers.

Dan

* Not intended as legal advice. For legal advice, please consult with a licensed attorney.

Douggie Stafford · Answer

I agree - mortgages depend on the 'overall trend' of the borrower, not necessarily their 'score' specifically.  I managed to improve my credit score(s) through a credit fix agency, but it took a lot of time and it was expensive.  I was paying over $100 a month, which sucked even though it worked.  Now I found out, there's software online that does all of the same stuff for you. 
Here's the link if you want to check it out:  www.mycreditlocker.com

That's the only one I found so far.  I uploaded my credit report and it figured out all my negatives, same thing a credit repair person would do.  But the software is only like 20 bucks a month!  Good deal as long as it keeps working for me.

What was weird was the bureaus report everything so differently, apparently they all have very different rules.  There isn't any 'blanket rule' like Dion said.

Anyway, it's good to see derogatory stuff drop off and just be left with my good payment history (which has been almost perfect these past few years!)  The overall trend now looks good for people thinking about lending to me

Bill Gulley · Answer

And also, it may take several years 3 to 5 to actually improve the overall history the other side is that if they are or were a credit risk, it's probably shown in other areas as well as the mortgage.

As Dion was saying, different lenders, mortgage, consumer, revolving accounts all look at histories differently. If I'm making a car loan I'm looking closely at how past car loans and consumer accounts were paid and look over the fact they were over 30 days late on a mortgage two months ago. But no mortgage lender will be making a secondary mortgage loan to someone who was late in the past 6 months or year.

Your marketing idea is a good one and I have addressed credit with sellers as well, it's good to mention but I would never tell them by my making the payment it will improve any credit standing, but it sure won't hurt. Certainly address it as it indicates your credit worthiness as opposed to theirs but don't make any representations.

Samuel Ksiazkieicz · Answer

Thanks Dion.  
I figured there wasn't a black and white answer.  This was more for my edification as I know general credit wisdom but little about more specifics.  I didnt know that some lenders dont look at score at all though.

Dion DePaoli · Answer

Good sales pitch but will not always work.  The assumption here is the mortgage servicer reports to the credit bureaus which is not true for all mortgage servicers and likely no private or self serviced notes are reported as getting approved to report costs money and is a process.

That said, the impact of on time payments reported to the credit agencies is relative to the specific borrower.  There is no blanket rule to apply.  The amount of additional derogatory credit or positive credit will affect the impact.  This along with history of accounts, history of default and delinquency, amount of available credit vs used credit all play into the credit score calculation.

One other common misconception, conventional mortgages are not credit score driven.  They are credit history driven.  While many creditors have an overlay for minimum credit scores, DU, LP or DO will approve eligible loans with low credit scores depending on other loan and borrower characteristics.

I would say your best bet is not attempt to quantify this in any manner.  That too could get you into some trouble if in fact they walk away assuming a promise that was not made and didn't come true.