Consequences of Working on Your Own Credit

Poor credit scores can have a number of consequences for consumers:
  • Difficulty getting approved for a lease.
  • Difficulty getting approved for a mortgage or refinance.
  • High interest rates or denial on credit cards.
  • Having to leave security deposits for utilities.
  • Higher insurance premiums.
  • Having a hard time starting a business.

If you learn that bad credit is hurting your financial goals, it’s possible that work can be done to repair the damage. But, it has to be done properly or you can risk further damage to the profiles. For many, loan approval may be denied due to the lower credit score. Even those that have the funds to pay for the higher rate loan would usually rather seek out options to improve their score and have the ability to save hundreds of thousands in interest payments over the life of the loan. Loan rejection or high interest rates could be caused by an issue that may seem minor to most but can cause major damage to credit. For example, having a new late payment on an account for a minimal payment of $80 could drop scores over a hundred points, especially if the scores were very high in the first place. Many individuals are perplexed by the idea that some minor error or mishap could cause such a major problem.

Many consumers also think that since the error is so “minimal” that they can take care of it on their own. This is often not the case. In fact, even though it is tempting, we recommend that you do not call the creditor at all and seek a professional opinion first. By speaking with and possibly working with a professional credit repair company you will be given the best information on why information is reporting, whether it can be removed, how long it will take, and an approximate idea of where your scores will be. Getting a professional opinion could be the difference between loan approval and/or huge savings in interest payments. Unfortunately, many individuals can’t resist the temptation of rushing to contact the creditor and attempt ‘do-it-yourself’ credit repair where they either release way too much information or quickly make a payment on a collection account. Once they have spoken to the creditor, or in the case of a collection account paying it off, our job can become twice as hard and 50% less effective. There are a vast amount of laws that apply to credit bureaus, creditors, consumers, and debt collectors. If the credit holder divulges the wrong information it could paralyze or inhibit any possible tactics that could have been used to help them.

Example
 We recently had a case where the client found he had a new late payment on a credit card reducing his scores by 80 points. It was not a complicated case for us and it should have been a pretty simple fix. He was a high level executive and an extremely intelligent man. Unfortunately those are sometimes the people that try to do it their way and wind-up making things much worse for themselves. He couldn’t resist calling the creditor and giving them information which created stumbling blocks to the removal of the late payment. There are also those who randomly dispute information over and over causing red flags to the bureaus and creditors. After a lack of success, we are called to help and again our abilities are lessened since creditors and bureaus are less apt to listen due to so many frivolous claims.

It is important to make sure credit holders understand that speaking with a professional before impulsively taking action will at least give them the opportunity to make an educated decision, ultimately leading to better choices. Of course anyone can try to fix their own credit just like they can fix their own car, give themselves surgery, act as their own attorney, or even do their own dental work, but what will the quality of the result be? Call the credit experts.

Call us with any questions or feedback on credit challenged clients or credit in general! 914-524-8300

Making sure credit is analyzed with future financial goals in mind is a MUST before taking an action that can foil those plans and limit a consumers options for a better quality financial life.