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Credit Repair Post Subprime Mortgage Crisis

cburns — Tue, 23 Feb 2010 15:24:48 +0000

Many individuals and families with less than perfect credit scores have found themselves caught up in the recent US subprime mortgage crisis. In many situations, they are the victims of unscrupulous lenders who have engaged in predatory lending practices and unfair, or “teaser”, interest rates. The end result is that many victims have come out of the crisis with their credit histories in ruins. These are typically people who had less than perfect credit to begin with. Many believed their subprime mortgages would eventually help them earn better credit, only to have the outcome be the exact opposite.

Subprime lending is a term used when loans are given to borrowers who have blemished credit histories, lower income levels, and/or less than perfect job histories. These people cannot qualify for traditional mortgages at market interest rates. As a result, lenders offer loans with higher interest rates and unconventional terms. Although some feel that this type of lending is important in helping this group of people access credit and build credit, the recent fallout in the US housing market has had disastrous results for this very group.

The individuals hardest hit by this crisis are those who are most vulnerable to changes in the housing market and changes in interest rates. Subprime adjustable rate mortgages (ARMs) account for 6.8% of the mortgage loans currently outstanding in the US, but in the third quarter of 2007, these loans represented 43% of the foreclosures instigated during this same period.

There are a variety of types of ARMs, however many ARMs allow borrowers to pay a fixed interest rate for an initial period, after which the rate can increase as much as 2% per year. These mortgages can cost far more than a traditional mortgage. A 4% fixed rate on a 30-year, $500,000 mortgage would end up costing the borrower $864,000. An ARM, with an initial three year lower rate period, at 10% for the remaining 27 years would cost the borrower $1,367,280.

The message is clear to those still hanging onto ARMs. “Your last rate reset may have been a nonevent, but your next one won’t be,” voices Greg McBride, senior financial analyst for BankRate.com.

The Effect on Subprime Borrowers

There is no question that the majority of subprime borrowers are those individuals with poor credit scores. The payment delinquency rate for these ARM borrowers has ballooned to four times its historic level. Easy access to credit, along with the belief that US housing prices would continue to increase, led many borrowers to overextend. However, once housing prices began to drop, refinancing loans became more difficult, causing many borrowers to default as their interest rates and corresponding payment obligations increased. The negative effects of this on their credit scores cannot be underestimated.

Credit Repair for Victims

The real victims of this debacle are those individuals who strove to increase their credit scores through home ownership, only to have the carpet pulled out from under them, largely by forces entirely beyond their control. Foreclosures, bankruptcies and late payments are some examples of negative credit information that markedly lowers a person’s credit score.

If the mortgage crisis has left you in a credit crisis, some simple suggestions may help. The first step is to Obtain copies of your credit report to ensure that all the credit information they contain is accurate. If there are any inaccuracies, consult a legitimate credit repair company. An expert can not only get errors on credit histories corrected, but can also help a client with debt consolidation strategies to assist the client in rebuilding a good credit score.

The worst thing a victim of the subprime mortgage crisis can do is give up and walk away. It is critical to face the challenge head on so that your credit score doesn’t end up further hampering an ability to get access to credit at a reasonable rate and use that credit to help build a higher credit score.

Credit repair services can help.

Bad Credit Repair-Ways To Repair Your Credit Legally

cburns — Sun, 16 Aug 2009 15:23:31 +0000

In today’s world of credit score based lending, credit repair can make a world of difference. Credit repair is simply a legal way to clean up and improve your credit file also known as your credit report. A successful credit repair process has an end result of bringing an individual’s financial history back to life. As much as it helps, it takes time, and should never be viewed as a quick fix.

Although credit repair may seem like a very tedious process it is actually a small price to pay for the benefits gained. This process has become a necessary part of today’s life as more and more people fall victim to bad credit. This “repair” re-establishes the individual’s creditworthiness in the eyes of potential lenders and/or existing creditors. Credit repair is not an easy process and is not something that happens over night.

Taking the time and effort to repair your credit requires patience and, many times, the help of an outside organization. Many have been through similar situations as you and the good news is that it is possible clean up your credit file and remove all the inaccurate information. However, truly fixing your previous financial issues can only be achieved through financial discipline and hard work.

Repairing your credit profile is one of the most important financial decisions you can make. It isn’t just a series of techniques and steps to take, it is your legal right to have questionable negative items removed from our credit files that all of us have as consumers. Regardless of how bad your credit is credit repair is a possibility but it requires changes in spending, saving and bill payment habits. Repairing a bad credit score will require you to have patience, focus and also a little luck.

So how does it all work? A detailed review of your credit file is one big piece of the credit repair puzzle. After careful review, any inaccuracies or incomplete information on a credit report should be reported to the consumer reporting agency (CRA) and the bank, credit card company, or other entity that provided the information to the agency. There may be a substantial amount of inaccuracies currently in your own credit file. Reporting agencies rarely verify or cross check information unless they have a specific reason, like a request from you, to do so.

Although sometimes it seems to be a difficult, time consuming endeavor it needs to be a priority in your personal finance life. Bad credit should not be a source of shame or embarrassment. In addition, it can have more affect on your life then you may realize. Besides the psychological effects it can have on some, bad credit becomes an issue, when you need to make any major purchase such as a home, car, furniture or major appliances. Repairing your credit helps consumers who are being denied or do not qualify for the best interest rates, because of negative information on their reports.

Although not known as a priority for some, credit repair is not just helpful for those who have bad financial history. Credit repair can even be performed on individuals that have moderate to good credit scores, simply to improve their score even more. Whether to help those recover from a negative financial past or to make additional improvements for those with good credit, it is a worthwhile investment.

Credit repair is a booming business now and, unfortunately, a lot of unscrupulous elements are thriving in the market. Scams and shady companies are catching millions of people around the world, and are bleeding those people for millions of dollars a year. Some credit repair clinics do this by challenging every item in a credit file be it negative, positive, or neutral with the hope of overwhelming the credit bureau into removing information without verifying it. Other companies often claim they guarantee to get you a credit card, regardless of your financial history.

If you decide to work on improving your scores, it is absolutely in your best interest to enlist the help of a legal professional. Bad credit repair is possible and can all be done legally, by legal professionals. Due diligence on your part is required as many law firms can charge as high as $2500 for a consultation and some debt counseling offices can charge as much as $800 just to start the process to erase poor credit. Other law firms that specialize in credit score repair have similar techniques at their disposal, which are also completely legal, but offer legal credit repair at substantially lower fees.

I’m searching for information on online credit repair services. Do they work? What improvement can be expected

cburns — Tue, 11 Aug 2009 15:51:48 +0000

fixdaback asked:

Is investing the money for credit repair wothwhile? Are the results satisfactory from an accredited repair service company? I am looking for first hand experience and reference from someone who has used an online credit repair service.

How will credit counseling services affect my credit rating?

cburns — Mon, 10 Aug 2009 15:19:26 +0000

dwaindaddy asked:

I am thinking about allowing a credit counseling service (Take Charge America) to consolidate all my unsecured credit. Will this help or hurt my credit rating once I complete the program in about 3.5 years?

How to raise my credit score? Where to get my credit score?

cburns — Sun, 09 Aug 2009 12:13:54 +0000

A A asked:

I paid a service for my credit score but apparently b/c I didn’t buy the best package they show payment and history but not the actual score.

What is the best most reliable and cheapest place to get my credit score?

Also, what are some way to raise my credit score? Obviously to pay off anything thats not paid off. Should I close out cards I have low balance on and don’t use much? Should I write companies and make sure they take old things off my credit report?

What can I do?

Credit Repair?

cburns — Thu, 06 Aug 2009 18:32:48 +0000

mrdeservn913 asked:

I have no idea where to start to repair my credit. They are always offering free credit reports but I am leary of that. Could someone please tell me where to start?

What is the best way to fix bad credit with out bankruptcy?

cburns — Tue, 04 Aug 2009 16:12:47 +0000

USuck79 asked:

I have a very low credit score with old delinquent accounts. I have heard paying off old accounts is pointless, and will not improve your score. Is there any way to fix credit on your own with out the use of a lawyer etc.

Do credit repair services work? Which is the best agency to go through?

cburns — Tue, 04 Aug 2009 00:48:50 +0000

mkstar214 asked:

I have paid for alllllll of my old collection accounts and I’m just waiting for them to drop off of my credit reports. I’ve been looking into credit repair service on line and wondering if they can actually help. All of the items on my reports are actually MINE and I did actually owe them, but they are all FINALLY paid off. Is there any hope to get them removed quickly?

How can you fix bad credit, can you wait it out until it disappears off your credit report?

cburns — Sun, 02 Aug 2009 06:05:29 +0000

Kristy R asked:

I’ve heard bad stuff goes off your credit report after 7 years, so can you wait it out and have decent credit again after 7 years? Anyone know how that works or what to do to fix it?