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Thursday, October 17, 2013

‘Credit Repair’ Services Can Make Your Credit Worse, not Better

[Published Oct. 17, 2013, in the Jeffco editions of the Denver Post's YourHub section]

Recently a man walked into our South Golden Road office inquiring about rentals. After giving him the name of a company that handles rentals, I asked him why he wasn’t considering purchasing a home.

The man explained that he had paid $1,800 to a “credit repair” company which had actually made his credit worse, not better.  As a result, he was less able than before to qualify for a mortgage.  Sadly, this was not the first time I had heard such a story.

There are definitely ways to improve your credit, but paying creditors less than you owe will actually cause your credit score to drop.

When I have a client who needs to improve his or her credit score in order to qualify for a mortgage, I refer them to Bruce Gustafson of Crestline Mortgage.  Bruce’s goal is to help you qualify for a mortgage, which is how he gets paid. Helping you to improve your credit score is something he does for free in pursuit of that bigger goal.

Bruce is an expert in “what if” software which tells him precisely how your credit score will change if you do this or do that.  He does not try to negotiate settlement of debts.  He just tells you what you could do to improve your credit score.

For example, he can tell you that paying down the balance of a particular credit card by “x” dollars will raise your score by a certain number of points, which may be higher than paying off the credit card completely.

He’ll advise you against closing credit card accounts and explain why. (Your score is higher if you use a smaller percentage of your credit limit. If you close a credit card, you eliminate part of your credit line. It’s better to keep the account open with a smaller balance than to close it.)

Bruce has given our office lots of training in how he does what he does and as a result has gotten many referrals from us of buyers who need to raise their credit scores in order to buy a home.

You can reach Bruce Gustafson anytime on his cell phone at 303-596-0780.  

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