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Special Reports
Credit Restoration
Tips to Help Borrowers Restore Credit
'Consumers need a coach over the long term.'
By Anthony Garritano
As borrower suitability becomes more of an issue, the spotlight will again be
put on so-called credit repair that unfairly inflates a borrower's credit for the short term to make it seem like
they can get in the house at a lower rate. The alternative is credit restoration where the borrower receives tips
of how to get the credit that they deserve over the long term, which is where technology can play a part. "Certainly
credit repair has gotten a bad reputation when they changed the law and people could contest their individual credit
report," said Ron Litt, president of Market Kinetix LLC. "What happened as a result of the law was that
once a protest was lodged, that disputed item was removed from the borrower's report until it was settled. So,
people started bombarding the repositories because if the repositories didn't respond in 30 days the blemish was
removed permanently. So, credit scores were unfairly elevated as a result. "When I was at Allied I took some
of these guys to task. I had a lot of problems with these procedures," said Mr. Litt. "Yet, there are
valid reasons for people to be able to correct and improve their score as well. We hire lawyers to help us get
what we're entitled to and conversely people don't know what they're entitled to when it comes to credit either."
However, people lose points just for having a balance on their credit card, which is why a credit advisor is a
must-have, according to Mr. Litt. "Borrowers should also know that, for example, if they have three open credit
lines with a zero balance that counts in their favor. I know people who have great payment history, but don't know
how to distribute their money to impact the actual credit score. People are underscored in the credit business
and should be better educated."
To fill this void, Market Kinetix offers its flagship DealMaker tool. "The role DealMaker fills is such that
it allows a loan officer to get a person into a loan that they deserve. DealMaker helps the borrower improve their
credit to the point where it's good enough without inflating their credit," noted Mr. Litt. "For example,
the IRS allows you to declare X amount of dollars as a charitable donation without a receipt. Similarly, DealMaker
knows what the rules of credit scoring are and applies those rules to the borrower in question. "So, if the
borrower doesn't have revolving credit, getting a credit card may improve their score by 40 points. The product
also makes long-term recommendations. DealMaker won't flood the bureau with protests; it'll give the borrower actions
to help them improve their overall score strategically. "This is about credit restoration. Consumers need
a coach over the long term to help them get what they deserve out of their credit. A broker or an LO just wants
to get the borrower's credit up in the next 30 days to get them in the loan, but they're not counselors advocating
for the borrower over the long term, this technology tool is."
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