Credit Repair: What’s it Worth?
Liz Cope, Debt Counselor July, 2012
One of the services we offer at DebtTech Financial Solutions is also our most popular - Credit Repair. Our program can raise a credit score beyond the 640 mark, allowing clients the number they need to qualify for mortgages, jobs, security clearances, car loans and better insurance rates. But is it worth the $799.00 price tag? DebtTech founder, Jason Madasz decided to find out in DIY fashion. Keep reading for my interview with a very overwhelmed Jason!
Liz: Jason, our Credit Repair program has been successful for hundreds of people across the nation. Why are you trying to go it alone?
Jason: As the founder of DebtTech, I want to be sure we’re providing value to our clients, so I decided to try out a DIY credit repair for myself and my wife, using a framework provided by our credit repair partner, Clean Slate. It’s important to me that it’s worth what we’re charging… thankfully, after this first round, I can say IT IS (laughs).
Liz: So, what was your goal?
Jason: I’d love to have over a 700 again, just for the purpose of our insurance and interest rates. Our finances are in order, and we do have positive reporting with our car loans and mortgage, but it hasn’t been enough to raise the score. I needed to do something else. (continues below…)
Your credit score is based on 5 inputs, and your payment history is the most important, at 35% of your score. A late payment can drop your score up to 80 points, so it is critical that you always pay your balances on, or before, the due date. The second most important area, at 30%, is your debt to available credit ratio. Keep your balances between 10% – 30% of your available credit. Usage below 10% isn’t reported, but usage over 30% is a negative and can reduce your score. The last 35% is made up of your length of credit, new credit, and types of credit. Basically, having a good mix of old and new revolving accounts, plus a variety of credit types, such as a mortgage, car loan and credit card will keep your score strong.
Liz: So you were ready to finish putting your financial house in order, by repairing your credit.
Jason: Yes. Though we don’t plan to move for a little while, I wanted to have it done so that when we were, we could roll. As it stands, we are like many people and struggled through the economic downtimes. Now we’re on our feet again and want to get that score back up.
Liz: If you don’t plan on moving for a while, why bother now?
Jason: A full blown credit repair can take up to a year. Many times it’s only 4 – 6 months, in fact 80% of our clients graduate the program in that time frame, but I wanted to be ahead of the game.
Liz: You really wanted to see the work involved in a Credit Repair, so you tackled it DIY. What was the process?
Jason: The first thing I had to do was pull both of our 3 bureau credit reports.
Liz: Don’t lenders get different reports than consumers?
Jason: Yes. If you have a specific lender you are working with, I recommend you get a report from that lender. However, I paid for credit report from all 3 credit bureaus since my credit repair is for general purposes – about $40.00 total for myself and my wife.
Liz: What do you look for in your credit report? How do you know what needs to stay or go?
Jason: There are three major credit bureaus – Equifax, Experian and TransUnion. Each of these credit bureaus report information differently, but they all do outline your negative information so it is easy to find.
Liz: So, you find the section on the report with the negative information and then what?
Jason: Next step was to going through each report, line by line, and draft letters to each bureau regarding each disputed item. There were definitely things on there that I had no idea what they were. They were clearly mistakes. The DIY Credit Repair had boilerplates of the letters to use. I thought it would be pretty easy! (laughs) Then, all the letters needed to be printed and mailed via certified mail with return receipt.
Liz: It sounds pretty straightforward – what was the issue?
Jason: All this took me over 4 hours and $40.00 in postage – and this was just the one round. On average, we conduct 4 rounds of disputes when clients pay for the program. My biggest challenge was deciphering the credit reports and using the right letter. There are 20 different letters to chose from… knowing the proper letter for the situation was a challenge. On top of that, knowing the proper dispute to insert into the letter was difficult. And each bureau reports a negative item differently, so you can’t just reuse the same letters from bureau to bureau. You have to send each bureau a different batch of letters. For example, each item, per bureau, is titled differently. So each letter has to reflect the proper title. So you could have 3 different letters regarding the same item, but all titled differently and needing mailed certified mail with return receipts. It was exhausting and time consuming!
Liz: If we calculate that out, you spent 4 hours – let’s say at $30 per hour – for one round of disputes, or $120. Plus $40.00 in postage and $40 for the reports. If we conduct 4 rounds using those numbers, that’s roughly $620.00 to do it yourself – and you are pretty familiar with the industry, so you didn’t have the learning curve our clients would have.
Jason: Right! The purpose of this exercise for me, was to ensure we were providing value to our clients. And value isn’t just about cost, but time and frustration as well. In doing this DIY credit repair, after 4 rounds of disputes, I will have over $100 in postage alone, and over 20 hours of work. I’ll also have to pull a credit report at least once more to see if our scores are rising. Also, even though I know the industry, I’m not a pro at this, and am not as familiar with all the nuances of the law. I don’t feel my results will be as good. At the end of the day, I feel tired! I have a busy life, this is the last thing I need to add to it – between work, life and kids, I’d gladly pay someone to do this for me.
Liz: Well, Jason, we’re going to stay tuned. In September we’ll see what results your were able to achieve when your first round of disputes comes back, but in our next issue, we’ll interview a client about their experience using Clean Slate.
Learn more about our Credit Repair program and how it can help you, or someone you know. Visit www.DebtTechOnline.com. Interested in trying a DIY credit repair for yourself? Give us at call at 419.318.9798 and connect with a Debt Counselor.