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Marketing Maven

Credit Report Errors Harm Your Business

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Errors on credit reports are harming your business, and the business of your key Realtor and builder referral sources.

This one fact is holding back a complete recovery of the housing market nationally but also in your local market.

A February 2013 report by the Federal Trade Commission finds “that up to 40 million American’s have an error on their credit report” and that will keep many of them from being able to purchase a home.

"Errors in credit reports can cause consumers to be denied credit or other benefits or pay a higher price for them. It may also lead credit issuers to make inaccurate decisions that cause them to deny credit to a potentially valuable customer or issue credit to a riskier customer than intended," Maneesha Mithal, associate director, Division of Privacy and Identity Protection, told the Subcommittee on Consumer Protection, Product Safety and Insurance.

I have the privilege of being a continuing education instructor for the University of Alabama Center for Real Estate. They asked me to prepare a report on the impact to a local housing market caused by errors on credit reports. The numbers break down like this for Tuscaloosa, Ala.:

  • Metro Area: 192,000
  • Profound error: 19,530 *
  • Significant Error: 4,650 *
  • Would be homebuyers: 20% +- **
  • Avg. Sales Price: $149,450   ***
  • Homes sold per month: 150 ***
  • Avg. Percentage of Sellers that purchase: 20% +- **
  • Long Story short: $9,728,730 lost real estate commissions per year

* FTC  ** Estimate  ***ACRE

Folks, the facts are simply undeniable. Values in the Tuscaloosa housing market and in markets all around the country are artificially suppressed simply because the errors on credit reports deny consumers the ability to qualify for a mortgage to purchase a home.

And of course, that translates into a tangible direct and significant loss of income to your company, your personal income, the income of your referral partners, and last but not least, the value of your own home is impacted as well.

Simply stated, you are loosing money every day because of errors on credit reports. The question on the table for you today: Does an opportunity exist for you to engage this sector of the market and if the answer is yes, who and how?

Before I give you that answer, it is important that we deal with the elephant that is about to walk into your room.

Yes, I am talking about credit repair and yes the industry has a sullied reputation that they have worked very hard to earn. Even now, some companies continue to violate Federal Law by charging in advance, making promises that they can’t keep and of course some even have problems with simple business operations like answering their phone and returning calls. You name it. The industry has been has been its own worst enemy for years.

But now, I am glad to report, in many markets, a new breed of professional is beginning to take the place of the old school companies. These professionals can be relied upon and it’s a good time for you to take another look and meet some of them face to face.

As with any member of your team, it is critical to understand their qualifications, their commitment to customer service and their dedication to the industry. These are the basic criteria that you can use to begin your search:  

  • They are members of the National Association of Credit Service Organizations
  • They are local. If not. Make sure they have the bandwidth to do business with you in your market
  • Do they use advanced software platforms that allow you to monitor the activity?
  • Have they earned designations like FICO Professional from AllRegs?

If the answer to these important questions is no, keep looking. As a past owner of five mortgage company offices and a real estate broker, developer and builder since 1985, I understand your concerns when determining if it is best for your business just to give out a quick no or to attempt to assist a family to navigate back to being mortgage ready.  Whether they find themselves in this situation from their own poor behavior patterns or from errors on their credit reports caused by merged files or even Identity Theft, the fact is that they need your help and there is money to be made.

The purpose of today’s article is give you the information that you need to understand that there are hundreds if not thousands of families in your local marketplace that need your assistance. They don’t know what to do to overcome an obstacle that in many cases is not their fault. Tools and training are available to help you to determine if this market segment is right for you and your company.

To obtain a list of trained, educated and professional credit repair companies in your local market or just to call to set up a short call discuss this market segment, feel free to contact me.

Joel S. Pate is a 28-year veteran of the real estate, mortgage and credit industries and has founded many successful ventures. You can reach Joel at Joel.Pate@ScoreInc.com or at 877-876-5921

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