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Jim’s Mortgage Corner | Real Estate

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SHOULD I CONSIDER CREDIT REPAIR?

I am often asked about credit repair agencies and if they provide a good service. I’m sure there may be someone out there that provides good credit “consulting” services, but I tend to see more damaged cause by credit repair agencies than good.

Most credit repair agencies are not in compliance with the Credit Repair Organizations Act since they are prohibited from charging or receiving any money or other valuable consideration for the performance of any service they have agreed to provide before the service is fully performed. However, most charge $200, $300 or even more before they will perform any service. How are they able to do this? The majority will claim it is a sign-up fee and does not relate to the services they have agreed to perform, which is a direct violation of the act. If a lender refers a client to a credit repair agency they are inadvertently supporting a company that is violating the Credit Repair Organizations Act.

When you sign up with a credit repair agency you are required to provide a copy of your credit report. Since credit repair agencies do not have permissible purpose with the repositories (Experian, Trans Union, Equifax) to access your credit, they will often ask you to provide them a copy of the credit report you received from the lender. If the lender provides you the credit report with knowledge you will share it with the credit repair agency, they are in direct violation of their permissible purpose for pulling a credit report in the first place.

The majority of credit repair agencies will submit a dispute to the bureaus for inaccurate information. The bureaus then have 30 days to investigate and respond to the dispute. A credit repair agency may submit multiple dispute requests to the bureaus with multiple letters disputing the validity of an account. Because they receive so many letters in such a short period of time they don’t always have the resources or time to reasonably investigate each request and after 30 days they may remove the disputed account as they have not been able to resolve it within the 30-day period.

I worked with a borrower a couple of years ago that disputed their bankruptcy. I asked them if the bankruptcy was accurate and they said yes, but the credit repair agency recommended to dispute it to increase their score. Sadly, it did not improve their score and it delayed the loan process since we had to remove all the disputes on information that was correct in the first place. Credit repair can do nothing to improve legitimately unfavorable credit information.

If you pay a monthly fee, they may continue to send letters to the bureaus month after month. If you cancel the contract, the letters stop and the majority of the information that was removed will come back. Collection accounts are the worst since the initial disputes could cause them to report again which will result in a more recent report date and lower your score even more!

If there are truly inaccuracies on your credit report, there is nothing a credit repair agency can do for you that you can’t do for yourself. You can do this without the cost of what a credit repair agency will charge you. First I recommend obtaining a free copy of your credit report from all three bureaus at www.annualcreditreport.com. You will have instant access to the reports from the bureaus and, if errors are found, you can dispute them online at no cost. They also provide a toll-free number where you can reach a live person who can answer questions and assist you with the process.

As I mentioned earlier, Federal law requires the dispute process be completed within 30 days however, it can be sooner than that. They also provide a fax number where you can send any supporting documentation regarding your dispute. If you advise them you have a mortgage pending they will often accelerate the dispute process.

If you have applied for a mortgage loan, most lenders provide rapid re-scoring services that will correct information on your credit report. This can include removing an inaccurate late payment, a paid medical collection or updating the balance on your credit card. And lenders cannot charge you for rapid re-score services.

When it comes to credit repair agencies, truly the answer may be to just say NO.

Jim Kaiser

Branch Manager, NMLS #1721861

Cherry Creek Mortgage Co., Inc. NMLS 3001

Jimkaisermortgages.com



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Are Sallie Mae Student Loans Federal or Private?

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When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances

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Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit

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Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.

 

 

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