What’s the difference between a run-down Volkswagen Beetle and a nearly new Mercedes? Kevin Foster will tell you it’s the difference between a 460 and a 780 credit score.
The Amarillo, Texas resident was just like the majority of Americans – he rarely checked his credit score until it was time to make a big purchase. So, the retired insurance salesman was shocked to learn that he was rejected for a car loan due to a rock bottom 460 credit score.
“There were only two cars on the lot that we could get a loan for –one was a junker and the other was a double hooptie,” Foster said. “I ended up leaving the lot with a yellow 2002 Beetle with 87,000 miles and a payment $424 for 60 months, essentially paying $24,000 for a $7,500 car. That’s what happens when you have crappy credit.”
After investigating the sources of his low credit score, Foster learned his credit report had been transposed with another man with a similar name and Social Security number, who was living in serious debt in the same city.
After undergoing credit repair services and removing the other man’s debt from his report, Foster was able to increase his credit score to a 780 in less than six months. Armed with an excellent credit score, Foster returned to the dealership and purchased a newer model, low mileage Mercedes for the same monthly payments he was making on the beat-up Beetle.
While Foster’s personal credit crisis had a happy ending, he knew there were millions of other Americans who haven’t been so lucky. He parlayed his own bad credit into a new career helping others in financial trouble. Foster and his wife, Sherry, invested about $2,500 to educate themselves about credit repair at several conferences and boot camps and launched TRW Credit Services out of a spare bedroom in their home. Foster said he went from neglecting his credit report for years to pouring over dozens of credit reports a day.
“I’m just a nerd,” he said. “I read credit reports over my morning coffee while you are reading the newspaper. I have become totally absorbed in it because I truly want to change lives through better credit.”
Foster acknowledges that the credit repair industry has a less than stellar reputation, and that consumers have to be wary of the many scammers who offer similar services.
“Our company name TRW stands for ‘The Right Way’,” Foster said. “We took a position that if we were going to be involved in an industry that has a black eye, we were going to set a precedent of doing things the right way, so we are very conscious of doing everything ethically and legally.”
To uphold that professional integrity, Foster said the fee structure and selecting eligible clients is of utmost importance.
“First of all, it is illegal to charge an up-front fee for credit repair, and any company that does either uninformed or they think the law doesn’t apply to them,” he said. “When credit repair services began to emerge in the 80’s and 90’s, scammers came on the scene and targeted people with bad credit and charged exorbitant fees. Most of the people weren’t even competent to do the work, and they would abscond with the money. The customer was then left holding the bag, and they not only had bad credit, they were out a few thousand dollars.”
Foster recommends avoiding any company that promises they can deliver a certain credit score, that says they can make negative credit items disappear from a credit report, or that encourages consumers to open credit cards under a trade account or any number other than their Social Security number.
The Federal Trade Commission warns consumers about credit repair companies, stating that negative information cannot be legally removed from a credit report if it is accurate, and only time will heal credit report wounds. But Foster says there are exceptions. For example, if you have a debt from seven years ago that was sold to a collection agency and then resold to another debt collector, the original debt on your credit was accurate, but the third and fourth-party debt collectors may be trying to collect after the statute of limitations. Those are the kinds of issues that Foster’s company can help resolve.
Foster also screens his customers and won’t take on lost causes. He will turn down customers who are repeatedly delinquent on their credit cards. And if he tries and fails to repair your credit, you don’t have to pay.
“All the credit repair efforts in the world won’t do you a bit of good if you don’t pay your bills on time,” he said. “I can fix some things, but we’ll never make any progress if you are constantly getting dings on your credit report for late payment.”
Foster admits that, with the right knowledge and time, anyone could attempt to clean up their own credit. His customers typically pay about $600 to benefit from Foster’s expertise and save themselves the hassle and tedium that disputing credit requires. Foster has also written a book, Goodbye Bad Credit: A Do-It-Your-self Practical Guide to Improve Your Credit that he gives away for free to people who can’t afford to pay for credit repair services.
“I could mow my own lawn, but my time is better spent doing something else. I could learn how to fix my own car, but there are people who know how to do it better,” Foster said. “There ain’t no secret sauce and there ain’t no secret letter to improving your credit score, but most people don’t have the time or patience to do it. I’ve given hundreds of copies of my book away, and most people get one or two chapters in, and get frustrated with the whole process and say ‘I don’t know what I’m doing.’”
Though his business has doubled every year since he started working from the house in his pajamas, Foster says that being turned down for a car loan helped him change his life and the lives of others.
“The money comes and goes, we all have to make a living, but the most rewarding thing is when I get a call from someone who was able to buy their first home for their family because we helped them clean up their credit and qualify for a loan.”