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In a Nutshell: Many people are unaware that they may have low credit scores, and oftentimes it is not through any fault of their own. Over the last 15 years, MSI Credit Solutions has been helping clients remove bad credit reports and improve their overall scores by leveraging consumer rights through various laws. The company’s two main focuses are on establishing lines of credit and resolving disputes and credit errors. MSI says that among the factors consumers tend to overlook to improve their credit scores are education and ensuring that clients remain accountable for their financial decisions going forward.
During its 15-year history, MSI Credit Solutions has helped countless clients repair their credit scores. But before the company launched, its Founder and CEO, Ricardo Mendiola, happened to be in a financial dilemma of his own. Back in 2005 when Mendiola was trying to purchase a home, a loan officer informed him that his credit score was too low.
“So I took matters into my own hands, and I started paying off my collections,” says Mendiola.
He had 16 accounts in collections amounting to $6,000 in unpaid debts, and since he was on a fixed income, Mendiola said he made it a goal to pay off one unpaid account each month, every month. For a period of time, he was consistent with paying off his debts. But Mendiola later found out through a credit monitoring site that his score hadn’t improved at all despite paying off his collections, so he decided to temporarily put his credit repair efforts on hold.
After a few months had passed, Mendiola said he met someone at church who worked in the credit repair industry and suggested he enroll in a professional service. The credit repair service was able to remove 12 of the original 16 collections from his report, and Mendiola finally started to see his credit score improve from the low 500s to the mid 600s.
Convinced by what he had achieved and with some encouragement by his credit repair friend, Mendiola went on to work as a credit consultant and then formed MSI Credit Solutions in 2006.
Low Interest Rates Sparked Interest in Credit Repair
For the last several years and throughout the pandemic, the housing market has experienced dramatically low interest rates. Thirty-year fixed-rate mortgages reached their lowest levels in nearly 50 years in the spring of 2020.
With rates at such record lows, borrowers were eager to refinance. But many people discovered that their credit scores were too low for them to qualify for the best loans. An estimated 32% of households with an annual income below $50,000 were more likely to report having a low credit score as cite that fact as the reason for not refinancing.
With nowhere to turn, people started seeking professional assistance.
Mendiola noted that those with low credit scores have begun flocking to repair services to improve their scores like never before, and MSI Credit Solutions has been experiencing some of its best years. “We just blew up these last three years!”
It’s also worth noting that the COVID-19 pandemic may have also played a role in helping people improve their credit scores. In a recent study by the Federal Reserve Bank of Boston, researchers found that, as businesses were shutting down and unemployment rose, people began using their credit cards less often. This decrease in credit card utilization then led to gradual improvements to credit scores.
The researchers also note some borrowers chose to use stimulus checks to offset their debts, but they lack the data to determine that claim.
In addition, they warned that such correlation could go in the opposite direction as the economy continues to improve. By studying this relationship further, the researchers hope to inform policymakers on what they predict may occur as Americans recover from the pandemic.
Accountability and Education Lead to Continued Success
Data suggests that restricting credit card spending during the pandemic has had a direct effect on improving credit scores. Mendiola emphasizes how important it is for clients to be educated and accountable with their spending and finances. That approach plays a critical role in how MSI services its clients.
“We’re very transparent on what we do and how we do it,” says Mendiola. “And then we ask them the most important question, which is ‘Are you paying all your active open bills on time,’ because if you’re not paying your active open bills on time, this won’t work.”
Once MSI’s credit consultants determine that they have a good client, they evaluate the client’s credit report, call the client back and set up a game plan on what the client needs to do and what negative items MSI can find that need to be deleted from the credit report. That’s when they can then start the process of educating the client and helping him or her make better financial decisions.
Mendiola said that one of the major differentiators that sets MSI Credits Solutions apart from the competition is that competitors often neglect to educate their clients about responsible spending. “They weren’t holding their clients accountable for what they needed to be doing,” Mendiola. And if clients max out their credit cards while in the program, they’re going to lose points “because 30% of our scores come from how much debt we carry on our credit report,” he said.
Clients seeking credit support need to cooperate with their credit repair companies if they want to succeed.
MSI Credit Solutions provides educational social media content for its clients and the general public. The company’s website regularly posts blog articles and maintains a library of educational videos that address frequently asked questions and credit tips.
Helping Clients Improve Prospects for Big Purchases
It is an unfortunate truth that many people with low credit scores lack the resources or are simply unaware of their consumer rights when it comes to disputing and eliminating negative items on their credit reports. Research shows that up to 79% of Americans have some type of inaccuracy on their credit reports.
While it is possible for people to take on the repair process without any assistance, credit repair companies have become an invaluable asset for consumers seeking to improve their credit scores.
For its part, MSI Credit Solutions offers consumers two major services to help them get their credit standing back on track: establishing and maintaining good lines of credit and removing disputes.
The company also has a Pay for Delete option that allows a borrower to agree to pay off a collection account in exchange for the debt collector erasing the account from their report. Clients find the option very helpful.
When a credit repair client disputes an item and it gets validated, the client’s options are either to pay it off or wait for the item to fall off on its own. MSI’s Pay for Delete option allows clients who need to raise their scores fast to do exactly that. “It’s helped us out a lot, and our clients love that because sometimes, some clients can’t wait for stuff to get validated,” says Mendiola.
“We’ll call up every one of these collections, starting off with a smaller one, try to make it affordable, and we’ll try to do two things for you. We’ll try to get a settlement for you. And we’ll try to get them to agree to remove it from your credit report completely when you pay it.” Mendiola noted that the deletion is also included in the service and there are no extra charges.
Pay for Delete has been a very successful program for MSI because, when it’s implemented in conjunction with building lines of credit, clients often see a score increase of about 35 to 40 points on top of their already improving score.
After 15 years of providing highly satisfactory results, MSI Credit Solutions shows no signs of stopping its education-oriented approach to help people understand their consumer rights and improve their credit scores.