Negative or derogatory information on a credit report can affect a credit score anywhere from 60 to 160 points. Short sales and foreclosures definitely hurt a credit score, but it is possible to remove such negative information from the report, according to a local certified credit specialist.

The Federal Fair Credit Reporting Act states that everything reported on a client’s credit report must be 100 percent accurate and verifiable. At a recent meeting with members of the Silicon Valley Association of Realtors, Julie Macc, a legal consultant with the Century Law Group and credit and identity-theft specialist, said studies show that 93 percent of consumers have inaccurate information recorded on their credit reports.

You can challenge inaccurate reporting, according to Macc. Are the dates and amounts accurate? Is it being reported correctly as “charged off” after payment was accepted for release of the lien? Does the credit report reflect the account as closed? Often the account is still reported as open, Macc said.

If a borrower believes the mortgage loan servicer or lender has made a mistake, under the Real Estate Settlement Procedures Act (RESPA), the borrower can file a Qualified Written Request (QWR) for information about any questionable fees, entries or documentation and a life of loan history (all fees and payments ever made on the mortgage) from the lender. The lender has five days to acknowledge receipt of the request and 21 days to provide the requested documentation, or request an extension with an explanation of why an extension is needed.

Consumers may file a complaint with the lender(s), and in most cases against the three credit bureaus – Experian, TransUnion and Equifax. If the lender does not respond, or refuses to comply with the borrower’s QWR, the borrower may take the matter to small-claims court and sue the lender.

Macc encouraged realtors to warn their clients to beware of credit repair companies that advertise that they can remove short sales and foreclosures in 30 days or less. There are many bogus companies that continue to prey on struggling homeowners, she added.

She also noted that homeowners who attempt to remove a short sale from their credit reports need to be aware that they can be at risk if their loan is a “stated income” loan instead of a fully documented loan. Macc said the government is conducting more audits on “stated income” loans because of the many borrowers who lied about their stated incomes in order to purchase homes, a practice that contributed to the recent housing crisis.

The Silicon Valley Association of Realtors provided information for this article. For more information, email This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or visit www.silvar.org.

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