PITTSBURGH _ The Great Recession took a heavy toll on Jackie Horvath while she was living in Tampa, Fla.
Business dried up to the point where she had to shut down a once-thriving venture. She lost her home and had to file for bankruptcy. She said that by the time she decided to pack up and move back to Pittsburgh in 2007, her credit score had tumbled to around 400, which is about as bad as a credit score can get.
It took about two years for her life to stabilize. She gave birth to her son and found a job that allowed her and her husband to establish a budget and live within their means. Then she met with credit counselors at CureMyScore, who helped her clean up errors on her credit report and showed her how to build her credit. Within six months, her FICO score jumped to 760.
Today, Horvath, 50, lives in a $300,000 home outside Pittsburgh that she and her husband built. She works as a real estate agent at Coldwell Banker and often refers potential homebuyers with credit problems to the counselors she worked with.
Cindy Shipley also had to take time to repair her credit. She had a mortgage application denied in 2012 because of problems on her credit report.
She found a private party lender who took control of the three-bedroom home and worked out a deal with her to make payments under a rent-to-own contract until she could fix her credit and qualify to purchase it.
Six months after she started working with credit counselors at MyCreditTeam, she qualified to purchase the $175,000 house with an in-ground swimming pool that she had been renting. With a 10 percent down payment, her lender approved her for a 30-year mortgage at 3.25 percent interest.
"I was ecstatic," said Shipley, 43. "I actually almost couldn't believe it."
Credit can be a deciding factor in getting a loan and it can affect many other aspects of life, such as job promotions, the rate that insurance companies charge for auto coverage and how much lenders charge borrowers for credit.
FICO scores range from a low of 300 to 850, the highest score. The scores use five factors to determine a person's creditworthiness: payment history, current level of indebtedness, types of credit used, length of credit history and new credit accounts.
Often bad credit is the result of poor debt management, but it can also be caused by errors on a credit report or by identity theft. Many consumers who have had to deal with credit reporting agencies to fix errors have brought in professional credit repair professionals to help resolve issues.
A new study by New York-based SmartAsset, a personal finance technology company, delved into 2016 data from the federal Consumer Financial Protection Bureau and found incorrect credit report issues dominate financial issues complained about in each state.
Incorrect information on credit reports ranked as the No. 1 issue in 43 states. In fact, SmartAsset found nearly 17 percent of all CFPB complaints are about trying to correct a credit report. The only one that came close was problems processing mortgage payments, which accounted for 8.9 percent.
Problems on credit reports often follow bankruptcies.
Pittsburgh bankruptcy attorney Matthew Herron said the purpose of filing for bankruptcy is to allow people a fresh start and give them a chance to rebuild their credit. However, from what he has seen, it can be an uphill battle for people.
"If you file for bankruptcy, in many instances the credit furnisher, which would be like Target or Kohl's, may not report the bankruptcy correctly and a lot of the reporting they do after bankruptcies, they shouldn't be reporting at all," said Herron, managing attorney for The Debt Doctors at Quatrini Rafferty.
He said it can be difficult to challenge reports by companies such as Transunion, Equifax and Experian because of their relationships with creditors and their internal systems.
While credit repair companies can sometimes help, consumers should be aware that not all are legitimate. The most basic scam occurs when a company or individual promises to repair a consumer's credit after receiving an advance fee and then does nothing to improve the person's credit score. Consumers who have a problem with a credit repair company can report the issues to their state attorney general or to the Federal Trade Commission.
When clients come to Herron following a bankruptcy and say they are having trouble getting credit, the first step he takes is to refer them to CureMyScore.
Chris McConville, owner of CureMyScore, which also worked with Horvath, said his company makes sure the credit reports are 100 percent accurate and verifiable, while also teaching clients the rest of how credit works.
"In Jackie's case, anything that could not be verified or was not 100 percent accurate, it would be corrected or deleted off the credit or they would update it to report it in a different fashion," he said.
"Our customers go from _ say they're at a 550 credit score and 750 is the national average. Then we are just putting you on a fast track to get there."
McConville said inaccuracy in the reporting is just one part of credit scoring.
"Some people have too much credit, and we teach them how to use the credit they have established," he said. "Some people need to establish credit. So, we help with the inaccuracies.
"But we also make sure they understand how to open credit, have the proper amount of credit open and how to use it once it's opened."
The counselors work one on one with clients to show them the ropes of the credit industry. The company charges a fee to work with clients, typically for about a six-month period.
Paul Ritter, owner of MyCreditTeam, the company that helped Shipley get back on track, said the errors on her credit report were holding her back.
He said Shipley's credit report contained duplicate entries and no date of last activity on accounts. In one instance, he said, she had a 90-day late mark on an account, but the report showed that in the prior month she made her payment on time.
"When it comes to fixing erroneous entries, the question is: Is it timely, accurate and verifiable? If it fails any of those tests, the law states it must be removed from the credit profile."
While credit repair can give people with less than perfect credit a new lease on life, not everyone is ready for that process.
"The interesting thing about credit is what led you to the credit issue really has nothing to do with it," said McConville at CureMyScore. "What has to do with it is what do we do now?
"If you're in a financial situation today where the wheels are falling off, we can't help you," he said.
"What happened to ( Horvath) back when she had the storms, that wouldn't be a time for us to work with her. She had to wait until she stabilized."
