A few years ago a client of mine moved about two blocks away from their old residence address.  They went through an elaborate and thorough process of notifying everyone, including their creditors, of the change in address.  But one store made a mistake and typed the wrong street name into their database.

Soon after, the borrower walked into the store and bought merchandise for $135. The bill was sent to the wrong address and was returned to the creditor who then began reporting late payments to the credit bureaus. The borrower just didn’t register that they didn’t get a bill a month later. They also were not getting regular updated credit reports. Thus they did not know what was going on until they applied for a loan with me a year later.

It gets worse. When the store didn&39;t get paid, they sold this account to a collection agency, probably for 10 cents on the dollar. That agency ALSO began reporting it to the credit bureaus. When they contacted the borrowers they paid immediately, but didn&39;t realize what effect even a "paid collection account" would have on their FICO scores. 

When I ran their credit all this finally came out. His scores were 736, 684, and 634.  That’s still good for general mortgage purposes, but if his middle score were higher than 720, I could get him better pricing. In his case, with this lender he’d get extra three-quarters off the fees. I’m getting him a $1,000,000 loan so three-quarters of a point is $7,500 that he’s missing because of a $135 snafu. Ridiculous, but that&39;s our world!

The borrowers called the store and the supervisor looked at the file, saw the borrower&39;s request for update, acknowledged the typing error, and sent a "no fault" letter to the borrower.

We took that letter and one from another small faux pas and sent them to my credit agency. It took a couple of days but they got the records updated at the bureaus and then got an Instant Rescore. The borrower’s median score came up to 777, almost 100 points! That qualified him for the pricing incentive.

Cost?  $120. Benefit? $7,500.  Not bad.