The current mortgage lending crisis will create an entire new generation of individuals with credit problems…. unlike this country has ever seen…
So if you or someone you know has or will become one of these statics, here is some advise from a seasoned pro.
“Credit Repair” “Credit Rehab” “Clean Up Your Bad Credit”
Internet ad terms so over used, so over rated, that it is almost shameful.
A search on the internet today for “credit repair” will return over 24 million results, absolutely amazing!
All of those individuals and companies that jumped on the band wagon of the heavily over publicized “credit repair” industry. And with what may be the largest foreclosure market in history…thousands of more will be selling their services.
Look, it DOES matter what your current credit report has to say about you, but if your credit is bad because you did not pay your creditors, then there is no magic cure!
You have to get all three of your reports, understand them, check them and correct the inaccurate information!
Yes: it does matter what you do to your existing credit report!
However!
There are ONLY three factors that will improve your credit and raise your scores:
Corrections, Time and New Credit Period!
The Author
I recently retired after spending the last 35 years in consumer financing, mortgage financing, real estate investing, debt counseling and consumer credit consulting. In addition to all of those years of business, I am also someone who has walked a thousand miles in your shoes.
A few years back an unexpected personal situation (aren’t they all) cause me to miss a couple of payments on my credit cards. A couple of 30 day late payments, well they hurt, but they are not going to hurt too much. Then like a big black abbess, a huge dark hole opened up in the center of my life and bam. My whole world seemed to begin to completely unravel.
One problem after another and then some more, my demise was apparent. You know the felling don’t you? It was not only financial, it started affecting me physically, mentally and affecting my relationship with family and friends.
I finally seemed to reach the point were I could not pay anyone anything; all I was doing was just trying to tread water. Then when I had some cash to start paying towards some of the mountain of debt that I had created, I owed three times as much as I did before the problems started.
Late charges and late payments caused me to go over the limit, which of course caused more charges, and on and on and on! A $2500 credit card has become a $5000 credit card! After all these years of teaching, the teacher just became the student. For me it was not only embarrassing, shameful and down right depressing, it has turned out to be a part of my path of life. A path that has lead me to you, to hold your hand, show you the way out and hopefully give you a small part of your life back as well as some of your dignity.
Lets go..
Rejection
During those 3 plus decades I have dealt with thousands of consumers, thousands of credit applications, thousands of credit reports, thousands of approvals and unfortunately, I have had to
speak those disappointing words thousands of times… “Sorry, you have been turned down, denied, rejected”. And yet still today, no matter how I say it, it never feels good!
There are many things that I have learned and many things I can attest to:
* Everyone, like me and you, all started out with good credit.
* Everyone understood the benefits of good credit and soon learned the disappointments of bad.
* None of us woke up one day and said: “I think I stop paying all my bills and watch my credit go bad”.
* It took us all years to build up good credit and it took only 30 days to destroy it.
* Everyone I ever took an application from, had a story, a reason, of how it happened, and why their credit had gone bad along the road of life.
So, you already know:
Good credit will save you thousands of dollars in interest charges.
Without good credit you can’t rent a car or reserve a motel room. Your mortgage rate is as much as a pawnshop charges. You get treated like you are a second class person. In most states, bad credit means higher insurance rates on your house and car. In some states you cannot get homeowner
insurance from most prime companies if your credit is bad. Many companies will not even sell life
insurance to good people with bad credit!
Good Credit, Low Scores
If you have good credit, you may already know that does not mean you are going to have good scores. Over 60 million people have problems with their credit reports, credit scores or have no credit at all. Having good credit and a good score, means the difference in almost everything you do financially in life.
I cannot begin to tell you how many clients complained about low scores with good credit. I explained the one simple credit rule that changed their score by as much as 100 points! No, it was not over night, it took over 45 days. If you have a credit card and you owe more than 50% of the credit
limit your scores go down. Simple rule!
You are better off to have 5 credit cards and spread the charges out over all 5 of them. Never owe more than 50% on any credit card! Get Approved…Not Disappointed!
So how many times have you said to yourself, I would give anything to get my good credit back?
So you have found yourself here, on the Internet, looking for information on how to get your credit scores back. How you can get your financial life back! What a difference a good score would mean to your family!
Your Credit Report Card
Well here are some facts that you need to know, some facts that you had better accept, and stop searching for a magical overnight fix, it does not exist.
If you did not pay your creditors on time, then you earned bad credit from that company! That is why there is credit reporting. Only time will cure that problem.
* You should have no problem getting inaccurate information off your report and keeping it off.
* You may be able to make a deal with a creditor to get some things removed.
* Credit reporting agencies (CRA’s) would like to maintain 100% integrity and never report any inaccurate information! They are not out to get you!
* Some negative items on your credit report that you want to challenge just might be better off left alone!
Here’s the bottom line:
The number one factor in credit approval and the interest rate you are going to be offered is your score. It is a real simple process, the lower the score: The higher the turn down rate and the higher the interest rate you will be charged.
Your credit score is not about you; it is about everyone that has gone before you.
Back about 50 years ago when the Fair Isaac And Company (FICO) designed the scoring process it was based on the history of people that had similar credit reports as you do. From Fair Isaac web site: Fair Isaac was founded in 1956 on the premise that data, used intelligently, can improve business
decisions. Today, the company’s solutions, software and consulting services power more than 180 billion smarter business decisions each year for companies worldwide.
OK You are just one of 180 billion decisions made each year! Based on this information they came up with a way to group people together and score them based on their performance in paying their
bills and the odds of the individual filling bankruptcy. Sound unfair, judged by everyone else’s behavior not your own.
Well time has proven that even though the system is not perfect, it is the only one we have and for the most part, it has worked. For example: The rate of foreclosure is almost 6 times greater on
individuals that had a 620 or lower score vs. individuals that had a 720 or higher score at the time their mortgage was originated.
The reason your neighbor has a 2.5% interest rate and you have an 8.5% rate, your payment is $768 a month and theirs is only $395! In the last few years rate have been at an all time low with an
adjustable rate starting at 1.5%. Borrow $200,000 for as little as $790 a month. WOW, think of the house you could live in for that kind of loan! Oh, that loan requires a 720 or higher score.
Lease to own, rent, or if you do get approved for a mortgage, it will be a sub- prime loan with a rate more like 8.5% or higher. And you will be charged thousands of dollars more in loan fees!
CRA’s
First, the basics principals of credit: Credit Reporting Agencies
(CRA’s) were never designed or intended for the consumers use. They were designed for business- to- business information sharing. Not for you and me to write them, call them and complain about
their poor record keeping. It took the Internet to really wake people up to the fact that there
are problems. But that also created one more beast from the darkness of the net.
Credit Repair Scams!
The credit repair industry was spawned from the ability for marketers to tell the world that about 60% of all reports are inaccurate and at the same time promise amazing repair tactics. As I mentioned if you do a search for “credit repair” on the Internet you will get back over 24 million results to view.
One every minute will take you about 120 years, better get started!
Here are some of the results:
Get a new credit report!
This one can land your rear in the Federal Penitentiary! Create a company and apply for an Employer Identification Number,” which has the same number of digits as a Social Security number. They
provide the EIN as the Social Security number when applying for credit. The new number isn’t linked to your credit report and any negative information won’t pop up in a credit check. A felony under federal law!
Increase your credit score 60 points in 30 days!
First, there is absolutely no way anyone can promise that the mega computers are going to behave in any fashion. Second, credit scoring is effected by age and many other factors, so 30 days is not enough time to even get a response from the CRA.
Fired Collection Executive tells all!
What can you tell me? The collection business is a legitimate business, well some off them are. Their rules are governed by the Federal Trade Commission, got a problem contact the FTC.
And There’s More:
How I raised my credit score 40 pts in 24 hrs
Insider secrets on how to legally establish a new credit file in 24hr
We Remove All Negative Items From Your Credit File
Smash Debt Using Just 2 Simple Credit Letters
Here is my favorite!
One of the country’s largest credit- repair operations has agreed to pay more than $1.15 million in consumer redress to settle Federal Trade Commission charges that it violated federal law.
Even with all the bogus stuff, all of the rip offs, there has been a lot of good information written and published. The Federal Trade Commission, the watchdog of the credit industry, has a lot of the best information, for free.
You don’t need to “clean up” your report before you start back on the road to rebuilding you good credit. Actually you need to do them both at the same time. Good, active and aging trade lines… the better the your score.
There are some rules the computer has in place so read all of this so you don’t make things worst.
Oh, in case you did not know, a trade line is the industry term for every entry of credit on your report.
The medical collections, the cell phone collections, that satellite dish and even those entries that you have no idea what are, well they are not trade lines.
Credit is in three categories, installment, revolving and a mortgage. Each one counts towards your score. If you do not have a mortgage, then installment and revolving will make up your score. But your score will never get into the top national percentile. Not having a mortgage will keep your score lower; keeping lower credit card balances will help raise your score. After all, we are talking about a computer controlling your life, not your co-worker.
Ever wondered why the computer does not factor in your job, your job title, your income, your savings, your cash in the bank, you paid cash for car or anything about just how much money you make or have? Why would it? Your history of paying your bills tells it all. If you make $500 dollars a week and you have a mortgage, 2 credit cards with low balances, a car note and no bad credit your score just may be 780.
It does not matter what you make, it does not matter what you owe! You are dealing with a computer that is trying to process over one million decisions every second of every day. Did you get that? Trying to process over 1 million decisions every minute of every day! No wonder the system has so many problems.
The Scales of Credit
You have seen the scales of justice, or maybe in your case, the unbalanced scales of credit.
All of the bad on the left and nothing on the right! Now think about that example as your bad credit score. Down on the left looking up at what you want, high credit scores! You take the time to clean up any inaccurate information on your reports, get all the mistakes cleared up, and that is all you can do
to “repair” your credit…Then you have to get some weight on the other side!
If you have all bad credit or no reporting credit then the scales are not in your favor and never will be.
With all bad or nothing at all then how in the world will you ever get a good set of scores?
Well here you are…and you can fix that problem.Buy your credit back! That’s rightI said buy it back! As I said early you will have to spend money to get your credit back. YOU HAVE TO PAY!
WHO DO YOU WANT TO PAY?
How To Buy Your Scores Back!
As you already know there are only three types of reporting credit, mortgage, installment and revolving. It is not necessary to have all three but to achieve the maximum score you will need them all. If a mortgage is not a part of your life then don’t expect to break the 720 mark any time soon.
So lets get into installment and revolving, those are the ones for sale.
In the beginning of your way back many of the things you are about to do will most likely lower your scores, the computer does not like you to kick up any dust. You are going to receive your plan as if are ready to seriously buy your way back and you can send some money to do that. It would be
a waste of your time to start this at a minimum and then show you the maximum.
Whatever part of these steps you can afford to do is what you need to do. You don’t need to go broke trying to get your scores back up and then you can’t pay your bills. So make a plan and stick with it.
Getting and keeping credit is about discipline and more discipline and more discipline.
Your Plan
Here are the steps I recommend you take to buy your life back.
Your Credit Reports:
There are many places to buy one but there is only one place to get yours completely free.
You may already know the government required the three CRA’s to give you a report once a year for free! It is a simple process and you can get them anytime on line or through the mail. Once you log in and get your reports make sure to print them and save them to your computer!
annualcreditreport.com
Step Two:
Your Credit Scores
Your credit scores are a different matter, to get those you will have to pay. It’s your choice; there are hundreds of sites to buy them, but only three major bureaus.
Step Three:
Checking Account:
If you don’t have a checking account then you already know the problems it can cause. Most of my previous client that have had bad credit also had checking account problems. Then they end up in Chex Systems or one of the bank reporting agencies. That stops them from ever getting a checking account with any of the local banks. So to cure that problem here is a bank that will give you a second
chance and open up a checking account for you and even give you a debit card. A checking account that has a credit reporting program!
Step Four:
Prepaid MasterCard:
Hang on, not all cards are alike! There are prepaid Master Card unlike all the rest! One has a credit rebuilding program that is going to report a new good trade line and like the checking account it is as cheap as it gets! This is a great program for a lot of reasons. You have total control, no late payments, no over the limit charges and no monthly bill! It’s a TRADE LINE! Get yourself a regular card once you have your scores back! Like all reporting credit, the longer you have it the better! Wow! Just like that, in less than 30 minutes you have 2 brand new reporting trade lines!
Step Five: Keep doing what you are doing
Step Six:
Add Four Major Guaranteed Bank Cards!
Secured cards have been the death of many people! Be careful and do this right. Do not get any of these cards and plan on using them for any reason but rebuilding your credit!
Step Seven:
Bank Secured Loan
If you do not have a checking account with a local bank then you can try this but it may take making some phone calls to find a bank willing to help you before you do. Don’t give up; banks are making an attempt to attract new business unlike any other time in recent history!
Step Eight:
A Certificate Of Deposit Secured Loan
This is a time proven way to buy one of the best installment reporting lines of credit that you have available. In most cases you will need at least a thousand dollars to but this line, but here the catchyou will only need it for a day! That’s right you just need it for one day, so if you don’t have it you may be able to borrow it from a friend or relative. Here the way this works and what’s it going to cost you, and the double benefit!
Go to your bank, do not call them, eye- to- eye is the only way to do this. Explain to the bank officer: that you have credit problems and you are going to rebuild your life no matter what.
Tell them that you want to buy a $1000 one- year certificate of deposit. Then you want to make a loan for $1000 using your CD as collateral. This is a no lose situation for both you and the bank. They could really care less what your credit looks like, you don’t pay they take your CD. A 12-month CD is paying between 4 and 5% in today’s market. Your loan is going to cost 8 to 9% for the year. Bottom line, you have an installment loan reporting from a bank to all three CRA’s! Cost: high side is about 6% or about $60 for the year. Your monthly payment is going to be about $90 a month. So you walk into the bank with a $1000 and but a CD. You then make a loan for $1000 and they give you a check.
You now have your $1000 (or the $1000 you borrowed) and you now have to make a payment every month of about $90! However, you do not need to let this go on for a year. After you have made six payments you have done wonders to your scores! You can go back to the bank and cash out your CD and payoff your loan. Oh, by the way, you have forced yourself into saving up about $500 dollarsyou only owe the bank about $500 and you have paid your loan down half way! Keep the loan for a year and build your scores higher and have a CD worth $1000!
Step Nine:
Local Store/Internet Store
“We carry our own accounts.” They are everywhere including the internet. The computer understands many things, but first and foremost it understands that some one gave you credit and you are paying on time each month! So even if your payment is only $10 a month and you pay on time
the computer understands! What did cost and what have you gained. If you spent $200 and paid
$100 down payment, and you bought something that is totally worthless, you have spent $200 for a trade line that is reporting and it is an installment line!
Step Ten:
Make this a dedicated part time job, cause it is. If you follow these steps, plan every week and apply the rules…your credit will greatly approved in about 6 months and a major improvement in 12 months.
Forget what you have read…Corrections, Time and New Credit!
Get Your Life Back Now!