Credit Make Over

8/2/2019 Credit Make Over

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The Credit Repair Bible

All the Sec rets to Neve r Be Turned Down for a Loa n Ag a in a nd Save Thousands

of Dollars in interest Payments

Copyright 2008 Chris Linus

Notic e of rights

All rights reserved . No pa rt of this boo k may be rep rod uc ed or transmitted in any

form or by any means, electronic, mechanical, photocopying, recording, or

otherwise, without the prior written permission of the publisher.

Disclaimer

This boo k is intend ed to b e used as a guide and it d oes not rep lac e the figure of

an a tto rney. The informa tion c onta ined in this rep ort is for informa tiona l purposes

only and is not lega l advic e.

While the author and/or publisher have carefully researched information from

c red ib le sources, they cannot guarantee the a c c urac y, c orrec tness or intend ed

use of the informa tion presented.

The autho r and / or pub lisher hereby d isc laims any liab ility for loss, risk, damage,

inc onve nienc e (rea l or ima gined ), tha t ma y be incurred by or resulting from the

use o f any idea s, informa tion, or op inions c onta ined or presented in this boo k. As

with any credit or legal matter, a consumer should seek the advice of a

c om petent leg a l p rofessiona l before a pp lying a ny of the informa tion p resented

in this book.

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TABLEOFCONTENTS

Contents

TABLE OF CONTENTS................................................................... 2

Contents...................................................................................2

PREFACE WHY YOUR FINANCIAL FUTURE DEPENDS ON

HAVING A GREAT CREDIT SCORE.............................................. 4

PART 1 - HOW A BETTER CREDIT SCORE CAN SAVE YOU OVER

$100,000 ON YOUR MORTGAGE ALONE...................................8

Case Stud y: The Impac t o f a Cred it Sc ore on a $250,000

Mortgage .................................................................................8

Case Stud y: The Impac t o f a Cred it Sc ore on a $20,000

Car Loan...................................................................................9

Conc lusion: The Highest Pa id Work You Will Ever Do ........10

PART 2 - THE BASICS................................................................... 12

What is a Cred it Sc ore? ........................................................12

How is Your Cred it Sc ore Ca lc ulated? ............................... 14

Do You Have Good Cred it? ................................................16

What is Your Sc ore? ..............................................................17

PART 3 - IMPROVING YOUR CREDIT SCORE: BASIC PRINCIPLES

....................................................................................................19

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Cred it Repa ir Ag enc ies (For Busy Peop le) ......................... 68

PART 6 - BONUSES...................................................................... 70

EPILOGUE...................................................................................78

PREFACE WHY YOUR FINANCIAL

FUTUREDEPENDSONHAVINGAGREAT

CREDITSCORE

There is som ething tha t makes the Americ an ec ono my

unique: the easy access to credit. It has become common

to buy not only homes and c ars, but a lso home app liances,

boa ts, and even pay for vac a tions with c red it c a rds.

The truth is tha t c red it c an be rea lly good and very ba d a tthe same time. It just depends on how you use it. If you are

responsib le a nd know how to p lay the game, then you can

use your credit to build a business, invest in real estate, or

maybe in the stoc k market. But if you don t know what you

are d oing, c red it c an be d angerous, very dangerous. Think

about it: you c an buy almost anything that you w ant even if

you d on t have the money to pay for it! They make it soundgreat: get this, get that. You dont have to pay for it, just

slide your card! And then you realize that all these small

monthly payments are eating up all your income. And the

worst part is that your debt never decreases, you are just

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paying interest. You are working really hard to make

som eb od y else ric h!

Again: credit can be a really good thing; you just have to

lea rn how to use it in your favor instead of aga inst you. I like

to say that there a re tw o d ifferent kinds of deb t: good deb t

and b ad deb t. Good deb t is money you use to make some

kind of investment (start or grow a business, invest in stock,

buy investment real estate, etc.) Bad debt is when you use

your c red it to buy consumer good s: a b igger TV, a week in

Hawa ii, expensive resta urant m ea ls, etc .

Essentially, good debt can make you wealthy; bad debt

c an make you broke.

The one question tha t you need to ask yourself to find out

whether a debt is good or bad is this: Will this put money

into my poc ket o r take it out?

If you are rea d ing this book, you p robab ly have som e c red itproblems. But I want you to know that you can solve them.

In fac t, I am sure you w ill. The fac t tha t you boug ht this book

is a good sign that you are committed to solve your credit

problems. But let me warn you: reading this book is just the

first step . Nothing will happen until you ac tua lly DO wha t this

book teac hes you. If you d on t go out there a nd d o w hat it

takes to improve your financial situation, nobody will do it

for you.

This book is about improving your c red it sc ore. But w hy is

tha t so important? Bec ause w ith a bad c red it history you will

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miss the best opportunities: the best mortgages, the best c ar

loans, and the best credit card rates. Many lenders will just

avoid doing business with you, and those who dont, will

c ha rge you outrageous inte rest ra tes. They will see you as abig risk, so they will make sure they get paid well for taking

that risk. You will end up paying thousands of dollars extra in

interest.

But don t frea k out. It d oesn t matter how bad your c red it is,

you now have a step-by-step plan to dramatically improve

it in a short period of time.

The first thing you need to keep in mind is tha t informa tion is

pow er. This is a game, and if you know how to p lay it, you

can radically benefit from it. Unfortunately, most of the

information contained in this book is not available to

everybody. If it were, we wouldnt see so many people

suffering from financ ia l p rob lem s.

I will teach you the rules; I will teach you the secrets. I will

reveal the truths and the myths. Once you know how the

system works, you c an make it wo rk to your ad vantage. You

will notice that a lot of times the system doesnt make a lot

of sense, or it just doesnt seem fair. Dont waste your time

judg ing it. There s nothing you c an d o about it, exc ep t for

lea rning how it works and take a dvantage o f it.

If you want to read the Fair Credit Reporting Act, visit this

website: www.ftc.gov/os/statutes/031224fcra.pdf

You dont need to if you dont want to, because I will

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explain to you exactly what the FCRA is all about and how

c an you take advantag e of it.

I hope you enjoy reading this book and I can guarantee

that if you do at least a couple of the things that this book

will teach you, you will see your credit score getting a lot

better, you will save thousands of dollars, and your financial

situation will improve in a way you never thought possible.

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PART 1 HOWABETTERCREDITSCORE

CAN SAVEYOUOVER $100,000ONYOUR

MORTGAGEALONE

It is essent ia l tha t you understand what a huge d ifferenc e a

credit score can make when it comes to loan payments.

Most people dont understand the power of a good credit

sc ore until they see c ase stud ies like the ones I am about to

show you.

I believe that there is no better way to make a point than

show ing you rea l c ases; rea l exam ples where a good sc ore

c an ma ke a ll the d ifferenc e.

Case Study: The Impact of a Credit Score on a $250,000

Mortgage

This is an example o f a typ ic a l 30-Year fixed mortgage fo r

the amount o f $250,000. You c an c lea rly see how som eone

with a credit score of 720 will pay $1,479 a month and the

to ta l inte rest tha t he will pay during 30 yea rs will be $282,557,

slightly mo re than the p rinc ip le a mount.Now, c om pare tha t to som eone who has a sc ore of 559. This

persons monthly payments will be $2,763 (almost twice as

much as the person with a good credit score!) And he will

pay $744,524 in inte rest. Tha t is 3 times as muc h a s wha t the

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first p erson w ill pay. It is ha lf a million d olla rs more! You d on t

wa nt to pay that much more, do you?

CaseStudy:TheImpactofaCreditScoreona$20,000Car

Loan

In this case, we can clearly see that someone with a really

good credit score will be offered an interest rate of 5.8%.

Now, compare that to the almost 15% interest rate that

someo ne with b ad c red it w ill get . The first person will pay

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only $3,088 in inte rest, whereas Mr. Bad Cred it will pay

$8,500, almost 3 times as muc h.

Conclusion:TheHighestPaidWorkYouWillEverDo

I hope that by now you realize that we are not talking just

about a number that doesnt really mean that much. We

are talking about thousands of dollars you are giving away

and should be keeping for yourself. If you are paying for a

$250,000 house and a $20,000 car, you can save $1,400 a

month by just having a good credit score. How does an

extra $1,400 in your poc ket every month sound?

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To use the same deb t c a lc ula tor tool I used to c a lc ula te

these payments visit this website :

http:/ / ww w.myfic o.com/ myfic o/ Cred itCentra l/ Loa nRates.a

sp

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PART2 THEBASICS

Whatis

aCredit

Score?

A credit score is a 3-digit number that ranges between 450

and 900 and rates your credit history. Lenders use this

information to determine how much risk is involved in

lend ing money to you. The higher your c red it sc ore is, the

less risky you a re c onsidered by lenders.

Your credit score is based on your credit report. A credit

report is a snapshot of your credit history for the last 7 years.

It shows late payments, collection accounts, current debt,

and also positive items, such as bills paid on time, paid as

agreed , never late , etc .

Your credit score doesnt bring into consideration race,

c olor, na tiona l orig in, ma rita l sta tus, sa la ry, oc c upa tion, title,

em ployment history, etc .

You might think that your current credit score is fair, or

maybe you dont think it is. But the truth is that this system,

even with its deficiencies, can give the lender an idea of

how responsib le you have b een a t managing your finances,and he w ill take that into c onsidera tion w hen he dec ides if

he is going to approve you for a loan, and what rate he is

going to offer you.

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There a re 3 ma in c om panies tha t monitor your c red it rep ort:

Experian, Equifax, and TransUnion. Eac h one ha s its own

sc oring system. Experian s system is c a lled Experian/ Fa ir

Isaac , Equifax s is c a lled Beac on, and TransUnion s is c a lledEmpirica.

Each of these companies is referred to as credit bureau.

Eac h c red it burea u will have a d ifferent c red it sc ore for you.

This doesn t only happen bec ause they w ork with d ifferent

systems, but also because most creditors dont report to the

3 bureaus. For example, if you d idn t pay your phone b ill last

month, the phone company may report to Experian only or

maybe to Experian a nd TransUnion, but no t to Equifax.

In March of 2006, the 3 bureaus decided to create a new

sc oring system: Vanta geSc ore. Its ma in purpose w as to

solve discrepancies between the different scores each

burea u had for ea c h person. It made things bette r, but the

system is far from being perfect, and many times there are

b ig d ifferenc es betw een the c red it sc ores ea c h burea u will

p rovide fo r the same p erson.

FICO is a c om pany who provides c red it sc ores based on the

reports ob ta ined from Equifax, Experian, and TransUnion.

FICO developed its own scoring system called FICO

Expansion Sc ore, whose m ain goa l is to inc lude p eop le w itha thin o r inexistent c red it histo ry into the ir sc oring system.

Here is the contact information for each of the three

bureaus. You will need it when you dispute inaccurate or

incom plete negative items on your c red it rep ort.

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EXPERIAN

P.O. Box 2104

Allen, TX 75013

(888) 397-3742

EQUIFAX

P.O. Box 740241

Atlanta , GA 30374

(800) 685-1111

TRANSUNION

P.O. Box 2000Cheste r, PA 19022

(866) 726-7388

HowisYourCreditScoreCalculated?

35% of the sc ore is based on your paym ent history

This makes sense sinc e one of the p rimary reasons a lend er

wants to see the sc ore is to find out if (and how timely) you

pay your b ills. The sc ore is a ffec ted by how many b ills have

been pa id la te, how many were sent out for c ollec tion, any

bankruptc ies, etc . When these things happened a lso c omesinto p lay. The more rec ent, the w orse it will be fo r your

overa ll sc ore.

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30% of the score is based on outstand ing deb t

How much do you owe in car or home loans? How many

c red it c a rds do you ha ve tha t a re a t the ir c red it limits? The

more cards you have at their limits, the lower your score will

be. The rule of thum b is to keep your c a rd ba lanc es a t 25%

or less of their limits.

15% of the sc ore is ba sed on the length of time you've had

credit

The longer you've ha d estab lished c red it, the b ette r it is for

your overall credit score. Why? Because more information

about your past payment history gives a more accurate

p red ic tion o f your future a c tions.

10% of the score is based on the number of inquiries on yourreport

If you've applied for a lot of credit cards or loans, you will

have a lot of inquiries on your c red it report. These a re b ad

for your score because they indicate that you may be in

some kind of financial trouble or may be taking on a lot of

debt (even if you haven't used the cards or gotten theloans). The more rec ent these inq uiries a re, the worse for

your credit score. FICO scores only count inquiries from the

past yea r.

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10% of the score is based on the types of credit you

c urrently have

The number of loa ns and ava ilab le c red it from c red it c a rds

you have makes a d ifferenc e. There is no magic number or

combination of types of accounts that you shouldn't have.

These ac tua lly c om e more into p lay if there isn't as muc h

other information o n your c red it rep ort on whic h to base the

score.

DoYouHaveGoodCredit?

To determine how good your cred it is, we w ill show what the

sc ores of the entire US popula tion looks like so you c an d o

some comparison:

Up to 499: 1%

500 - 549: 5%

550 - 599: 7%

600 - 649: 11%

650 - 699: 16%

700 - 749: 20%

750 - 799: 29%

Over 800: 11%

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WhatisYourScore?

There a re free and pa id servic es tha t a llow you to ac c ess

your credit report and score. We strongly suggest that you

stick to the paid services for a couple of reasons: they will

p rovide you w ith more a c c ura te d a ta and the free servic es

usually are not that free after all, and start charging you

a fter a 30-day tria l.

According to the law, you have the right to get one free

c red it report every 12 months. To get yours, you c an req uest

it online at www.annualcreditreport.com or calling 877-322-

8228. Note tha t they will g ive you a c red it rep ort for free , not

a credit score. You can, however, purchase a credit score

from them . When you req uest your c red it rep ort, ma ke sure

they ma il it to you, as opposed to get ting the online version,since the report you will receive in the mail will be more

complete than the one you can get online. Even if you

req uest your rep ort online, you can get it ma iled to you.

Additionally, if you have been a victim of ID theft and you

have reported it to the bureaus; they will send you a free

credit report. Do this only if your identity has really beensto len. Doing it just for the c red it report d oesn t make sense,

sinc e you will be unab le to op en new ac c ounts for 90 days.

If you are thinking about b uying a p iec e o f rea l esta te a nd

your b roker or lend er gets your c red it sc ore to eva lua te your

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history, you have the right to get a c op y of tha t sc ore from

him or her.

There a re a c oup le o f c red it sc ore estima tors online.

Although they are not the real deal, they can usually give

you a very good idea of what your score could be. And

they are free . Chec k out a c oup le o f them:

MSN Money Centra l:

http://moneycentral.msn.com/investor/creditreport/main.as

p

Bankrate.com:

http://www.bankrate.com/brm/fico/calc.asp

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PART 3 IMPROVING YOUR CREDIT

SCORE:BASICPRINCIPLES

The2MostImportantConceptsYouWillEverLearnAbout

YourCreditScore

High Credit Limit

Your high credit limit is the total amount of unsecured

revolving accounts that you have in your name. It includes

credit card debt and any other kind of credit not secured

by an asset. It doesn t inc lude m ortgages or c a r loans, sinc e

these kinds of loans are secured by a piece of real estate

and a c ar, respec tively.

Lets say you have 4 credit cards, each with a limit of$10,000. Your high credit limit would be $40,000.

The higher your high c red it limit is, the bette r your c red it

score.

Deb t-To-Cred it Radio

The deb t-to-c red it-rad io is the tota l amount o f deb t in

relation to your available credit. In the previous example,

your high c red it limit was $40,000. Tha t is how muc h you a re

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allowed to borrow. Now, lets say you only borrowed

$20,000. In this c ase, your deb t-to -c red it rad io is 50%.

The low er your deb t-to-cred it ra tio, the bet ter your c red it

sc ore. The lenders assume tha t if you c an borrow $40,000

and you only have a $5,000 debt, you are managing your

financ es responsib ly.

The10CommandmentsforBuildingaGreatCreditHistory

Pay Your Bills on Time

It g oes without saying tha t la te payments a ffec t your c red it

score. Obviously, a person with a big list of items showing

never late will have a much better score than someone

with a bunch of negative hits for la te payments.

Start Early

Build ing a good c red it history takes time. You won t b uild an

amazing c red it rec ord overnight. Tha t is why it is so

important to sta rt ea rly.

Open Savings and Chec king Ac c ounts

A lot of people still rely on cash as a main method of

payment. This c an be a b ig mistake if you a re trying to build

a c red it history. Op en a t lea st one savings ac c ount a nd one

c hec king ac c ount. And use them.

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Dont Close Old Ac counts

Closing accounts can be very damaging to your creditsc ore. Keep them op en. If you have an old c red it c ard , the

first one you ever go t, and you a re thinking about c losing it

because the interest rate is 30%, dont do it. Keep it open.

Make sure you keep a really small balance, even if its $10,

so you dont have to pay a lot in interest. But dont close it.

An old account with on-time payments history can boost

your c red it sc ore.

This a lso app lies for sto re c a rds, suc h a s a Wal-Ma rt c a rd ,

Sea rs, Hom e Depot, etc . Don t c lose them . If you a re an

ob sessive shop per and a re a fra id of spend ing money just for

having the cards, cut them in half and throw them away,

but dont go to the store and ask them to close the

account.

Keep Your Deb t-to-Credit-Ratio be tween 10% and 30%

If your high credit limit is $40,000, try to have an outstanding

balance of between $4,000 and $12,000. If you really need

to go over that, never go past 50%. Tha t would hurt your

credit.

If you have 4 credit cards and you max out all of them, it is

not going to help you.

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If you decide to pay off your credit cards balances every

month, it is not a bad idea, but keep in mind that creditors

make the ir money when you pay interest to them. If you pay

your c red it c ard ba lanc es in full eve ry month you w ill have agood sc ore, but no t as good as if you kep t a 10% ba lance.

Now, lets say you have a high credit limit of $40,000. And

your debt is $15,000. Tha t is a deb t-to-cred it ratio of 37.5%.

To dec rease tha t to 30%, where is c onsidered op tima l, you

c an pay $3,000 of your c red it c a rd ba lance a nd dec rease

your debt to $12,000. But there is another thing you can do

to take your deb t-to-cred it ra tio b ac k to the 10%-30% range.

You can increase the limit of one of your credit cards by at

least $10,000 (or get a new card with a limit of $10,000 or

higher). Now your new high credit limit is $50,000, and even

though you still owe $15,000, your debt-to-c red it ratio is now

30%.

Something else to keep in mind is how to d istribute your

debt among your accounts. For example, if you have 4

c red it c a rds with a limit of $10,000 ea c h and your tota l deb t

amount is $12,000, it would be OK as long as your ba lanc e is

$3,000 on each of those cards. If one of the cards is maxed

out (you used all your credit, which was $10,000), and the

other cards have balances of $1,000, $500, and $500

respectively, that will damage your score, since you are

way over 30% on one of your cards (actually, the debt-to-

c red it ra tio for the c a rd where you have a $10,000 ba lance

is 100%).

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Make sure your debt is distributed evenly among your

accounts.

Inc rease your high c red it limit

As we mentioned before, a higher credit capacity can

increase your credit score. But you need to be very careful

about this. If you op en too m any ac c ounts in a short pe riod

of time, it will hurt your score. If last week you had a limit of

$10,000 and you went and got 3 new credit cards for

$10,000 each within the last 4 days, it will damage your

sc ore a lot .

There is no rule for how muc h you c an inc rease your limit to

get your credit to improve instead of get worse. It is just

c ommon sense. Think ab out it this way: if you were a lender

and you were looking at someones credit report, and this

person ha d a limit o f $10,000 until last w eek, and now she isopening more and more credit cards, taking more debt,

you wouldn t see tha t as a good thing. You w ould think tha t

this person went crazy and you dont know how well she is

going to manage her new credit capacity. One thing is to

manage a $10,000 credit limit, and a very different thing is

to manage $40,000 a ll of a sudden.

When you were a teenager, your pa rents let you go to your

first party and asked you to be back by 9 PM. For the next

party, you probably begged them to let you stay until 9.15

PM, or maybe 9.30 PM, but you didnt ask them to stay until

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midnight. They were going to say no. You were smart about

it and tried to negotiate little things a t a time tha t you knew

you could get . A coup le of yea rs la ter, you were fina lly

allowed to stay until midnight, because you were patientand asked for small things tha t you knew you c ould get.

The same thing ha ppens with c red it sc ores. If your limit is

$10,000 today and $40,000 tomorrow, some red flags will

ra ise and your sc ore will signific antly drop .

Open new accounts slowly but constantly. Another

tec hnique tha t a lmost nob od y uses but it has p roven to bevery effec tive is to c a ll your c urrent c red it c a rd vend ors and

ask them to raise your limit. Ask them to raise it by 50%-100%

every 6 months. If you always paid on time and kept your

debt-to-credit ratio below 50%, they will almost always

agree to d o it. You a re a go od c ustomer to them and if they

c an make more money on you, why wouldn t they?

Make Sure to Have a Mix of Revolving Debt and Installment

Debt

So far, we have only ta lked about revo lving deb t, whic h is

unsec ure c red it, such as c red it c a rds and any other type of

c red it tha t is not sec ured aga inst an asset.

In order to ha ve a grea t c red it sc ore, you a lso need to ha ve

som e insta llment d eb t: a mortgage, a c ar loa n, or any other

kind of loan sec ured by an asset .

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A lot o f peop le finance their c ars even if they don t need to,

bec ause it is very benefic ia l for the ir c red it history.

Use Your Revo lving Debt

Having a bunch of c red it c a rds is not enough. You ha ve to

use them. Try to keep small ba lanc es (between 10% and

30%) a nd use your c ards as often a s you c an. Try to avo id

cash.

The key is using your cards lightly but regularly. If you justkeep them in your wallet, they wont do much for your

credit.

Avo id Hard Inquiries

There a re 2 d ifferent kind s of inquiries: soft a nd ha rd . Soft

inquiries a re reg ula r ac c ount review s and they don t a ffec t

your c red it sc ore, so you d on t need to w orry ab out them .

Hard inquiries take place when you apply for a firm offer of

c red it or insuranc e. They d o hurt your c red it sc ore and c an

stay on your credit report for up to 2 years, even though

FICO only takes into consideration the ones during the last

12 months to c a lc ula te your sc ore.

A ha rd inquiry could lower your sc ore up to 35 points, so only

allow them if you are serious about a credit or insurance

app lic a tion w ithin the next 2 months.

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Note that nobody can place a hard inquiry on your report

unless you autho rize them to . It does happen though. Some

c ompanies will do it desp ite o f the law. If it happens to you,

contact the creditor or collector and ask them for theirpermissible purpose. We have included a template letter

tha t you can use for this c ase. If they don t have a

permissible purpose, you can ask for and collect damages

for up to $1,000 ($2,500 in California). Mortgage broker

inquiries are not rare, even when they did not process your

app lic a tion. They have to ma il you an approva l/ denia l

letter and state that you did not put the application onhold . If not, they ha d no permissib le p urpose.

Show a Stable Lifestyle

Even though this might not directly affect your credit,

showing stability can greatly improve your chances ofgetting new credit card offers, which can ultimately

improve your credit score, as we mentioned earlier in this

chapter.

Cred it c a rd c om panies a re m ore likely to o ffer you a c a rd if

you d idn t rec ently get d ivorc ed , if you have kept the same

address for a c oup le of years, if your ma iling address is not a

P.O. box, if you ha ve a land line listed as your p rimary phone

number instead of a cell phone, and if you are not self-

employed.

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Actually, being self-employed can be very detrimental to

your c red it. But there is som ething you c an do a bout it: you

can create a business entity (corporation or LLC), and you

will basic a lly be a n em ployee of this c om pany. You need toown no more than 55% of this new business, or you will be

considered self-employed anyway. Find someone you trust

to ow n the rest of this c om pany.

If you see your self-employed sta tus on your c red it reports as

a negative item , you c an a lways ma il a c oup le o f W2s and

paystubs to the credit bureaus along with a letter stating

that you a re a n emp loyee and you are subm itting p roo f of

tha t. Ta lk to your ac c ountant to g et he lp set ting this up .

A StepByStep Plan to Start Creating Healthy Financial

Records

Som e young peop le, immigrants, and rec ently widow ed or

divorced women might have a very thin credit history or

even no c red it history a t a ll.

Som e o f these p eop le think tha t c red it rep orts only c onta in

negative hits, and that they are actually better off not

having a c red it history a t a ll. This is a b ig misc onc ep tion.

Lets say you fall behind on your cell phone payments, but

after a couple of months you bring the balance current.

Lenders now know how you are likely to act if you are ever

la te a ga in on your pa yments. They know you made a

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mistake in the past b ut you a lso d id something to fix it. But if

you dont have a credit history, they have no idea about

how you are g oing to ac t if you fa ll behind sc hed ule.

If you a re a married wom an who has only joint ac c ount w ith

your husband, it is very important that you start creating

accounts of your own. Here is why: if your husband has

financial difficulties and his credit is affected by that, yours

will be too. If you have credit of your own, you and your

husband c an rely on your c red it until he c an fix his.

There is another rea son why you w ant to build a c red ithistory of your own. If you get divorced, all your joint

accounts will be gone, and you will have absolutely no

credit history. Believe me: that is a situation you dont want

to put yourself in.

If your cred it is a lmost nonexistent , you c an p iggybac k your

husband credit (more on this technique later) by having joint accounts with him. But once you have built a credit

history of your own, you need to open accounts in your

name and c lose the joint ac c ounts. I know I rec om mend ed

earlier keeping accounts open, but in this case you have

more to lose tha n you have to win.

If you have an inexistent o r very thin c red it history, you need

to get started with secured credit cards and catalog cards.

With a secured credit card, you make a deposit with a

lender and your credit limit is usually equal to the deposit.

You can find these cards on www.bankrate.com or

searching on Google for secured credit cards. Please

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make sure that they report to the bureaus. If they dont,

there is no point in do ing it. Sinc e the ma in rea son why

people get this kind of cards is to start building a credit

history, most of the secured cards published out there willreport to the 3 bureaus, but it wouldnt hurt to double-

check. Most of these cards will convert to regular,

unsecured credit cards after 12 to 18 months of on-time

payments.

You can also get catalog cards, also known as store cards.

You c an get one of these a t Sea rs, GAP, Hom e Depot, and

so many other chain stores. Again, make sure that these

cards will report to the credit bureaus, or they wont help

you at all. And I cant emphasize enough that you need to

ac tua lly use the c a rds, and pay a lways on time. If you don t

use them , they won t build a c red it history for you.

A couple of months after you get catalog and secured

c ards (and if you a lways pa id on time), you w ill sta rt gett ing

in your ma il offers for more reputa b le unsec ured c ards, suc h

as Visa and MasterCard . Sta rt filling out a pp lic a tions for

these. This is when your cred it histo ry w ill sta rt b uild ing a t a

much higher pace. Get these cards one at a time.

Remember that increasing your high credit limit all of a

sudden doesnt do you any good. Apply for one, get

approved, and pay on time. A couple of months later,

apply for another one, get approved, pay on time, and so

on.

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Ma ke sure you don t app ly for those c red it c ards offers tha t

sound too good to be true. If you get rejected, that will

count as a hard inquiry on your credit report. If you are

getting started with building your credit and you get anoffer for a 0% interest card for the first 10 years and a limit of

$50,000, well, it doesn t look like it is for rea l. Look for p re-

approved offers only. Be aware that a lot of companies

use that term as a marketing tool, so make sure you read

the small p rint befo re a pp lying .

There is a small tric k tha t a friend of mine d isc overed a lmost

by ac c ident and shared with me. She c a lled her c red it ca rd

company to cancel her card, and the telemarketer talked

her into staying with them by waiving the annual fee for her

c a rd and dec rea sing her interest ra te c onsiderab ly. The

terms were g rea t, so she sta yed with this c ompany. She then

decided to cancel her other card, since she thought she

had too many, and something similar happened: theyoffered to waive her annual fee and to decrease the

interest rate . She then rea lized tha t she c ould get g rea t

deals by using this technique and all the credit cards

companies except for one offered her much better terms.

So the re you go, try that if you don t want to w aste your

money paying unnec essary fees and high interest ra tes.

And if you are getting started and you already have a

couple of secured and catalog cards, remember to add

some insta llment c red it to your mix. You might no t qua lify for

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a mortgage yet (maybe you dont even want to buy a

home), but you a re p rob ab ly rea dy to app ly for a c a r loa n.

If you have had some secured and catalog cards for a

while (tha t you ha ve b een using) and you still d idn t rec eive

any unsecured credit card offer in your mail, you might

want to c ontac t Innovis Data Solutions. This c om pany keep s

c onsumer financ ia l rec ords, and they can filter you out from

their databases causing you not to receive credit card

offers- if they dont think you will be a good prospect for

c red it c a rd c om panies. They might have som e negative

items on your credit history that dont show on the reports

tha t the c red it burea us keep of you.

To c onta c t Innovis, visit the ir website :

http :/ / www.innovis.c om / pers_p lac eDispute.html

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remove the item from your credit score right away. Keep

your rec ords.

Why it is Not Ab out Just Rem oving the Negative Items

Remember we mentioned that poo r c red it is bette r than no

credit? Adding positive items to your report is as important

as removing the neg ative ones.

Somet imes, there a re neutra l items tha t you will want to

leave on your report. For example, if you had some latepayments on your electrical bill, but then you brought it

current; even if you find a mistake on the item, it may be

convenient to leave it, or maybe request a correction of

that item instead of deletion. Remember, it is not about

deleting a s muc h as you c an.

Lea rn the Number One Rule

You might have a number of negative items on your credit

rep ort that m ight b e leg itima te a nd you d on t think you can

d ispute. Well, let me tell you a b ig sec ret . I want you to pay

extra attention because this is what all the credit repair

a ttorneys know but they never revea l: it is not about what islegitimate, but what creditors and the bureaus CAN PROVE

is legitimate.

You will find some negative items on your report. And you

are g uilty until you prove you a re innoc ent. But if you d ispute

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the item, then the creditor or the bureau need to PROVE

you a re guilty. Do you see how it works? If they c an t p rove

something, even if the item is legitimate, they need to

remove it.

Choose Which Items You Will Dispute

Let s say you have a c ollec tion a c c ount tha t was pa id in full

2 yea rs ago. It shows on your reports. In this c ase, you should

probably not do anything about it, because even though

there was a delinquency once on that account, you have

proven to be responsib le enough to pay it o ff.

There is no rule to help you dec ide w hic h ac c ounts you

should try to dispute and which ones you should not. Just

use your common sense. It always helps to put in the shoes

of a lend er: If I were a lend er eva lua ting offering a loa n to

this person, would I consider this account a positive ornega tive one?

In addition, if there is a mistake that actually benefits you,

suc h as a delinquenc y tha t show s it sta rted 5 yea rs ago and

it was in fact only 2 years ago, dont do anything.

Remember that after 7 years that item will disappear from

your report, so if they say its 5 years old instead of 2, itsbetter for you a nd you shouldn t ask for c orrec tion.

Perform Factual Disputes

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Never d ispute ea c h sing le neg a tive item on your rep ort just

bec ause you don t want to see it there . There ha s to b e a

reason for you to dispute an item, or otherwise it will get

verified and the bureaus will classify you dispute asfrivolous and reject any further disputes for up to 12

months.

For that reason factual disputes are the way to go. If your

disputes are factual and the bureau does not make the

necessary corrections or deletions, they have violated the

FCRA and you now have some leverage. Without any

violations, all you can do is file worthless complaints to

reg ula tors (who w on t even bother to help you anyway).

Believe it or not, most of the items on your credit report will

either be incom p lete o r c onta in errors. And even if they a re

leg itima te, DON T EVER ALLOW A NEGATIVE ITEM THAT IS

INCOMPLETE OR CONTAIN ERRORS to stay on your c red it

rep ort. It is impera tive tha t you understand this. If you see a

late payment from last year on your report and you know

you did pay late, but the item doesnt show the payment

da te, dispute it! How c an you know you were late if they are

not giving you the payment date? Let me repeat what I

said before: even if you know you were late on that

payment, the entry has a mistake, so its your job to dispute

it. Often times, creditors and the bureaus make mistakes,

and that is exactly what you want, because if an item is

inc om plete or conta in errors, it shouldn t be there.

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The previous paragraph is p rob ab ly one of the most

important ones in this book. I encourage you to read it

again.

When you submit factual disputes, you need to include a

letter explaining why you are disputing a certain item and

attach evidence supporting your statement. For example, if

it was a creditors mistake, have the creditor write a letter

sta ting tha t it was the ir mista ke.

If they don t remove an item right away after you submitted

a fac tua l d ispute, keep mailing them every month until theycomply.

Learning the Different Kinds of Requests

When you dispute an item, there are 2 things you can

request: correction or deletion. If you think an item should

be removed, ask for deletion. If you want it corrected, ask

for c orrec tion. Let them know what you want them to d o. If

you just point out a mistake but dont specify what action

do you w ant them to take, they will not d o a nything.

There is a third kind of request: va lida tion. Never ask for

validation. What is the point of asking for validation

anyway? I request validation for item number #####.

And they will answer Item validated. We confirm it is

correct. It just doesnt make sense. You dont have

anything to ga in.

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Dispute the Most Harmful Items First

There a re 2 c riteria you w ill need to use to esta b lish whic hitems you will d ispute first: age and severity o f the item. The

older an item is, the less weight it has on your sc ore. So, if

you have 2 la te p ayments (one from last yea r and the o ther

one from 5 yea rs ago), go a fter the new er one first.

Seve rity of the item is a very important c onc ep t. If you ha ve

c ollec tion items on your reports, dispute those ones first. You

will a lways have time la ter to c hase the sma ll stuff.

A very important thing that you need to know is that

collection accounts are allowed to be re-aged. Do you

rem em ber we ment ioned tha t a fter 7 yea rs a ll the items are

erased from your credit report? Well, collections have an

assigned date, and collection companies often sell or

transfer your deb t to other c ollec tion c om panies. And everytime your account is assigned to a new debt collector, it

resets its date on your credit report, and can stay there

forever. Actually, debt collectors are very well aware of this

and will do it to inflict the most possible pain until you pay

your deb t.

So, d ispute the most ha rmful items first a nd leave the smallstuff for la te r.

Call the Creditor

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I am impressed by how often people dont even consider

this c hoic e, a lthough it is very powerful.

It consists in calling the creditor (the company you owe

money to) and negotiating a deal where you pay them

whatever you can afford, and they report to the credit

burea us that the a c c ount is pa id as agreed .

Most c red itors might no t even think that you will ever pay, so

if you call them and offer to set up a payment plan with

them, they are likely to be very receptive. After all, you are

g iving them money, so w hy in the world wouldn t they takeit?

Som etimes, even if you have p a id off the d eb t entirely, you

c an offer them som e kind of incentive so they remove your

negative item from your credit report forever. Again, you

are offering them something, and they dont really benefit

from damaging your c red it, so they m ight a s well take yourmoney and help you clean your credit. I noticed that

especially small companies are always willing to work

something out w ith you if there is something in it for them.

It is important that you know all these techniques because

you might use them at some point, but what you need tounderstand is that not everybody will need to use all of

these strateg ies. I am just g iving you the tools. Use only those

tools tha t you rea lly need .

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Step2:BuildingaPositiveCreditHistory

Ask Some Companies to Report the Good Stuff TooAs we mentioned earlier, your credit report doesnt only

c onta in nega tive items. It c an inc lude a c c ounts that show a

status as pa id as agreed and never la te .

Well, you can use this to your advantage. Call some

companies you do business with (only if you always paid

them on time) and ask them to report a good paymenthisto ry to the bureaus.

The truth is tha t most b ig c om panies won t even take the

time to do it, but some smaller companies appreciate your

business so much that they will be glad to do you a favor.

Dont threaten anybody with taking your business

somewhere else, just ask nice and you will be surprised by

the response you g et .

Deposit Loans

Deposit loans are a great option to build credit fast. You

see , there is one kind of mortga ge c a lled SIVA, whic h stands

for Sta ted Inc ome Verified Assets. So you d on t need to

submit p roo f of your inc om e b ut you do need to show p roo f

of your assets. The way a deposit loa n w orks is this: a lend er

will put some amount of money in a bank account in your

name. It can be anywhere from $25,000 to $10,000,000. You

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c an t w ithdraw any of that money; it is just there to p rove

tha t you have assets. This is perfec tly lega l. And you pay 1%

of tha t a mount every month. Som e lend ers will req uire tha t

you have the money sea soned in the bank ac c ount for a tleast 3 months. Having $25,000 in the account for 3 months

will cost you $750, so it isnt very cheap, but you will have

ac c ess to a mo rtga ge tha t you otherwise w ouldnt.

And the other great aspect is that the payments for the

deposit loans are reported to the credit bureaus as a

current installment loan, which can skyrocket your credit

sc ore in just a few months.

Piggyback: Borrowing Som ebody Elses Cred it

This is a rea lly grea t strategy if you ha ve a very thin or

nonexistent credit history and want to improve it

d ramatic a lly in a lmost no time.

Nearly every credit card or credit account will permit the

primary account holder to add on (at a later date) an

autho rized user or sec ondary ac c ount ho lder. In most cases,

when this is done, the entire account history (retroactively)

gets posted to the authorized users credit report regardless

of their c urrent age o r c red it history.

This strategy has been used mostly by parents with the ir

c hild ren, but it can b e used by anyone. The key he re is to

find someone who trusts you and is willing to do this for you.

It is not a lways ea sy, but you c an ask them to add you a s an

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authorized user to their account and to have the card

mailed to their address. You dont need it; you just need to

benefit from the ir c red it histo ry.

Creating an Alternate Credit Profile

Before you start reading this, let me warn you that there are

ma ny illega l wa ys to d o this and we don t rec ommend a ny

of them. Always stick to the law and you will get the best

results.

There is a leg a l way to c rea te a n a lterna te c red it p rofile a nd

it is so basic that often times it is overlooked by people with

bad c red it. It basic a lly can be p erformed by c rea ting a new

leg a l entity: a c orpo ra tion o r LLC.

At first, the new entitys c red it w ill be linked to your persona l

credit, but using all the techniques explained on this book,

you can build a strong credit history for the new company

and it will eventually have credit of its own, and will not be

linked to your pe rsona l c red it rec ords anymore.

Step3:DisputingtheNegativeItems

Incorrec t Leg itima te Items

Som e items on your c red it rep ort c an be leg itima te (when

the fact did happen), but the item is mistaken or has an

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inc omplete fie ld . You are g oing to use these m istakes in your

favor to c lea n your c red it rep ort. For example, if you pa id a

bill late and the creditor reported it but they forgot to

mention the date of the late payment, you can dispute it.The ir mista kes are your ga in.

It goes without saying tha t if an item is not leg itimate, by a ll

mea ns you w ill want to d ispute it. For example, if they report

a la te p ayment and you pa id on time, it will be easy for you

to get that item removed assuming that you have proof of

your on-time p ayment. Tha t is why I rec om mend ed you to

keep rec ords for the last 7 yea rs.

The Proc ess

You want to d ispute your items by ma il. It is the ea siest w ay.

The envelop e w ill c onta in the d ispute lette r, p roof o f wha t

you are disputing (this is critical for success), and 2 forms ofID (d river s lic ense and Soc ia l Sec urity c a rd , or any other

kind of ID).

Now, a warning about the letter: you dont want to sound

like a lawyer. Dont try to threaten them. Dont waste your

time exp la ining the law to them; it is a bunc h of lawyers tha t

you will be d ea ling with. They know exac tly how this works.Dont dispute items if you dont have a reason for it (i.e.

illeg itima te, erroneous, or inc omplete items). If you a sk them

to remove a n item from your rep ort just bec ause you don t

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wa nt to have it there, they will laugh a t you and they wont

remove a nything.

OK, I just told you what not to do. Now let me explain

exac tly how to do it right. Send them a short, c onc ise, and

simple letter. It should have your contact information, the

bureaus contact information, the date, the account or

item number you are disputing, why you are disputing it,

your nam e, Soc ia l Sec urity Numb er, day of b irth, and your

previous address (if that is the address that shows on the

report).

I have included dozens of sample letters with this kit. Use

them. Tweak them a little b it. The sec ret is tha t you don t

want them to look as templa te lette rs. But you c an definitely

use them as a guide to write your own letters, or fill in the

b lanks and then c hange the format a little b it. Tha t is a ll you

need.

Once you start reading the sample letters, you will realize

how ea sy and simp le they are. And you w ill notic e tha t they

c ut right to the c hase. They are short, conc ise, and

powerful. Basically, you need to tell them what are you

disputing, what is the reason for disputing it, and what

ac tion do you expec t them to take (correc tion or deletion).

And, of course, you want to include your personalinforma tion so they know who is writing the let ter. There you

go, that is the secret formula. Actually, the secret resides in

submitting proof. Nothing can beat hard evidence. For

illeg itimate items, if they rep orted that a n ac c ount w as not

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pa id and you have the rec eip t that shows that you d id pay,

send the evidenc e o r forget a bout see ing the item gone. If

they didnt require proof, everybody would be disputing

everything. It would be a big chaos. For legitimate items,look for mista kes or inc omplete fields and just te ll them item

# # # # # doesn t show c red itor s nam e (or wha tever mistake

the item has). I req uest immed ia te rem ova l .

Dispute 1 Mistake at a Time

Lets say an item has 2 mistakes: the account number is

missing and it s a c ollec tion item w ith a c red it limit (c lea rly, a

c ollec tion ac c ount can never have a c red it limit).

Instead of sending a removal request mentioning both

mistakes, mention just one, and see what happens. If they

remove the item, then you are d one.

But if they didnt remove it (lets say they now included the

account number), there is still 1 mistake and you can

req uest a remova l aga in.

If you mention both mistakes on your first letter, they might

correct both and now you have no reason to dispute it

anymore.

Keep in mind that you a re d ea ling w ith peop le, and peop le

make mistakes. Your creditor could have received the fax

from the bureau asking them to update your account

number, and someone at your creditors office could have

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put that fax among a bunch o f other papers and it go t lost.

It ha ppens a ll the time. The bureau has by law 30 days to

update the item or they have to remove it. Probably your

creditors employees where oversaturated with work anddidnt have the time to find your account number, write a

letter for the bureaus and fax it. Great! Now the bureaus

have to delete the item or they will be violating the Fair

Cred it Rep orting Ac t.

Tha t is exac tly why you w ant to d ispute 1 mistake a t a time.

The m ore d isputes you submit, the more c hanc es the

bureaus and your creditors have to mess up. And by now,

you know how it works: if they mess up , you benefit.

If you need to dispute different items, you can do it with 1

letter, as long as you d on t d ispute m ore than 1 mistake p er

item.

Mailing the Dispute

Mail your disputes through USPS (United States Postal

Services). Use the ir Priority Ma il service. And pay a ttention to

this: don t request a signa ture. The bureaus a re overloaded

with work and if they c an avoid get ting your let ter, they w ill.

Don t g ive them rea sons to rejec t it.

If you a re going to send ma il to your cred itors, I rec ommend

tha t you use First Class servic e.

Never eve r send orig ina l doc uments, a lways send c op ies.

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Merged Acc ounts

You first need to identify if your credit file has been mergedwith someone else s. The way to d o it is by ca lling the c red it

bureau and asking them if there are any other sources of

informa tion linked to your ac c ount. It c ould b e a spouse, ex-

spouse, relative or a complete stranger. If so, request the

files be sep ara ted . Their system c onta ins a fie ld c a lled

Ad d itiona l Sourc es of Information. Tha t field should be

blank. Once those additional sources of information areremoved, everything linked to that source should drop off

your report. If the credit bureau is not helpful, then have a

mortga ge lend er pull a tri-merge c red it rep ort. That w ill

usually list the additional source of information. You can

then d ispute it w ith the c red it burea us.

OK, let s sta rt listing the most c ommon m istakes you c an findon your credit report and how to dispute them. Remember

that you will find sample letters for all these situations, but

before filling in the tem pla te let ters you need to understand

what you are doing. In each case I mention what kind of

evidence you can submit to support your dispute, but you

also need to use your common sense and make sure you

are sending all the necessary documents to prove yourc ase. It he lps to ask yourself this: If I worked a t a c red it

bureau, what evidence would I need to verify what this

person is te lling me?

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Cred itors Name Missing

If your report shows a negative account but it doesnt say

who you owe money to, how in the world a re you supposed

to know if the item is right or not? If you report contains an

item tha t doesn t spec ify the c red itor s name, d ispute it.

I d ispute [name of a c c ount], ac c ount number [xxx]. This

listing does not show the c red itor s name. I dem and

Ac count Number Missing

Every creditor should assign you an account number.Without one, the item is inc om plete and you should d ispute

it.

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I d ispute [na me o f ac c ount], ac c ount number [xxx]. This

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Blank Fields

No b lank fields a re a llow ed on your rep ort. If a c ertain fielddoesn t a pp ly, it should show N/A . If it s b lank, dispute the

item.

I d ispute [na me o f ac c ount], ac c ount number [xxx]. This

listing does not show ing the d a te o pened . I demand

Inconsistencies

You w ant to look a t ea c h derog a tory ac ross a ll the 3 c red itreports to find inconsistencies. If you find different dates,

balances, or any other inconsistencies on derogatory

accounts, consider contacting the original creditor for

documentation.

If the inconsistency was on the Experians report, for

example, submit a copy of your report from the other 2

credit bureaus showing the accurate information to prove

your d ispute.

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Lets say the first report is from Experian and the second onefrom TransUnion. You c an see the inc onsistenc y on the

Date Opened field. In this case, contact your creditor to

find out w hic h da te is ac c ura te, and req uest c orrec tion if it

will benefit you.

I d ispute [na me o f ac c ount], ac c ount numb er [xxx]. The

da te opened is 12/ 1993, not 12/ 1999, as shown in theevidence a ttac hed. I dema nd d eletion.

Incomplete Item

Som etimes, a deroga tory item doesn t show req uired

information, such as dates, balances, etc. In this case, youwa nt to d ispute the incomplete item.

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listing is inc omplete ; the High Ba lanc e is missing . I demand

Wrong DOLA (Day of Last Ac tivity)

The d ay of last ac tivity is a time stamp of when the ac c ount

was last permanently delinquent. We mentioned before

tha t items will sta y on your report fo r 7 yea rs. Some

companies play dirty and do what is called re-aging an

account. If you notice that they report a wrong DOLA, you

c an ge t the item deleted . These c ompanies re-ag e

accounts for 2 reasons: they want to hurt your credit asmuch as they can by keeping your delinquent account

foreve r on your rep ort, and the sec ond rea son is tha t new er

ac c ounts a re easier to resell to deb t c ollec to rs. Think ab out

it: if an ac c ount is 6 yea rs old, you know tha t if you d on t

pay for it, it will be gone from your report in 6 months

anyway. But if an account is just 1 year old, you have a

bigger motivation to pay, or otherwise that item will be on

your report for 6 yea rs.

Remember that the only ac c ounts that c an be re-aged a re

collections, since the date for these accounts resets every

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time your debt is transferred from one debt collection

c om pany to another. That is why collec tion delinquenc ies

a re the first thing you need to take c are o f.

Don t forget to submit p roo f of the ac tua l DOLA if you have

it.

Only Equifax revea ls the DOLA. For TransUnion a nd Experian,

the re is still a way you c an estima te them. On TransUnion

reports, take the Estimated date when this item will be

removed and count back 7 years. On Experian reports, if

you have an account listed as a Charge off as of Jun1997 , c ount b ac k 6 months.

If you have different DOLA for the same item from different

burea us (and the d ifferenc e is signific ant), c hanc es a re they

have re-aged the items. The oldest DOLA w ill be the c orrec t

one, since it is very common for creditors to re-age items,

but inverse re-ag ing a lmost never happens.Contact your creditor and ask them for a letter stating the

right DOLA a nd write a d ispute to the burea us send ing them

a c op y of the let ter your c red itor issued you.

I am d isputing the da te o f last ac tivity for ac c ount

number [xxx]. It ha s bee n re-ag ed . Plea se d elete this

Balanc e is Higher than High Balanc e

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The ba lanc e is what you c urrently owe. The high b a lanc e is

the most you ever owed. If we are talking about a credit

card, the high balance is the biggest balance that card

ever had .

Obviously, the current balance cant be higher than the

high ba lanc e. Dispute your item if you find this mista ke.

I am writing to d ispute a n ac c ount tha t s show ing a

ba lanc e tha t s higher tha n the high ba lanc e. Enc losed is a

c op y of the rep ort w ith the item c irc led . Plea se delete it

Incorrec t Credit Limit

If you have a $10,000 limit for one of your c a rds and the limit

shown on your report is different, send the bureaus a credit

card statement where it shows what your real limit is, along

with the proper letter, and ask for correction. Remember,

the b igger your high c red it limit is, the bette r your sc ore. So if

your report shows a limit of $20,000 instead of the actual

$10,000, don t do a nything; you w ill benefit from it.

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I d ispute [name o f ac c ount], ac c ount number [xxx]. This

listing shows a c red it limit o f $[xxx] a nd it should be $[xxx].

Enc losed is a c op y of my last c red it c a rd sta tement

show ing the c orrec t c red it limit. I dem and c orrec tion.

A Co llec tion Item Has a Credit Limit

This ha ppens very often and is a mista ke you will easily get

your item removed or c orrec ted over. A c ollec tion a c c ount

c an t ever have a c red it limit. It is not a c red it c ard . Dispute

it.


listing is showing a c red it limit o f $[xxx]. How c an a

c ollec tion item have a c red it limit? I dem and deletion.

Delinquenc ies After Closing Date

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An account cant show delinquent activity after its closing

date, or the day when it wa s c harged -off. If the da te when

the a c c ount was c losed or c harged off is not on your c red it

rep ort, you will have to w rite the c red ito r. Supportingevidence will make the difference between deletion and

correction. With or without evidence, factually dispute the

la te-pa ys a fter the c losed da te.


ac c ount was c losed on [da te], but is show ing delinquent

ac tivity after the c losed da te. Your p roc ed ures havea llow ed this since [d a te c losed or charged -off] a nd this

has been highly da mag ing to me. I want this ac c ount

Undated Late Paym ents

This is a very c ommon mistake. How c ould you know if a

payment was la te if it has no da te? Dispute it.

The fo llow ing listing is inc om plete: [name o f ac c ount] /

[ac c ount number]. I am d isputing this ac c ount due to the

fac t tha t it s listing an undated la te p ay. Plea se d elete it.

Incorrec t Ac c ount Types

If a charged-off account shows as open, it is clearly a

mistake. It should show Closed Account, Charged-Off,

or not show an ac c ount type a t a ll.

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I am w riting c onc erning the follow ing a c c ount: [ac c ount

name ] / ac c ount numb er [xxx]. I am d isputing the

ac c ount type . It s inac c ura te. A cha rged -off or c losed

ac c ount ca nnot be a n op en ac c ount . Plea se d elete it.

Date Verified Did Not Update

When you dispute an item and a bureau verifies it, the

Date Verified field should update. If it doesnt, it means

that they didnt really verify it, which is a violation and you

have to req uest immed ia te deletion.

On [da te] I d isputed [ac c ount name], [ac c ount numb er].

You verified the item as ac c ura te. The [whatever the DU is

nam ed for the b urea u in question] d id not c hang e. No

investiga tion wa s ac tua lly do ne. Delete the item.

On [da te] I d isputed [ac c ount name], [ac c ount numb er].

You verified the item as ac c ura te. The [whateve r the DU is

nam ed for the b urea u in question] d id not c hang e. No

investiga tion w as ac tua lly done . Delete the item.

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Ac count Inc luded in Bankruptc y Shows a Balanc e

If an account was included in a bankruptcy, its balance

should be zero or N/A . If not, d ispute it.

The b a lance for ac c ount number [xxx] is inac c ura te.

Please delete this item.

Ac count Inc luded in Bankruptcy Shows as Open

If there is a certain item that you included in your

bankrup tc y, it shouldn t show as op en a nymore.

The a c c ount type for ac c ount numb er [xxx] is inac c ura te.

An item inc luded in ba nkruptc y can t be open. Plea se

Item Not Yours

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Before disputing an item as not mine, first make sure that

you never had a business relationship with that company.

Even if the name of the company doesnt sound familiar,

call the phone number on the report and ask them toc hec k out w ho they a re. The rea son why, is tha t som e

companies have a commercial name that is different from

their leg a l name. Their c om mercia l name c an be The Shoe

Planet , and the lega l entity behind is Oklahom a Shoe

Distribution Inc . .

If you d id have a business relationship with tha t c om pany in

the p ast but you a re positive that you ha ve no o utstanding

deb t w ith them, c a ll them. They might have m essed up and

they now have to contact the bureaus and get the item

rem oved . Even if they p romise to do tha t, ask them to send

you a letter stating that it was a mistake and mail it to the

bureaus along with another letter explaining what

happened and req uesting deletion. If you do it yourself, youhave the pea c e of mind that has been done.

I am w riting c onc erning the follow ing a c c ount: [ac c ount

name] / ac c ount number [xxx]. I am d isputing item. It is not

mine. Enc losed is a let ter of the c red itor admitting the

Ac count Sold or Transferred With an Outstanding Balanc e

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If there is an account that was transferred from the

company XXX to the company YYY, then your outstanding

balance with XXX should be zero or N/A, that is if it shows

on your report at all. If you owe the first company $5,000,they transfer your debt to the second company, and it

shows that you owe $5,000 to each, request immediate

removal.

I d ispute [na me o f ac c ount], ac c ount number [xxx]. The

ba lanc e is inc orrec t. Plea se delete.

You might have noticed that I always use very

stra ightforward word ing . Tha t is the way to go. Short, simp le,

and c onc ise. Tell them what is wrong and what you want

them to do about it. Tha t s it. Also, don t try to explain the

whole situation. Write as little as possible. In the last case,

you could see how I just told them that the balance wasincorrect. I didnt explain that it could be because my

ac c ount was sold or transferred . You just let them know tha t

a certain item is not correct. Its their job to find out why. If

they do nt, they are b rea king the law.

Step4:

Following

Up

After you submit your dispute, the credit bureaus have 30

days to investigate it and take action (verification, deletion,

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or correction). It is the law. If they dont comply with this,

they will be violating the FCRA and now you have some

leverage. Send them a lette r letting them know that they

have violated the Fair Credit Reporting Act and requestimm ed ia te remova l.

It is important tha t you know the rules bec ause you w ill need

good information to fight these g uys.

If the item gets verified within 30 days, you can ask them

wha t verific a tion method d id they use and where d id they

get the information from .

On [d a te] you verified a public rec ord I had d isputed . It

wa s a [type o f pub lic rec ord ] rep orted / filed on [d a te]. I

am now req uesting the m ethod of verific a tion, inc lud ing

the name and address of the furnisher of informa tion.

Never threa ten the burea us. Do you know how many lette rs

a day they get from peop le saying that they w ill sue them?

Don t go there; it s a waste o f time.

Som ething e lse you don t want to do is writing the Atto rney

Genera l or the Federa l Trade Ad ministrat ion. You w ill just

wa ste your time and postage money. If you don t have the

time or just don t want to dea l with this yourself, you c an usea c red it rep a ir c ompany. I listed a c oup le of them in Part 5

of this book.

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Two more p iec es of advic e b efore w e g o to the next

chapter: the first one is to get always every statement in

writing. If a creditor tells you that your debt has been paid

off, you inform that to the bureaus, the bureaus contactyour creditor, and your creditor denies it, you have nothing

to prove that your creditor said what they said. Always,

a lways get eve rything in w riting .

The sec ond advic e is to a lways c ontac t c red itors if you

d idn t find any mistake with a ny g iven item. The c red itors,

especially if they are a small company, might have

reported your case to the bureaus and then got rid of the

documents and have no records of your debt. If this is the

case, contact the bureaus and ask for deletion, since its

against the law reporting an item without proof of the

delinquency.

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PART 5 ALL YOU NEED TO KNOW TO

BOOSTYOURFINANCIALIQBY1000%

All the Secrets to Negotiate With Creditors and Save

ThousandsofDollars

It is a good idea to c a ll your c red itors before you send them

mail. The truth is tha t they will welcome you if you w ant towork out some sort of pa yment sc hed ule. Chanc es are they

c onsidered your deb t a s a loss and thought they were never

go ing to see a penny from you ag a in.

You have a lot of leverage in these negotiations, since you

won t pay unless they ac c ep t your c ond itions. There is a rule

of thumb tha t works very well: offer to pay them 20 c ents on

the dolla r. If you owe them $100, offer them $20. They will

ask for more, but you can usually get them to report your

account as paid in full as agreed for 25% to 35% of the

orig ina l deb t amount. Also, set up a payment p lan of $200 a

month fo r every $10,000 you o we them. This approac h works

like a c harm.

Stay away from debt c onsolida tions c ompanies. They all saytha t they have spec ia l rela tionships in the c ollec tion industry

and c an ge t you ama zing d isc ounts on your deb t amount.

This is not true. All they ha ve is a c ompute r system with the

same sample letters I give you with this book. Debt

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c onsolida tions c om panies will neg ot ia te the interest on your

deb t, but not how the p rinc ip le, and tha t is the ma in rea son

why you dont w ant to work with them.

HOW TO PROTECT YOURSELF FROM ID THEFT (OR

FIGHTIT,IFITSTOOLATE)

The first a dvice I will g ive you is tha t it is better to be sa fe

tha n sorry. Be very c areful with who you g ive your SSN to,

and keep it a s sec ret as possib le.

If you use online banking and your name is John Smith,

dont pick up passwords like johnsmith, jsmith,

smithjohn , etc . Try to use a c om bina tion o f random lette rs

and numb er so nobod y can guess it.

When you receive those emails asking you to log in to your

PayPa l ac c ount (o r even worse, your bank ac c ount), ignorethem. They a re a lways sc ams.

If its already too late and your ID has been stolen, follow

these steps:

1. Plac e a fraud a lert on your c red it rep orts and review

your credit reports. Contact any one of the nationwide

consumer reporting companies to place a fraud alert onyour credit report. Fraud alerts can help prevent an identity

thief from op ening a ny mo re a c c ounts in your name. The

company you call is required to contact the other two,

whic h will p lac e a n a lert on the ir versions of your report, too .

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Equifa x: 1-800-525-6285; www.equifax.com

Experian: 1-888-EXPERIAN (397-3742); www.experian.com

TransUnion: 1-800-680-7289; www.transunion.com

In addition to placing the fraud alert on your file, the three

consumer reporting companies will send you free copies of

your c red it reports, and , if you a sk, they will disp lay only the

last four digits of your Soc ia l Sec urity num ber on them.

2. Close the ac c ounts tha t you know, or believe , have

been ta mp ered with or op ened fraudulently.

Contact the security or fraud department of each

c om pany where you know, or believe, ac c ounts have been

tampered with or opened fraudulently. Follow up in writing,

and include copies (not originals) of supporting documents.

It's important to notify credit card companies and banks in

writing. Send your lette rs by c ertified ma il, return rec eipt

requested, so you can document what the company

received and when. Keep a file of your correspondence

and enc losures.

When you open new accounts, use new Personal

Identification Numbers (PINs) and passwords. Avoid using

easily available information like your mother's maiden

name, your b irth d a te, the last four d ig its of your Soc ia l

Sec urity number, your phone number, or a series of

c onsec utive numbers.

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3. File a rep ort with your loc a l polic e or the po lic e in the

c ommunity where the identity theft took plac e.

Get a copy of the police report or, at the very least, the

number of the report. It can help you deal with creditors

who need proof of the crime. If the police are reluctant to

take your report, ask to file a "Miscellaneous Incidents"

report, or try another jurisdiction, like your state police. You

also can check with your state Attorney General's office to

find out if state law requires the police to take reports for

identity theft. Check the Blue Pages of your telephone

d irec tory for the p hone numb er or c hec k naag.org for a list

of sta te Atto rneys Genera l.

4. File a compla int with the Federal Trade Commission.

By sha ring your identity theft c omp la int w ith the FTC, you will

provide important information that can help law

enforcement officials across the nation track down identitythieves and stop them. The FTC a lso c an refer your

complaint to other government agencies and companies

for further action, as well as investigate companies for

violations of laws tha t the FTC enforc es.

You can file a complaint online at www.ftc.gov/idtheft. If

you don't ha ve Inte rnet a c c ess, ca ll the FTC's Identity Theft

Hotline, toll-free: 1-877-IDTHEFT (438-4338); TTY: 1-866-653-

4261; or write: Identity Theft Clea ringhouse, Federa l Trade

Commission, 600 Pennsylvania Avenue, NW, Washington,

DC 20580.

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I highly rec om mend you to c om p lete and file an ID Theft

Affidavit. You c an find it here:

http://www.ftc.gov/bcp/conline/pubs/credit/affidavit.pdf

HowtoGetRidOfAnnoyingCollectionAgencies

There is som ething tha t mo st peop le d on t know about

c ollec tion a genc ies and I am about to revea l it.

You ha ve no ob liga tion to dea l with them. So, when they

call you requesting payment, you can politely say thank

you, but I do n t want your business . It is tha t simp le. They

are a company, you are a customer. Nobody can force

you to do business with them. They c an invite you, but you

have no ob liga tion to a c c ep t their invita tion.

Let s say your c ell phone service p rovided by T-Mob ile. This

company has the right to collect money from you. If you

dont pa y, they c an c all you and dema nd p ayment. But if

Debt Collectors Inc. calls you to get money from you on

beha lf of T-Mob ile, you have the right to say I don t know

you, I don t want to do business with you, I ow e money to T-

Mob ile, not to you. Don t c a ll me a nymore.There is one excep tion to this rule, and tha t is when you

signed a c ontrac t sta ting tha t in case of de linquenc y, Debt

Collectors Inc. has the right to collect the payments on

beha lf of the c om pany you a re doing business with.

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If you a c c ep t the business of the c ollec tion c om pany, ma ke

sure they dont bully you. If they use aggressive techniques

to g et you to pay, you c an sue them. Some o f the non-

accepted practices could be: threatening to hand yourcase over to their legal department when they dont have

one , send ing m a il p retend ing to be a ttorneys, c a lling b efore

8 AM or a fter 9 PM, c a lling severa l times, etc .

If they do tha t let them know that they are b rea king the law

and sue them if nec essary.

How to Achieve a 700CreditScoreWithin 36Months of

FilingforBankruptcy

When you file for bankruptcy it will show on your credit

report for up to 10 years and will also become a matter ofpub lic rec ord . But it is not the end of the world . Fa r from it.

You can file for either Chapter 7 or Chapter 13. If your

income is above the median for your state and you can

make payments of at least $100 a month, you will have to

file fo r Chapter 13, sinc e you won t qua lify for Chapter 7. But

most attorneys will still recommend filing for Chapter 7 first. I

am not q ua lified to g ive leg a l advic e, so b y all mea ns go to

see an a ttorney before filing for bankrup tc y.

The g ood news is tha t you c an sta rt c rea ting a good c red it

profile even before applying for bankruptcy. Create new

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ac c ounts, pay them on time and d on t inc lude them in the

bankruptcy. You will notice that after filing, you will have a

c oup le o f ac c ounts with imp ec c ab le p ayment history.

In add ition, after bankruptc y you a re d eb t-free . That mea ns

that a lot of lenders and credit cards companies that

specialize in high-risk markets will approach you with credit

card offers, which is exactly what you need to start re-

building your credit history. However, be prepared to pay

high interest ra tes, so keep the ba lanc es of your new c red it

c a rds very low .

Follow the a dvic e in this book to sta rt c rea ting a good c red it

histo ry from sc ra tc h. If you do this, don t be surprised if within

3 years of filing for bankruptcy you have a credit score of

700 or higher. I ve seen it happen a ga in and aga in.

Howto

Get

aChecking

Account

If

You

Are

In

ChexSystems

ChexSystems is a c hec k verific a tion servic e and c onsumer

credit reporting agency like Experian, Equifax and

TransUnion. While most c red it reporting a genc ies b roker

data about how a consumer handles credit relationships,

ChexSystems provides da ta related to how a c onsumer hashand led dep osit ac c ounts a t banking institutions.

ChexSystems works und er the FCRA rules, just like the c red it

bureaus. And the process to dispute items on your report is

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pretty much the same. First, you need to request your

report. You can get 1 for free ever 12 months. Request it by

phone by c a lling 800-428-9623, by fax: 602-659-2197, or ma il:

ChexSystems Inc., 7805 Hudson Road, Suite 100, Woodbury,MN 55125.

Once you have the report, dispute the negative items

factually, just like you would do with Experian, Equifax, or

TransUnion. The most c ommon items on a ChexSystems

rep ort a re NSF (non-suffic ient fund s) and non-pa id overd ra ft

fees. With ChexSystems your negative items will stay 5 years

on your rep ort instead of 7, so tha t s goo d new s.

For a free list o f banks tha t don t c hec k the ChexSystems

database a nd w ill op en an ac c ount for you even if you a re

in ChexSystems, visit this website:

http://www.chexsystemsvictims.com/AboutmyList.html

You c an a lso c hec k http://www.passchecking.com

CreditRepairAgencies(ForBusyPeople)

In case you d on t have the time to rep a ir your ow n c red it or

just d on t want to, there a re som e rea lly good c red it rep a iragenc ies out there:

Onyx Leg a l Cred it Rep a irhttp://www.onyxcreditrepair.com/

888-322-3643

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Buena Vista Cred ithttp://www.buenavistacredit.com/

888-235-8056

Veracityhttp://www.veracitycredit.com/

866-383-1801

Lexing ton Lawhttp://www.lexingtonlaw.com/

800-458-5202

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PART6 BONUSES

You will find in this kit some bonuses I added as a way to saythank you for rea d ing this book.

Sample Letters

I have included over 30 sample letters to send to the

bureaus, creditors, and collection agencies. Just fill in the

b lanks, persona lize them a little b it a nd ma il them . It is rea lly

simple.

Som e of the templa te letters you w ill find in the CD inc luded

in this kit a re:

o Sample Templa te Lette r to Cred it Burea uso Sample Templa te Lette r to Cred itorso Free Cred it Report Requesto Cred it Report Purchaseo ID The ft Alerto ID Theft A lert Remova lo ID Theft Alert Extensiono Inc om p lete Rep ort of Item Disputeo Inc orrec t Cred it Limit Disputeo Inc orrec t Ba lanc es Dispute

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o Delinquency or Past-Due Amounts After AccountClosed or Charged -Off Dispute

o Und ated La te Pays Disputeo Inc orrec t Ac c ount Type Disputeo Wrong or Re-Aged Date of Last Ac tivity Disputeo Date Updated / Date Verified Disc rep ancy Disputeo Item Not Inc luded in Bankrup tc y Disputeo Incorrect Balance of an Item Included inBankruptcy Disputeo Re-Aged Date of Last Activity for an Item in

Bankruptcy Dispute

o Day of Last Ac tivity Follow Up to Verific a tiono Burden o f Proof on The Cred it Bureauo Req uest for Me thod of Verific a tiono Follow Up for Method of Verific a tiono No Response to Request for Method of Verific a tiono Judgment and Tax Lienso Co llec tion Agenc y Cred it Burea u Disputeo Investiga tion Results Disputeo Inac c ura te La te Payo I don t want your business to Debt Collec tors

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o Samp le Va lida tion Example if Cred ito r Has NoDocumentation

o Sta tute of Limita tions Expiredo ID Theft to Cred ito rso Req uest o f Doc umentation from Cred itoro Unautho rized Inquiry by Cred itoro Unauthorized Inquiry by Deb t Collec toro Unauthorized Inquiry by Deb t Collec tor After Idon t w ant your business Let tero Follow Up to Una uthorized Inq uiry Lettero ID Theft Letter to Cred it Bureaus Ab out Fraud ulent

Account

o ID Theft Lette r to Cred itors or Deb t Collec torsAbout Fraudulent Ac c ount

o ID Theft Affidavito Cease and Desist (Phone Ca lls Only)o Cease and Desist (Phone Calls and

Correspondence)

o Cease and Desist (A ll)

Interviews with Cred it Rep air Experts

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All the insider secrets from the most successful credit repair

a tto rneys in the industry. They have been fixing c red it

rep orts for yea rs, da y a fter day, and now they a re going to

reveal all the things you ever wanted to know about yourc red it sc ore.

Find the audio interviews in the CD included with this

program.

How to Ma ke $60,000 a Year Fixing Credit Reports Part-Time

Maybe you already thought about this while you were

reading the book. Four hours ago you were in the dark as

far as c red it sc ores c onc ern. You knew nothing about them.

Now you are almost an expert. You have the necessary

knowledge to help other pe

Documents

Credit Make Over