EverybodysCreditRepairProgram

8/6/2019 EverybodysCreditRepairProgram

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Table of Contents

Basic Glossary of Terms 5

Debt and Credit 10

Credit Scores 13

How Does Marriage Affect Your Credit Score? 15

How is Your Credit Score Determined? 17

Your Credit Report 33

Get Started 38

PRBCPay Rent Build Credit 40

The Three Credit Bureaus at a Glance 41

Repairing Your Credit 50

Communicating With your Creditors 60

Debt Consolidation Loans 63

Debt Settlement 65

What is Loan Modification? 72

HELOC: Home Equity Line of Credit 75

How Do Creditors Collect Money 76


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Basic Glossary of Terms:

Adjustable Rate Mortgage (ARM)

A loan with an interest rate that is periodically adjusted to reflect changes in a specified

financial index. Many people are in trouble with their mortgages due to the low ARM

rates offered when they first got their mortgages or re-financed their mortgage. The

interest rate adjusts, usually up to a higher interest rate, which they cant afford or didnt

budge for.

Asset

A valuable item that is owned which does not have a loan or lien on it. For example: You

paid off your car, so it doesnt have a loan anymore. The value of the car is your asset.

Bankruptcy

A proceeding in Federal Court in which a debtor can get relief from payment of certain

obligations. Bankruptcies remain on a credit record for 7 to 10 years and can severely

limit a persons ability to borrow. Bankruptcy should usually be considered as a last resort

to escaping financial worries or to getting out of debt, because it causes severe damage to

your credit.

CreditorAn individual or institution to whom a debt is owed.


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Debt Consolidation

When a person takes out a loan to pay off all of his or her debt at one time

Debt Settlement

When debt is negotiated with creditors and paid off on a schedule.

Default (on a loan)

A loan is said to be in default when a borrower fails to make payments as agreed to in the

original loan document (called promissory note).

Discretionary Income

The money remaining from net income after essential living expenses are determined.

Escrow

A special account in which a lender holds monthly payments from the borrower to cover

property taxes, and/ or insurance (depending on how the account is set up). Sometimes

buyers/ borrowers choose this, and sometimes this is a requirement of the loan.

Fair Market Value (or Market Value)

Used to determine the price of things. The information used to determine the value is

based on the condition of the item, what similar items have sold for recently and the

demand for the item. Your Property Tax Assessment on your house is an example of theMarket Value determined by your city, county or state (whoever sends you your tax bill).

Kelley Blue Book is used to get an idea of what the value is for vehicles. An art or jewelry

Appraiser would determine the value of those items and so forth.


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WHAT YOU REALLY NEED TO KNOW: The value of anything is really only worth

what a buyer would actually pay for an item.

First Mortgage

The primary mortgage on a property that has priority over all other voluntary liens. If two

mortgages are taken out on a home, the first mortgage will almost always be at a lower

interest rate than the second.

Forebearance

Gives you a chance to delay or reduce payments for a short period of time, with theunderstanding that another option will be used to bring your accounts current.

Foreclosure

The forced sale of property pledged as security for a debt that is in default. It is when your

bank repossesses your home if you are no longer making payments.

Gross Income

The amount of money coming into a household before any taxes, insurance, dues, union

fees, etc are taken out of your pay.

Identity Theft

When one person steals another persons personal information in order to commit fraud,

obtain money, or commit crimes in the victims name.

Judgement


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The decision of a judicial court.

Lien

A legal claim upon real property (like a house), or personal property, for the satisfaction of

a debt, usually placed upon the title to a property, in order to make the title unclean, or

unable to be transferred or sold until the debt is paid.

Lis Pendens

A recorded notice of pending lawsuit, filed with the clerk of routs in the county in which

the property is located.

Lender

A person or company who lends money for temporary use on co0ndition for repayment

with interest (i.e. the bank, mortgage company, etc...

Loan Modification

A change in any of the terms of the loan agreement. Preferred method of saving a home.

If a homeowner qualifies, a good portion of the past-due payments may be put at the end

of the mortgage

.

Mortgage

A written pledge of property that is used as security for the repayment of a loan.

Mortgagee


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A lender, which includes banks, credit unions, mortgage companies, etc

Mortgagor

The borrower or homeowner.

Private Mortgage Insurance

PMI: Private Mortgage Insurance is an insurance policy purchased by the homeowner

(you) that is provided as a means of protecting the lender (the bank) in case you default on

your loan.

Rate

Interest rate you pay on a loan.

Repayment Plan

When a borrower falls behind in mortgage payments, a plan that is negotiated to prevent a

foreclosure. Lets you repay part of your past-due payments each month in addition to yourregular monthly mortgage payment. Usually this plan will catch you up in 12 to 24

months.

Second Mortgage

A mortgage placed upon a piece of property. This lien is recorded behind the firstmortgage.


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Secured Loan

A loan that uses some asset as collateral in securing that loan.

Tax Lien

A legal claim placed against a property for the payment of back taxes.

Unsecured Loan

A loan that is not secured with any asset as collateral. These loans generally have higher

rates of interest.

Debt and CreditIsnt Everyone in Debt?

Our society operates on credit. Even if it seems like it would be a great idea to operate

purely with cash, sooner or later, you will probably need credit. After all, it is very few

people who have enough money to pay cash for things like a house or a car, and those who

do, likely did not get that way by paying cash for everything their entire lives. The rich and

otherwise well off were either born into it, struck it lucky, or they worked hard and played

smart and were careful with their money, making smart decisions along the way. People

who have a good relationship with money understand just that, being fiscally secure is a

process, much like being in a healthy relationship is a process. It is not something that just

happens. It is something that is nurtured over time.


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When you use credit, you are borrowing money from banks or other lenders. This money

may be in the form of a loan, credit card, or some other source. Some people are able to

borrow a lot of money. They are able to take out large house loans, large car loans, and

have seemingly endless credit card limits. These people usually have good paying jobs,

pay their bills on time, are financially secure, have some assets, and have great credit

scores.

Individuals who have a lot of credit may or may not use all of the credit available to them.

Usually people who use all of their available credit have lower credit scores. Many people

who obtain a lot of credit and use too much of their available credit get too far into debt.

Getting too far into debt can cause many problems.

Getting too far into debt can cost you a lot of money in the long run by costing you way

too much money in interest. It can make it impossible for you to get out of debt, and it can

ruin your credit score, making it impossible or next to impossible for you to get necessary

loans, in the future.

This guide will inform you about credit, how to manage your credit, how to achieve goodcredit, and how to repair your credit, if your credit is less than perfect now.

Credit and Risk?

When you apply for credit, whether it is something as minor as getting utilities hooked up

in your name, or something as major as a loan for a home, companies run a check on yourcredit.


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Lenders want to find out how much of a risk you pose to them. In other words, they want

to find out what the chances are of you repaying your loan if they lend you money. They

will not lend you money if you pose too much of a risk to them. If you pose a moderate

risk, they may lend you money, but at a higher interest rate.

RISK

Banks and other creditors who are deciding whether or

not to lend you money like to determine how much of a

potential risk you pose to them. They want to give loans.

That is their business. They make money from giving loans

and getting interest. However, they also need to protect

themselves by determining if it is too risky for them to give

you a loan because of your poor credit history.


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Credit Scores What is a Credit Score?

A credit score is a number, usually ranging between 300 -800, that lets a lender know how

likely it is that you will repay your loans. It is based on your past credit history. It is

sometimes called a FICO score, named after the company that developed the formula for

determining the score (Fair Issac Corporation).

You Dont Have A Credit Card or Any Loans; Do You Still Have a

Credit Score?

YES. If you have a bank account and bills that come, in your name, you, my friend,have a credit score. Any (negative) past credit youve had will appear on your score for

approximately 7-10 years. Positive things can stay on your report, indefinitely.

What is a Good Score to Have?

There are no hard and fast rules for what determines a good credit score. In fact, what is

considered a good score varies by lending institution, but the following table is based on

an industry average.


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What do These Scores Mean?

Excellent: 750-800

You are a low risk borrower to the bank. You will probably be able to receive the lendersbest interest rate . If you are not offered the best rate, you should strongly consider

switching to a different lender. If you are taking out a loan, you will be able to borrow

quite a large percentage of the total cost of the home.

Good: 650-749

You will definitely be able to get a good loan. You will probably not be able to get a

lenders best rate. However, if you shop around a little bit, the right lender may surprise

Excellent 750 800

Good 660 749

Fair 620 659

Poor 350 619


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you. On the other hand, it is common for borrowers in this category to expect to pay up to

half a percentage point more than those with the best credit scores.

Fair: 620-659

You will still be able to find a loan with a fair credit score. However, you may be paying

up to 2% more in interest than borrowers with excellent credit. You may also need to take

some more time with your lender and provide extra documentation to support your loan.

Poor: 350-619

There are actually loans available, these days, for borrowers with poor credit. This does

not mean that people who have declared bankruptcy within the last 7-10 years, or who

have suffered from a recent foreclosure, for example, can necessarily find a loan. What it

does mean, however, is that if you have poor credit but have not had a major financial set-

back, you can still obtain a loan and use it to begin to repair your credit. If you have a

poor credit rating, there are many lenders who will lend to sub-prime borrowers. Thats

you. The bad news is, the rates will be high. However, if you can make regular payments,

you should be able to gradually repair your credit and refinance for a lower rate.

How Does Marriage Affect Your Credit Score?

Nearly every American adult has a credit score. Individuals maintain their own credit

scores, even once they are married. However, joint financial investments, loans, and

accounts will show up on both individuals credit reports. This is important information,


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therefore, when entering into business deals with others, as well as joint accounts with

spouses.

If you marry someone with a poor credit rating, this will not automatically affect your

credit rating simply because you are married. However, it could very well affect your

score indirectly, if you have joint accounts and if you apply for loans together. If your

spouse has poor money management skills, is irresponsible with debt, and runs up your

joint credit cards or fails to make payments on your joint accounts, both of your credit

scores will suffer, and your relationship will likely suffer, as well.

If your spouse owes money and is delinquent in his bills, or if he or she defaults on a

mortgage, even if it is solely in his or her name, you may still be held responsible for his or

her debt. Marriage is a partnership. This doesnt mean that it will affect your credit score

if your spouse has high debt and you have separate accounts, but creditors will come after

you to get their money if your spouse is not repaying what he or she owes.

If you are married to someone who has bed credit and it is negatively affecting you, in the

event that you get divorced, this will not necessarily go away. Debts incurred during your

marriage remain your responsibility.


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How is Your Credit Score Determined?

There are five basic components that are used in determining your credit. Each component

is assigned a certain percentage of your total score.

Payment History 35%

How well do you pay your bills?

Debt (Debt to Income) 30%

How much do you spend compared to how much you earn?

Length of Credit History 15%

How long have you been using credit, and have you used it responsibly?

New Credit 10%

Have you applied for a lot of new credit lately? Hopefully not.


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Types of Credit 10%

What type of credit do you have? Is it considered credit for necessary items such as a car

loan, home loan, utilities, major credit card, etc, or do you have a ton of departmentstore credit cards? You can guess which ones look more favorable on your credit report.

Payment History

THIS COUNTS FOR 35% OF YOUR CREDIT SCORE.

Payment history is a big deal for lenders. If they can see that you have a history of making

payments on time, this counts big, in their book. However, while an overall good credit

picture can erase a few late payments, especially over time, it is very important to try to

AVOID LATE MORTAGE PAYMENTS , if at all possible. These can significantly hurt

your credit rating.

PAY YOUR BILLS ON TIME!


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As soon as you get your bills, put them in one spot in the house.

This should be a spot that you see every time you walk in the door. It should

not be tucked out of the way, and it should not be somewhere that you willbury under junk. Then, dont allow bills to hang over your head. Pay them

right away. You will feel so great when its done. As soon as you pay them,

file them.

File Right Away

Try this. Its amazingly simple, and whats better, it works! Put all of your financial

records together in one place. Invest in a file cabinet or better yet, file suitcases. Label file

folders, and every time you get new financial information, after youve addressed it, file it!

Youll be so happy the next time you need it when you find that its right at yourfingertips.

Some financial filing category ideas:

Gas and Electric

Water

Taxes

Life Insurance

Health Insurance


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Auto Insurance

Home Owners Insurance

Primary Mortgage Information

Secondary Mortgage Information

Private Mortgage Insurance (if you were required to get this)

*Make a note to cancel this when you have 20% equity in your home

Pay Stubs or Proof of Deposits (Separate file for each person)

Receipts and Information you will need for paying your Income taxes

Cell phone bills

Internet bills, phone bills, cable bills

Garbage or other services you may pay for

Car loans

Credit Card Statements

Retirement Accounts

Investment Portfolios

Bank Statements

Miscellaneous Bills


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Portable Filing

When I file, I love using portable filing suitcases.

These suitcases are perfect for storing all of your

important documents. They make filing convenient.

You can take the cases to bed, out in front of the

television, to the park..wherever.Theyre about $8.00 at discount stores.

I have about a dozen of them, and I use them for family

photos, my kids school accomplishments, old letters

and greeting cards. They are a great organizational tool

and very economical and convenient to use.


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Debt to Income Ratio 30 %

This refers to how much you owe, compared to how much you earn. You may very well

have never missed a payment on anything in your life, but if you spend more than you

make, banks consider you risky. If they feel you are over-extending yourself, banks will

not want to give you a loan. Even if you make a lot of money, having a lot of debt makes

you risky investment for banks.

Lets Say that.

Your total take-home pay for your family is

$3200/ month after taxes. If you spend

$1200 on daycare, $1,300 on your

mortgage plus taxes, and $200 on utilities,

thats $2,700. A bank is going to assume

that you need the rest of your income for

things such as insurance, gas, groceries,

and other day-to-day living expenses.

They will view your income as stretched

too thin, to qualify for say, a new car loan,

even if you have never missed a payment on anything, in your life.


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What Counts As Income?

Income from your job

Extra income from part-time jobs

Income earned from rental properties

Alimony

Child Support Payments

Social Security Benefits

Unemployment Benefits

Disability Benefits

Pensions

Retirement

Income from Hobbies

Payments being received from settlements

Any other sources of income for which you havedocumentation


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The Benefits of Reporting Your Income:

Many people who do work in addition to their regular jobs (often called

side work), prefer to get paid in cash so they do not need to report this

income to the IRS and pay taxes on it.

However, if you do not report your income, you cannot claim it as

income for debt to income purposes. The interesting thing, however, is

that many times, with a little research and planning, reporting this extra

income can actually work out to your benefit in two ways. Reporting

extra income will allow you to claim more income for debt to income

purposes, and if you legitimize yourself a little, there are countless

write-offs you can claim on your taxes. You may be surprised to find

that claiming that extra income could actually save you money in the

long run.

Of course you should consult a tax professional to ensure accuracywhen taking these deductions, but the following are just some ways

that you could reap the rewards of claiming your cash.


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You can write off.

50% of the gas you use driving to and from jobs.

The depreciation on your car

The percentage of the mortgage you pay on the space in

your house you use as a home office

Any mortgage spent on the space in your home you use for your work (i.e. if you are a seamstress, you can write

off your sewing room)

Any equipment you use for your business (sewing

machine, ironing board, etc)

Cell phone, home phone, any portion of these services

that you legitimately use for your business

A portion of the utilities used to heat, light, run your home

(b/c this is your home office and the place you do your

work)

A portion of home repairs done each year

A portion of food and beverages purchased while

working


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Lets say that youre a seamstress who does side work from your home. You have a 10x10

foot sewing room in your 1000 square foot home. You are legally allowed to deduct 10%of your mortgage payment as a business expense. That is money you pay anyway. If your

mortgage is $1000 per month, that is $100 you can deduct.

Lets say that you have another room that you use as a home office. If this is the sole

purpose of this room, you can also deduct for this room. Perhaps this is another 10X10

room. Thats another $100.

You may also then deduct the portion of utilities that you spend heating and lighting the

space for where you work. So, if your gas and electric bill is $200 per month, you can

deduct 20% of that, or $40.

You have already found a way to deduct $240 per month.

You may deduct for phone service used for your business, 50% of gas and food while

working, so youre well on your way to making claiming your income the profitable

choice.

In addition to this, if you do repairs on your home, you can deduct 20% (or the comparable

amount of space you use for your business). If you do repairs on the space used for your

business, you can deduct the whole amount.


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TAX MUSTS!

Save your receipts for everything related to your business!

When you get paid cash for something, deposit the cash into your

bank account and make a note of the source of this income on the

deposit slip!

When filling out your taxes, take advantage of deductions.

Use an online program such as TurboTax. This is a great program that walks you through everything. It is very inexpensive and has a

very friendly program for people filing for a home-based business.

Consider having everything double-checked with a tax-professional.


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Length of Credit History 15 %

If youve had credit for a long time and done well with it, it shows banks that you are

responsible with your credit, and it makes you a good risk.

New Credit 10 %

New credit can negatively affect your score. If you open up too many new credit cards in

a short period of time, especially if you have a short credit history, you can make yourself appear as a greater risk to lenders. You can imagine why lenders dont want to think of

you frantically running around trying to get as much credit in as many places as you can.

Even if this is not the case, if you apply for a lot of new credit in a short period of time,

this is the picture that lenders are going to see.

Types of Credit 10 %

A combination of different types of credit can improve your score. For example, utilities

in your name, a credit card, and a car loan, all of which you pay on time, makes you a

much better risk than a consumer with 14 department store credit cards. Having THE

WRONG TYPE OF CREDIT CAN HURT YOU , especially if you dont manage it

correctly.


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Take a moment to take the following quiz.This quiz will not give you an in-depth look at your credit, but it will allowyou to view your credit from a lenders perspective. And it will take lessthan five minutes.

Without checking any records, from the top of your head, choose the bestresponse for each question. Each question has a point value assigned to it.When you are finished, add up your total.

1. When you get a bill, do you

A. Pay it electronically and have a system set up to protect you incase of accidental overdrafts (0)

B. Pay it within 2 days and file it immediately afterward (1)

C. Put it somewhere you can see it and pay it before it is due (2)

D. Put it somewhere and lose it, and pay it before the grace period isup (3)

Forget to pay it and end up paying late fees on it (4)


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2. If you ever forget to pay a bill and it becomes late, do you

A. Immediately call the company, explain why its late, apologize,

explain that you are sending the payment immediately, and askthat the late fee be waived, then send the payment right away? (0)

B. Send the payment right away once you realize it is late. (1)

C. Figure, its late now anyway, you may as well send it tomorrow. (2)

D. Stress about it and put it off because now you figure youve justruined your credit even more. (3)

3. If you suddenly lost your job, would you.

A. be able to keep making all of your necessary payments for thenext 6 months? (I know I couldnt) (0)

B. be able to keep making all of your necessary payments for thenext 3 months? (1)

C. possibly be late on a payment or two, but more or less be able to

keep up until you were back on your feet again (2)D. run up huge amounts of debt on your credit card and borrowmoney from everyone you could, miss payments, but still manage tokeep your house, and or car, if you have one (3)

E. fear that you would quite possibly lose everything you have (4)


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6. Count your credit cards. Dig in your purse or wallet, dresser

drawers, wherever you may have put them aside. How many creditcards do you have?

A. two, and they are major credit cards, such as Visa, Mastercard,Discover, American Express, Citibank, etc (0)

B. three, and they are major credit cards, such as Visa, Mastercard,Discover, American Express, Citibank, etc (1)

C. three to four, and at least one is from a store. (2)

D. three to four, and at least two are from a store (3)

E. more than four, and at least two are from a store (4)

F. more than four, and at least three are from a store (5)

0-5: Excellent: Where were you when I needed you?

6-11: Good : Youre on the right track to maintaining great credit throughlife.

12-17: Fair: Your money management skills could use some work, but Iwouldnt be writing this book if I hadnt been there myself.

18-22: Poor: Today is the day for a new beginning.


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Your Credit ReportWhat is on Your Credit Report?

When your credit report is requested, the credit bureaus send your credit score along with

any major reasons that your score may be lowered. Common reasons are the following:

Youve had a major setback such as a bankruptcy or foreclosure.

You have a history of having trouble paying your bills.You have a lot of debt compared to your income.

You have recently opened many new accounts.

You are currently behind on payments on one or more accounts.

You dont have a long enough history of established credit.

Major Setbacks to Your Credit

Bankruptcy

Declaring bankruptcy should be done only as a last resort. It should not be seen as an easy

way out, because it truly is not. You will lose nearly everything, and your credit willsuffer tremendously. If you do declare bankruptcy, it will stay on your credit report for 7-

10 years, and for the first two years after you declare it, it will be hard for you to get any

credit at all. The best thing you can do for yourself after declaring a bankruptcy, however,


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is as soon as you qualify, and as soon as you are in the position to do so, begin rebuilding

your credit. How do you do this? First, get a secured credit card and manage it responsibly.

Once you are successfully managing your secured credit card, apply for a small loan. If

you get approved, take out the loan, and pay it back right away. Do this a few times, and

be responsible and consistent about it, and your credit will slowly, but surely, begin to

improve.

Foreclosure

Foreclosure is the legal proceeding in which a bank or other secured creditor sells or

repossesses a parcel of real property (immovable property) due to the owners failure to

comply with an agreement between the lender and borrower called a mortgage or deed

of trust. Commonly, the violation of the mortgage is a default in payment of a

promissory note, secured by a lien on the property. When the process is complete, it is

said the lender has foreclosed its mortgage or lien.

A foreclosure will also stay on your credit report for 7-10 years. Lenders will view you as

a high-risk borrower if you took out a home loan that you were unable to maintain. If you

have gone through the unfortunate experience of a foreclosure, it is important to begin to

slowly rebuilding your credit as soon as you can. You can do this in the same way as

someone who has had to declare bankruptcy. Start small. As soon as you qualify for

credit, make sure you can handle it, and use it to start to prove your credit worthiness.

Your score will start to slowly improve.


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Little Things That Cause Hidden Dings

Credit cards that you dont even useget rid of them.

Every time someone checks your credit, it is noted by the credit bureaus, and while its not

a huge deal, avoid extra and unnecessary credit checks.

Online loan companies that offer to give you rate comparisons can affect your credit, for

this very reason. They may run a credit check on you over, and over, and over, with each

loan they compare for you.

When you use credit to get deferred payments and then dont pay it off in time (see the

following example)

How Long Does Information Stay on Your Credit Reports?

Positive information stays on your credit bureau reports indefinitely. Although

information about an account comes off after about seven years if no new information is

added.

Negative information, such as late or inconsistent credit payments, will stay on your credit

report for at least seven years, as does public record information such as tax liens and

delinquent child support payments.


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Bankruptcies, foreclosures, and judgments can stay on your credit report for up to ten

years, and information regarding a criminal conviction has no time limit. Most inquiries

stay on a credit report for up to two years.

WHAT YOU REALLY NEED TO KNOW: There are NO rules or laws that say how

long information, good or bad, stays on your credit report!

How Do Lenders Get My Credit Report?

There are three credit bureaus that keep track of everyones credit. They are Equifax,

TransUnion, and Experian. Whenever a lender checks your credit, they will check it with

all three . When you check your own credit, you need to get copies of your report from

each of the three bureaus.

Who Can Check My Credit Report?

Anyone with a legitimate business can check your credit report for a legitimate businesspurpose. The following list is not complete, but it is only meant to be an example of types

of businesses that are allowed to check your credit report.


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Landlords can check your report so see if you are eligible to rent from them under their

standards.

Banks will check to see if you qualify for a loan with them.

Stores will check your report in order to decide if they want to give you in-store financing.

Potential Employers can check, with your written consent, to find out if you are

financially responsible.

Car Dealerships will check your report before offering financing.

Insurance Companies will check your credit report. People with better credit will get

better rates on insurance.


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Get StartedObtaining your own Credit Report

Any time you are denied credit, you have the right to know why, and you have the right to

see a copy of your report. You are also able to get a copy of your report, yourself. Unlike

when others check your report, your score is not dinged when you check yourself. There

are many companies that advertise this as a free service. However, there are a few that

offer completely free and legitimate credit reports. One reputable site that I know of is the

following. http://www.annualcreditreport.com

You can do this once a year. Remember, this site offers you a FREE and LEGITIMATE

report.

If you need to get your credit report more frequently than once a year, you can contact anyof the three bureaus to get a copy. The easiest way to do this is to go directly to their

websites

www.experian.com

www.transunion.om

www.equifax.com


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Lets Do It!

If you dont have a current copy of your credit report, there is no better time than right

now to get one. I know that the hardest part of tackling this can be getting started, but take

a deep breath, find a comfy spot in your house and take the first step to repairing your

credit. Get a current copy of your report.

If you havent gotten a copy yet this year, you can get a free copy athttp://www.annualcreditreport.com .

If you have already gotten a credit report this year, but you feel that it is out of date, it is

well worth it to spend the money to get another copy of your report. Go online and

purchase a copy, and begin the process of nurturing your credit back to health. The scariest

part for all of us is getting started.

Great Job So Far, Youre on Your Way!

All this financial stuff can be very stressful!

Do something nice for yourself. Take a hot bath, go for a walk, or relax in

your favorite way. This was probably really tough. I know it was a

challenging obstacle for me. Now you can really begin to learn about how

credit works and you can apply it to yourself as you begin to repair your

own credit and heal your financial worries.

There is hope and there is help!


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PRBCPay Rent Build CreditIn addition to the three main credit bureaus, a fourth bureau opened its doors to allows

individuals to voluntary build positive credit. PRBC stands for Pay Rent, Build Credit. It

allows individuals and small business owners to build their credit scores through positive

actions that they voluntarily report.

Equifax, Experian, and TransUnion do not automatically report on-time payments for

common bills that you pay such as rent, telephone and utilities. These bills will only show

up on your regular credit reports if you are in default. If you enroll in PRBC, by paying

these regular bills each month, you build a positive credit history. The following list is an

example of some of the bills you can report to PRBC.

It is free to start an account with PRBC. Just like the other three bureaus, PRBC makes its

money when creditors check your report. Because it is less well known and less common

than the other three, if you have a credit report with PRBC, you will likely need to request

that landlords and lenders check your PRBC credit report, as they will not automatically

do so on their own.

Rent

Phone

Utilities

Insurance

Payroll

Cable

Daycare

Cell Phone


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The Three Credit BureausAt a Glance

Each of the three bureaus has a web site that provides information. Some of the web sites

are more helpful than others, but each provide information for consumers on how to check

your credit report, how to deal with problems or errors in your report, and how to find

answers to other questions you may have.

http://prbc.com

1-(877) PRBC-123


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Equifax: www.equifax.com

Number to call to obtain credit report: 1-800-685-1111 Number to call for disputes: Found on bottom of credit report

Number to call for identity fraud concerns: 1-888-766-0008

TransUnion: www.transunion.com

Number to call to obtain credit report: 1-877-322-8228

Number to call for disputes: 1-800-916-8800

Number to call for identity fraud concerns: 1-800-680-7289

Experian: www.experian.com

Number to call to obtain credit report: 1- 888 397 3742

Number to call for disputes: 1-888-397-3742

Number to call for identity fraud concerns: 1- 888-397- 3742

Equifax

Equifax has a great question and answer page. It lets you know exactly which types of

errors you can dispute online. To dispute an item online, you need to have a current copy

of your Equifax credit report. This report will have a 10-digit Report Confirmation

number on top. Having the number makes it easier to initiate a dispute online. To initiate

an online dispute with Equifax, simply follow the instructions on the web page and fill out

the online form.


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Equifax allows you to dispute the following items online, over the phone, or by mail:

Credit Accounts

Bankruptcy

Collection Agency Disputes

Liens or Judgments

Equifax does not allow you to dispute the following items online. You must dispute these

items over the phone or by mail.

Name

Current address

Previous address

Social Security Number

To dispute items over the phone, you will need a current copy of your Equifax credit

report. This report will have a 10-digit Report Confirmation number on top. This number

is absolutely necessary to begin the discussion over the phone. Of course you are free to


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dispute any of the above. If you wish to dispute errors on your report in writing, Equifax

offers a form for you to print. You may fill out this form and send it in to the company.

When sending it in, make sure to include your Credit report number, along with any

documentation that would help support your case.

TransUnion

TransUnion also has online services to help you deal with disputes in your credit report.

TransUnions online dispute process is interactive and very straight-forward and easy to

use. This bureau also has a customer service center that will help you deal with problems

over the phone 1-800-916-8800. The process for dealing with credit disputes with

TransUnion is similar to Equifaxs process.

TransUnion allows you to dispute the following items online, over the phone, or by mail:

Credit Accounts

Bankruptcy


Liens or Judgments


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TransUnion does not allow you to dispute the following items online. You must dispute

these items over the phone or by mail.

Name

Current address

Previous address


Experian

Experians web site is the least informative of the three. This bureau does, however, also

offer online services to help you deal with disputes in your credit report. Experians online

dispute process is fairly straight forward and easy to use. This bureau also has a customer

service center that will help you deal with problems over the phone (1- 888- 397- 3742).

They also have a form to print to dispute errors by mail. The process for dealing withcredit disputes with Experian is similar to TransUnions and Equifaxs process.

Experian allows you to dispute the following items online, over the phone, or by mail:


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Credit Accounts

Bankruptcy


Liens or Judgments

Experian does not allow you to dispute the following items online. You must dispute these

items over the phone or by mail.

Name

Current address

Previous address



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Mistakes on Your Credit Report

Its a good idea to check your credit report from time to time to make sure all information

is accurate. Errors can, and do, occur. A good time to check your reports is before

applying for a mortgage, auto, or other loan, or if you get denied a loan and are unsure as

to why. Correcting errors beforehand, however, will make your loan application process

much easier. If you have been denied credit and have not reviewed your credit reports,

you should do so to make sure the information on the report is accurate. You are entitled to

receive a free copy of your report if you were denied credit.

When you find something wrong in your credit report, you have the right to challenge it.

Submit your challenge to each of the three credit bureaus.

You may do this one of three ways:

Over the phone

Online

In Writing.

Some errors can only be disputed certain ways, but each of the three bureaus has a very

helpful website that lets you know what kinds of errors can be disputed in which ways.

Include copies (not originals) of any documents that support your position. By law, the

credit bureau must include this in your file, investigate your complaint (unless they

consider it frivolous), and either verify the item in question, or remove it from your file.


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In a nutshell, if there is a problem in your credit report, you will need to

dispute it with each of the three bureaus. You will need your credit report

from each separate bureau. You will need to know your credit report

number (this is located on top of each report.

If you prefer to tackle things online, each Credit Bureau has a website

that will walk you through the process. It tells you which issues you can address online (credit accounts, bankruptcy, collection agency disputes, and liens or judgments).

If you call an agent on the phone, have your credit report number ready.

Have all documentation ready to support your discussions or disputes before you begin the process.

If you prefer to make your disputes in writing, make sure to include your credit report number and copies of all support documentation.

Each of the three bureaus has a form you can download to make your written dispute easier.

Never dispute anything that is 100% accurate. This is Fraud .


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Repairing Your Credit Healthy Ways to Fix and Maintain Your Credit

The hardest thing about repairing your credit is that it takes time, and once you repair it,

you need to keep at it. Remember the relationship analogy. You must remember to keep

aware of your credit and not neglect it, once youve fixed it.

Pay your bills on time. This will show lenders that you are responsible and that you take

your financial obligations seriously. Remember, the fact that you pay (or do not pay) your

bills is worth 35% of your credit score. In addition to this, if you pay on time, youll avoid

excess late fees and save yourself money this way, as well.

Avoid getting excess credit, even if its Ohhhh so tempting. It is so easy to apply for

extra credit cards in stores, for example, and vendors know this. If you dont have the cash

available to get the pair of leather boots you want, or the new Craftsman drill, it can seem

like a great idea to take out a new Boston Store or Home Depot Credit card and save 10%

on your purchase that day, as well! But stop and think! Are those items really worth it to

you? Probably not. If you dont have the cash, you probably wont be able to pay the

credit card bill right away. This means that you probably wont save 10% anyway,because youll end up paying interest. Furthermore, a pair of boots (I dont care how nice

they are), or a drill (I dont care how many bits it fits), is not worth the potential damage it

could do to your credit.


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Pay down your debts. Lenders look at how much credit you have extended to you versus

how much credit you are using. This is called your available credit. Youve heard theterm, maxed out. If youre maxed out, youre using all of your available credit. Imagine

this scene.

Youre sitting in a nice restaurant with a group of people. Youve just finished a great

meal. The table has shared three bottles of wine, and youve had the waiter put one on

your bill. The waiter delivers the bills, and you pull out your credit card and stick it in the

slot in the folder. The waiter comes back after a short while, hands the other people at the

table folders with receipts, and he leans over and quietly whispers, Im sorry Sir, your

card has been declined. You ask him to run it again, but he explains that he ran it several

times. He apologizes and asks if you have another card. Slightly embarrassed, you pull

out another card. However, he again returns. The same problem has occurred. Your credit

cards have been maxed out. You have no available credit left. One of your friends picksup the bill.

Lenders want to know that you have some leeway. If you can keep your balance at around

50% of your available credit, thats great. This means, if the credit available on your card

is $2000, try to keep a balance of no more than $1000. It is ideal to pay off your balance

every month, but if you cant try to carry as small a balance as possible. Even if you have

a $2000 limit on your credit card, an do you almost always have a balance of $1800,

lenders will be less inclined to extend a loan to you than if you had a balance under $500.


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When paying down debt, it can definitely make more sense if you follow these simple

guidelines.

Start paying down your largest debt first. By doing this, you will be getting back a greaterpercentage of your total available credit.

Pay off your highest cost credit cards first, or consider switching high cost cards to low

cost alternatives, if it does not negatively affect your credit in other ways (more on that in

another section).

Consider keeping the credit card that youve had the longest. Longevity and stability

establish you as being a responsible borrower in the eyes of a lender. If this long-standing

card has a high interest rate, use it for very small purchases. For example, consider using

it only for filling up your car with gas. They resolve to pay it off in full every month. This

way, youll avoid paying interest on it, and you will help your credit score.


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Another reason to pay down your debts is because having too much debt leaves you spread

way too thin should anything unexpected or unfavorable occur. Perhaps you are able to

manage your debt given your current situation. For example, you may be married and

have a double income. But imagine what would happen if you got a divorce or if one of

you lost your job. Statistics tell us that when life gives us something unexpected, those

who are not burdened with debt are able to cope and recover from it much more quickly

than those who are.

4. Avoid buying on credit, in the first place, if you dont need to. Use cash wheneverpossible, and if you dont need something, wait until you have the money to buy it

outright. Otherwise, you are paying far more than the price on the price tag, if you dont

pay it off right away.

5. Build a range of quality credit types. It is a good idea to have a range of quality

credit types. While it is definitely important to have the type of credit you can handle,

more significant types of credit carry more clout with lenders. Ideally, if you had one or

two major credit cards and a home loan and a car loan that you managed well, this would

go a long way to establishing or maintaining your credit.


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6. Close all accounts you dont use, except for the following reasons.

If you have old accounts that you dont use, close them. The only reason to consider

keeping an account open is if you think you may need a similar account in the future, or if it is an old account that shows a really excellent credit history for you. If you think you

may have a need for the account or a similar account in the near future, it is unwise to

close the account.

Lets say you have a Home Depot or Lowes Card. You havent used it in three years.

Normally, I would advise you to close it, but if you know that you are going to be

undergoing a major home renovation project this summer and will be financing some of it,then keep it open. Dont close an account, only to apply for a similar one months later.

This will hurt your credit score far more than it will help it.

If you have had a credit card for a number of years, it can be a big benefit to your credit

score. Lenders look for longevity and stability. Dont rush to close a long-standing

account, especially if you have been able to pay down the balance. Consider keeping a

small balance on it that you pay off, in full, every month. For example, use it only for gas,and make sure to never miss a payment.


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Become Financially Organized

Should You Go Electronic?

Consider setting up electronic deposit with your bank, if you dont have it already, and

contact your bank or check its web site to see if it offers automatic web pay. Having your

paycheck automatically deposited is great. It saves you time and hassle, and it makes sure

that your money goes right into your savings account. You will still receive advice of

deposit so you know that the deposit has been made.

Then, a neat idea is to pay yourself. You can set up an automatic web pay to have money

drawn from your weekly paycheck and deposited into your checking account.

Make Online Banking Work For You

Now, heres the catch with electronic banking. Since everything is automated, there can be

time delays, oversights, and overdrafts, so here are some interesting facts you should know

and some precautions you should take to make online banking a smart choice.


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Late Fees, Overdrafts, and Bounced

Checks

Did you know?

Did you know that when you use your credit card,

there is a delay in the transaction?

Did you know that when you use your debit card atthe gas pump, the bank only recognizes that you are

spending $1? Everything that you spend after that

is taken out, regardless of whether or not you

actually have the money in your account or not.

Did you know that you might not realize that your

credit card is maxed out until it is too late and you

are sitting in a restaurant, youve finished your

meal, and your credit card suddenly gets declined?

My own bankrepresentative told me,

off the record, that theentire payroll at the bankwhere he works, is paidby late fees, overdrafts,and fees from bouncedchecks!

If youve ever been

charged $25 to $35 for abounced check,because you didntbalance your checkbook(and in reality, weve allbeen there), that moneygoes right to the bankspayroll.

There are ways toprotect yourself fromthis. Look into settingup overdraft protectionwith your bank so that ifyour checking account isdepleted, your savingsaccount canautomatically cover thedeficit. Its worth it topay a small amount ofmoney for overdraftprotection.


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Positive Steps Towards Improving Your Credit

Improving or repairing your credit is a process that focuses on improving the way lenders

look at you as a credit risk. Once you have addressed any possible mistakes that may be

present in your report, if you wish to truly begin the mending process, repairing your credit

report will likely take some work. If you think your credit history needs repair, its time to

take some positive steps.

Begin by developing a budget that you can stick to.

Set up a debt workout plan with each creditor.Apply for a secured credit card. A secured credit card is a backed by deposits by a lending

institution. It may only offer a small credit limit initially, even less than an amount you

are required to deposit. By charging and making payments regularly, you build a better

credit history. In turn, your score will increase.

Apply for a small loan that you will be approved for, and repay it immediately.


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Communicating With Your Creditors

Although you might feel like your creditors are now your enemies, the truth is, everyone

involved wants to work something out. Banks and other institutions that lend money are in

the business of making money. They make money by charging interest on loans. Loans

make lots of money for the banks. It is a big headache for banks or other financial

institutions to foreclose on a house, to deal with bankruptcy, or to turn you over to

collection agencies.

Lenders want to help you fix your credit situations. They will always work with customers

who take the initiative to communicate financial hardships. But it is important that you are

proactive. Dont wait for your creditors to contact you. Contact them right away.

For most of us, myself included, we have a natural tendency to avoid uncomfortable

conversations and situations. You may avoid communicating because you are too

embarrassed, anxious, or you dont know what to say. Using this guide will give you theknowledge and skills to fix your credit problems.

You will likely find that the more you talk with the same people, the better your

relationship with them will get. In fact, one time, my bank force closed one of my

accounts because I had bounced too many checks and I had other problems with it as well.

I went in to speak with a teller about opening a new account (which she was not going to

do), when the branch manager saw me, waved, and said, Oh, thats just Laura, go ahead,open it back up. Of course it was a little embarrassing for me, but it goes to show that

personal relationships with people still do mean something in todays world. So, stay with


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the same bank, and talk with the same people. Make sure that the employees there can put

a face with your name.

Write it Down

Always make notes of your conversations with any creditors or representatives with whom

you speak. Use the Notes section in the back of the Guide so you can all of your

information in one place. Every time you talk with someone, write down his or her name

and telephone extension, and the date and time of your conversation. You should also takenotes on what the conversation was about. You can be sure that the representative will be

taking notes, as well.

Make sure that you understand exactly what the representative is telling you. If you dont,

dont feel silly about asking questions. Its funny, but the longer you talk to someone, and

the more questions you ask, more often than not, the easier it gets, and the better rapport

youll build with that person. Repeat what the representative told you to make sure thatyou are clear, and then WRITE IT DOWN.

Write down the dates and times you fax, email, or mail any document. Write down

exactly what you included each time you send something. Youll be able to follow up

much better if you keep good records, and when you make a call feeling prepared and

knowing what youre talking about, youll be much more confident about doing so.


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Ask Creditors to Waive Late Fees

Creditors are generally willing to waive late fees is you are a good customer who pays on

time but you happen to miss a payment. A friend of mine was doing some major home

remodeling projects on her home. She and her husband had a joint credit card with a local

home improvement store that they had obtained a few years earlier. They had not used it

for a while and they both more or less forgot that they had it. When they startedundergoing their home renovations, each of them applied for that same store card

separately. He had gone in and made a major purchase and realized that applying for a

card seemed like a good idea. He applied and was approved. She did the same thing on a

separate occasion. Neither one of them communicated this with each other. Meanwhile,

the still had their original joint account, as well. It is actually quite amazing that they were

able to do this, but believe it or not, they were. They soon communicated and realized that

each had an account. This was fine with them. They werent thinking about credit score,

only about deferring payments, etc They used the cards only for major purchases of

$299 or more, in order to defer payments without interest. They ended up getting many

bills from the home improvement store and inadvertently missing some payments, because

they thought they had gotten billed twice (not realizing they were being billed for separate

accounts). They had more than one late fee. They called the store and spoke to them

about it. Even though they had multiple late fees, because they explained the situation andthat they were paying immediately, when the couple asked that the late fees be waived, the

store complied.


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Debt Consolidation Loans Individuals who have a lot of debt from multiple creditors often consider taking out a debt

consolidation loan to help them get out of trouble. A debt consolidation loan combinesyour various individual debs into one lump sum and allows you to make single monthly

payments to one creditor, rather than all of your creditors.

Some of the benefits of a debt consolidation loan is that there is less to keep track of, all of

your creditors are paid off (except for the new loan), your monthly payments may be more

manageable, and sometimes it is possible to get a lower interest rate than you had before

(if a lot of your debt was from high-interest credit cards, for example).

Some of the drawbacks to a debt consolidation loan are that you are taking out more

credit, you may end up paying a higher rate of interest than before, and you may end up

paying more in the long run, when you factor in the interest and time it takes you to pay

off your new loan.

Debt consolidation loans can be secured or unsecured, depending on what you qualify for.

A secured loan means that you need to take out the loan with a piece of property or another

asset serving as collateral, in the event that you should default on the loan. This means

that if you were unable to pay the loan back the lender would be able to take that asset as

payment. An unsecured loan is a loan that does not have any assets serving as collateral.

These are harder to get and you will pay the price of a high interest rate.


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When considering debt consolidation, decide if it will ultimately help or hinder your

situation. If it will benefit you by allowing you to pay off your creditors and avoid

getting behind on your payments, it may well be a good idea. The trick is to find a

service that will not charge you high fees to obtain the loan and to find yourself a loan

that will not charge you an arm and a leg in interest.

Debt Settlement

Oftentimes people in debt are unable to afford a debt consolidation loan. It is difficult to

obtain a secured loan if you have no property to use as collateral, and it is costly and often

impossible to obtain an unsecured loan, especially if you have poor credit already.

Furthermore, even if you are able to obtain the loans, the payments can still be too high for

people to afford.

Another solution that people in debt seek is debt settlement. This is a process in which theperson in debt hires someone to negotiate with his creditors on his behalf. The debt

settlement representative will negotiate payment plans with each creditor and set up a

schedule so that each creditor is paid off over time.

Entering into an arrangement like this will not protect you from legal action that creditors

may choose to take. However, even creditors know that they cannot get money from you

that you do not have, so if they feel as though they are getting as much from you as they

can in this way, they will be less likely to take you to court, wasting their time and money,

in the process.


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The Best Way to Get out of Debt..

Spend less than you bring in.

Really Important Legal Resource Information!

A good resource for legal advice is Pre-Paid Legal Services, Inc. They

provide access to families and individuals all across North America to a

national network of attorneys who cover all areas of law. Pre-Paid Legal

Services offers monthly memberships for whole families for as little as $17.00

per month! Its a fantastic program and I use the benefits frequently!

They cover issues such as legal questions, document review, traffic issues,

wills and estate planning documents, and more, all without additional charge

besides my monthly payment!

You can learn more about them at: http://www.prepaidlegal.com or visit

my web site: http://www.prepaidlegal.com/info/lauraschuster or ask

about it from the person you got this program from.


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SNIFFING OUT FRAUDS

Most firms that advertise that they

WIPE OUT CREDIT CARD DEBT are not legitimate!

The best way to find a legitimate company is to research and read

about the services they provide. Once you feel confident that

youve done your homework and picked a good one, contact the

Better Business Bureau to find out if they are legitimate and if there

have been complaints made against them.

If they are not legitimate, start over.

Finding a reputable company takes research, but by doing

your homework and checking their background,

you will find someone who can help.


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ATTENTIONCertified Home Redemption Specialists :

The Home Redemption Institute is forming alliances

with two major professional Credit Restoration

companies. You can offer their services to your

clients if they want powerhouse professionals to

do this work for them or to complete what your

customer couldnt accomplish with this book.

Our association with these organizations will put

money in your pocket! Watch your e-mail in the upcoming weeks for more details!

- Laura


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Know the Terms of your Mortgage

Answer the questions below.

1. How many mortgages do you have on your home?

(You may have one or two, depending on how much money you putdown.)

2. What is the interest rate on your mortgage or mortgages?

Mortgage 1:Mortgage 2:

3. What is your monthly payment for one or each of your mortgages?

Mortgage 1:

Mortgage 2:

4. Who holds each of your mortgages? (Is it a local institution)?

Mortgage 1: Local?

Mortgage 2: Local?


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Know the Terms of your Mortgage

5. Are your taxes escrowed (does your lender include money for yourtaxes, each month, in your mortgage payment)?

6. Do you pay Private Mortgage Insurance ? If so, how much do youpay per month or year?

You are now quite informed on the terms and conditions of your loan. Usethis information when speaking with your lender to determine if you qualifyfor a loan modification, to decide if refinancing or a home equity line ofcredit may be a solution to your problems, and if you are eligible to dropyour PMI (Private Mortgage Insurance) if you carry it.


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Private Mortgage Insurance:

PMI: Private Mortgage Insurance is an insurance policy purchased by the home owner

(you) that is provided as a means of protecting the lender (the bank) in case you default on

your loan. One potential benefit of PMI is that it sometimes allows people to purchase

homes with less money down.

However, you will be paying for the insurance policy. Once you have 20% equity in your

home, you longer need to have private mortgage insurance. It is important to note, though,that it is up to you to cancel your policy. As soon as you have 20% equity in your home,

contact your PMI agent and cancel your policy.

It is of no benefit to you, whatsoever, to continue to keep the policy. Private Mortgage

insurance can cost anywhere from $40-$100 per month. In 1998, the FTC or Federal

Trade Commission enacted a law (The Homeowners Protection Act of 1998) that required

Private Mortgage Insurance to be dropped automatically, after an individual obtained 22%equity in his or her home.

The law also says that new borrowers must be told about the law at the time of their

closing and once a year, thereafter. It requires lenders to provide a phone number for

borrowers to call, regarding information about cancellation of PMI. If lenders fail to

provide you a phone number or provide assistance, call the Federal Trade Commission

Directly (1-877-FTC-HELP).


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If you have 20% equity in your home you can saveyourself a lot of money by canceling your Private MortgageInsurance.

No one will let you know that it is time to cancel yourpolicy, so it will be up to you to watch for the opportunity

You will know that you have 20% equity when you haveeither paid off 20% of the loan, or your home hasappreciated 20% in value from the time youve purchasedit, or the amount of money you have paid on your home,along with how much it has appreciated, equals 20%.

You can find out if your home has appreciated enough bychecking tax assessments or having your home appraised.If you have it appraised, it will cost you approximately$300, but appraisals are usually significantly higher thanassessments, except in really depressed markets.

Once you no longer need PMI, call your insurance agentand cancel the policy. Your lender is required to provideyou with a number to call to cancel your policy. This isrequired as per the FTC Homeowners Protection Act of1998.

CANCEL PMI


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What is Loan Modification?

Loan modification is when the lender agrees to modify the terms of the loan, and

essentially writes a whole new loan. As an example, the lender may agree to extend the

terms of the loan or lower the interest rate of the loan, temporarily. This option helps you

catch up on unpaid payments by making your monthly payments affordable. Loan

modification may be appropriate if you have recovered from a financial problem and can

afford to make your loan payments after they are adjusted.

In most cases, lenders will not be jumping up and down to modify your loan. It will

definitely be up to you to ADVOCATE FOR YOURSELF. Loan modifications cost

lenders money. It takes them time, and they will never actively seek to offer loan

modification as a solution to your problems. It will be up to you to show your lender why

it is really the best solution for everyone involved, for them to give you a modification to

your loan.

The only way you will probably be able to get a loan modification, however, is if your

bank still owns your loan. A lot of loans today are sold, in bundles, to large corporate

lenders. This may very well be the situation for you if you were a sub-prime borrower (a

borrower who borrowed with questionable credit).

If your bank still has your loan, they can benefit from readjusting the terms of your loan,

because the alternative for them would be that you might possibly be unable to continuemaking your payments. It is also to their benefit to modify your loan, because you have

choices. You can seek a new loan somewhere else (this is more the case if you still have

decent credit).


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Talking with Your Lender About Loan Modification

DO be polite and courteous.

Do ask for the name of the person with whom you are speaking.

Do keep a record of the people you talk with, dates, and basic notes of what was discussedin each conversation.

DONT yell, swear, or otherwise be confrontational.

DO ask for clarification if you dont understand what is being said.

DO repeat back to the representative what you think she or she has said.

DO say, up front, that you are expecting a Loan Modification.

Do ask when you can contact the representative again to find out if you are approved.


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Do point out the obvious benefits that the bank will receive if they modify your loan (they

will receive your payments, and they will keep you as a customer).

Do tell the representative that you well call to check the progress. This helps hold the

representative and the company accountable, because they likely will not call you, and

they may not be good at following up without your prompting them.

BE PERSISTANT IN ASKING FORWHAT YOU WANT!

DALE CARNEGIE :

Most of the important things in the world have beenaccomplished by people who have kept on trying when there

seemed to be no hope at all.


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your property. Either use an appraiser that your lender recommends, or find one in the

phone book. Appraisers give an assessment of your homes current value.

If you refinance your home, you will be pulling money out of your home and getting a newloan at a new interest rate, for a new term (probably 30 years, since your purpose is to

lower your payments). You can use the money to repay your bills. The drawback to this

is that when you go to sell your home, you will have far less equity than you once did,

because you will have already have pulled a lot of it out. Also refinancing your home will

extend the number of years you will be paying a mortgage.

A Home Equity Line of Credit is a loan that is taken out against your homes equity. This

is simply a secured loan of sorts that you can usually get a fairly good interest rate on. For

people who have a lot of equity in their home, it is a good way to borrow money to pay off

large sums that they owe. You will however, be making monthly payments to repay it. If

you are strapped for cash, anyway, this may not be the solution.

How Do Creditors Collect Money

If you owe money to others, you are not a bad person, you are not a criminal, and no one

should be allowed to make you feel like one. It is not a criminal offense, it is a civil one,

and while it will be stressful, and while creditors may be allowed to follow you and

persistently seek payment until you have fulfilled your obligation, they must be respectful

and remain within the law at all times.


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There are many ways for creditors to legally seek retribution for the money that you owe

them. They may seek judgments in court that allow them to garnish your wages, they may

place liens against your property, and they may be granted permission to seek other

monetary assets (i.e. money from your savings account). If you have borrowed money on

a secured line of credit (money borrowed against an asset such as a home), they may even

begin proceedings to seize your property. What they cannot do, however, is threaten,

harass, or intimidate you.

Liens :

A creditor can attach a lien against your property if you own your own home. This is not

at all like foreclosure, nor will it in any way give the creditor the right to your property.

However, it will give you a muddied title. What this means, is that you will not be able to

sell your home or transfer the title until you have paid your creditor. In addition, you will

likely owe the creditor interest that has accumulated on the lien from the time that she

placed it.

Seizing of assets :

If you owe creditors money and they take you to court and win, they may be allowed

access to assets you have in order to secure what you owe them. This does not mean that

they can take your house or car, for example, unless, of course, your loan is secured with

this asset. What this does mean, however, is that they may be allowed to take payment

from a savings account if, for example, you owe them $1000, and you have a savingsaccount with $5000 in it. However, since you are reading this book and working to rebuild

your credit, we know that if you have the money to repay your debts, you are also working

to do that, as well.


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Garnishing Wages:

One way that creditors can get money from you is to garnish your wages. If you dont

have any money in a savings account and you dont have any assets, a creditor may seek to

earn a judgment that allows her to draw money from your paycheck on regularly scheduled

intervals.

Cross Collateral:

If you borrow money from a credit union for a loan for a vehicle, for example, they will

use that as collateral for any other money that you owe them (credit card, bounced checks,other loans, etc). This means, even if you have paid off your vehicle, if you owe them

other money, they can seize your vehicle as collateral for payment of delinquent loans.

Another way this works is if you think you are paying money on your vehicle loan, but

you own money on other loans to the credit union, they can put the money towards any of

the loans that they wish, making you, in fact delinquent on your vehicle loan, making them

able to legally repossess it.


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Consumer Protection LawsThere are three main laws that you can use to repair and protect your credit. They are the

Fair Debt Collections Act, the Fair Credit Reporting Act and the Fair Credit Billing

Act. If you know your rights and apply them diligently and consistently, and most

importantly, if you stay within the law, you can improve your credit score and stop or

lessen credit harassment.

This is what is important to remember. The credit bureaus are services that are in place to

make money. They are not government agencies or bodies, and they are not protected as

such. You, however, are protected under official laws, and as long as you are providing

true and accurate information, the law is on your side. The Consumer protection laws are

designed to protect you, the consumer. Make sure that you use them to your advantage.

Be lawful, but be picky, and insist that they prove everything. Following is an explanation

of each law, along with many examples of ways you can dispute information on your

credit report, and/or how you can stop harassment.


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Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act was enacted by Congress to protect the privacy

of individuals and to prevent us from any potential or real harassment that may occur from

Credit Collection agencies. This act protects debtors by regulating what debt collectors

and collection attorneys can do. You can request that debt collectors and/or debt attorneys

stop calling you at home and at work, and they must stop, once you ask them to stop. The

request must be in writing, and it must be sent by certified mail. IT DOES NOTREGULATE THE ACTIONS OF THE ORIGINAL CREDITOR.

This means, if you owe money to a jewelry store, the jewelry store can call you as many

times as it wants, but if the jewelry store turns you over to a collection agency, you are

now protected by the Fair Debt Collection Practice Act.

When you owe a creditor money, there is little he can do if you are unwilling or unable to

pay. Of course, if you are reading this book you are obviously a person who wants to pay

off your debts.


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If you are unable to work out a payment plan with a creditor, he may turn you over to a

collection agency so that he is relieved of trying to collect on the debt that is owed. If

this is all that the creditor does, there is little that the collection agency can do to secure the

money that you owe.

Most often, collection agencies will not accept partial payments. They have been hired to

get full payments, and that is what they intend to do. However, this is silly, because those

of us who owe money in the first place, are unable to pay in full, anyway. It would likely

be in everyones best interest for the collection companies to simply accept the partial

payments.

When people make partial payments to debt collection agencies, more often than not, they

are mailed back or not accepted. But.if you keep sending in partial payments, making

good-faith attempts to pay down your debts, when and if you do get taken to court, this

will be recognized in court as your good faith effort, and as a silly game that your creditor

is playing.

Report Harassment to the Better Business Bureau!


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Credit Collection Agencies

If you are severely delinquent in your bills, one way

that companies will get you to pay is by turning your

account over to credit collection agencies. For a flat fee

or for a percentage of what they collect, credit

collection agencies provide a service for companies inwhich they work to collect debt owed by different

individuals.

Credit Collection agencies are good at being annoying.

Thats their job. And, of course, the best way to make

them go away is to pay your debt. But you would have

done that already if you could.

Debt collection agenciesare not allowed to take

your house, garnish yourwages, or take moneyfrom you in any otherway, unless there hasbeen a legal proceedingthat allows the originalcreditor to do so.

People in debt often feelso guilty that they will putup with more than theyhave to, but no one cantreat you poorly unlessyou let them.

Debt collectors can notthreaten to call your

employer, they cannotcall you at work or homeonce you have sent thema certified letter askingthem not to, they can notthreaten to take awayproperty or assets,unless such judgmentshave already beenissued. You areobviously doing yourbest to repay your debt.Know the law and use itto your benefit.


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Stop Collection Agency Harassment

Know your rights.

1. Can Credit Collection Agencies contact others to find out where you are ?

YES.

Avoid this by letting them know where you are and being proactive in contacting them.

Let them know your plan for payment.

2. Can Credit Collection Agencies contact you any time of the day or night ?

NO.

Collection agencies can only contact you between the hours of 8A.M. and 9P.M.

3. Can Credit Collection Agencies intimidate you or threaten you in any way?

NO.

Collection agencies are not allowed to threaten or intimidate you. They must be

professional and accurate. If they are threatening or intimidating, you should contact the

Better Business Bureau and report them.


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Stop the Phone Calls Send a certified letter to the credit collection agency. You can

send a certified letter by taking it to the post office and asking

that it be sent as a certified letter. This means that when it is

received, it will be signed for, as proof that it was, in fact mailed,

and delivered.

In your letter, request that they stop calling you at home and at

work.

Request a return receipt to ensure that the letter was received.

You also do this when you mail the letter at the post office.

If you follow these steps, and they dont stop calling you, report

them to the Better Business Bureau

Remember you can only do this with collection agencies and

debt attorneys; you cant do it with the original creditor.


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LETTER TO STOP COLLECTIONS AGENCY FROM CALLING

Date

Company Name

Company Address

City, State Zip

RE: Account 1234567890

Dear Sir or Madam:

I request that you CEASE and DESIST all phone collection efforts on this account

(Information Enclosed). The Fair Debt Collections Act grants me the right to deal only

with my original creditor. Therefore, I am requesting that you CEASE and DESIST all

phone contact with me from now on.

You are hereby instructed to cease verbal collection efforts immediately or face legal

action under the Fair Debt Collections Act and other applicable state and federal laws. I

am sending this letter via certified mail because this is of utmost importance to me. Please

provide me evidence of receipt of this letter and acknowledge to me, in writing, that you

will CEASE and DESIST.

YOUR PROMPT ATTENTION TO THE MATTER IS NECESSARY.

Sincerely,

Your Name

MAKE SURE YOU SEND ALL LETTERS VIA CERTIFIED MAIL!


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FAIR CREDIT BILLING ACT

States that all information included on bills sent by

creditors must be 100 % accurate for the bills to be

considered legitimate. If the information is not 100%

accurate, your payments do not need to be sent until a

new bill is created with the correct information. Any late

charges assessed to you on bills that had incorrect

information can be contested.


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Fair Credit Billing Act

The Fair Credit Billing Act requires creditors to be 100% accurate and 100% complete in

their billing. They are not allowed to include unauthorized charges, incorrect dates,

incorrect amounts, charge you for goods or services that you did not accepts or that were

not delivered, items that were sent to the wrong address, bills sent to the wrong address (if

you sent a change of address form in writing 20 days prior to billing period), and they are

not allowed to bill you for things for which you asked for clarification (without providing

you with the requested clarification).

This means, if you have a delinquency noted on your credit report, but you can find proof

that you were late in paying that bill because of a billing issue, with the correct

documentation and a well-written letter, the credit bureaus should take this item off of

your report.

The following is a sample letter that you are free to reproduce. Use it to challenge late

payments that appear on your credit report that you can dispute because of inaccurate

billing.


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LETTER TO DISPUTE BILLING IN

Documents

EverybodysCreditRepairProgram