Chapter One: The Secrets Of The
Credit Bureaus Top of Page
What is a Credit Report? What Kind of Information
Appears on a Credit Report? How Long Will Negative Information
Stay on my Credit Report? How does Bad Credit Affect a Mortgage?
Can I See My Credit Report? How Much Bad Credit Does it Take for
Me to be Denied Credit? Who Looks at My Credit Report? 10 Favorite
Myths about Bad Credit What is a Credit Report?
Whenever you apply for any type of credit
or financing, a credit report is pulled from at least one of the
three major credit bureaus. While there are hundreds of smaller
credit bureaus around the country, virtually every credit bureau
is affiliated with either TRW, Trans Union, or Equifax. These
credit bureaus collect and maintain information on the majority
of Americans, but they are not affiliated with the government
in any way. The credit bureaus are for-profit corporations and
they sell your personal information for money. They receive your
personal information through the same lenders who grant you credit.
The credit bureaus have agreements with each
of these credit grantors that require the credit grantor to inform
the credit bureau of everything that occurs in your relationship
with the credit grantor. If you make a late payment, the negative
credit listing is quickly reported to at least one of the major
credit bureaus and is added to your credit history. Credit reports
are not just a record of how you are currently managing your credit
accounts. Credit reports are histories of everything you are doing
with your credit now, and everything you have done in the past.
The credit bureaus gather this information,
list the information on your credit report, then sell it to other
credit grantors whoosh to see your credit history before they
decide to lend you money. The credit grantors who review your
credit are especially interested in any negative credit. If you
have shown any tendency to pay late, or to disregard your financial
commitments in the past, the creditors' computers will immediately
reject your application. Exactly like when you were in grade school,
your credit report is your financial report card to the world.
What Kind of Information Appears on the Credit
Report? Merchant Trade Lines These include all regular credit
lines, such as department store cards, auto loans, mortgages,
and credit cards. If there is any history of late payment, or
if the trade line was included in the bankruptcy, charged off,
or put into repossession, the listing will be considered negative
by all credit grantors. Collection Accounts When an account is
referred to collections because of delinquency or because of a
bad check, this appears on the credit report as a collection account.
Collection accounts can appear as paid or unpaid accounts.
Any type of collection account, whether paid
or not, is considered very negative by all credit grantors. Court
Records Court records include bankruptcies, judgments, liens,
divorce, satisfied judgments, and satisfied liens. All court records,
including satisfactions, are considered very negative by all credit
grantors. Inquiries Every time a potential credit grantor looks
at your credit file, a credit inquiry appears on at least one
of your credit bureau reports. If the number of inquiries is very
few over the last two years, then there may be no negative effect
on your credit worthiness. However, if there are many recent inquiries
showing on your credit report, credit grantors will become nervous
and you will probably be denied.
How Long will Negative Information Stay on
my Credit Report? The Fair Credit Reporting Act (FCRA) requires
that most negative credit items be deleted from your credit bureau
file in no more than seven years, except for bankruptcy which
can be reported up to ten years. These are the time limits for
reporting negative credit. The creditor or credit bureau can choose
to have the negative credit information whenever they please.
Inquiries remain on the credit report for two years.
How Does Bad Credit Affect a Mortgage? Would
you believe that it is usually much harder to qualify for a gas
card than it is to qualify for a home loan? Like many, you may
have already disqualified yourself from buying a home due to bad
credit. Little do you know, you may be considered an "A" buyer
by many brokers and lenders. Even if your bad or insufficient
credit disqualifies you as an "A" buyer, a home loan at standard
interest rates may still be within your reach.
Homes are very secure collateral. Because
of this, the lenders feel more comfortable lending you money against
the property. As opposed to unsecured credit lines, the lender
will be primarily interested in your job security, debt to income
ratio, and ability to pay a reasonable down payment. Your credit
report will only represent minor role in your mortgage approval.
Can I See My Credit Report? Most credit grantors
are not allowed by the credit bureaus to show you your own credit
report. But, you can purchase your credit report from the credit
bureaus for a fee. Once you receive your credit report, you may
find that you cannot read it because the information is listed
in an unfamiliar code. Trans Union and Equifax credit reports
are very difficult to interpret and understand. TRW credit reports,
however, are quite easy for most people to read.
How Much Bad Credit Does It Take for Me to
be Denied Credit? As you may have already experienced, as little
as one small late pay listing will bring credit denials at every
turn. It is a myth that a large amount of positive credit can
outweigh some negative credit. Any negative credit whatsoever
will become a substantial credit obstacle in almost every case.
Who Looks at My Credit Report? With the passing
of each year, your credit report is used more and more often as
a yardstick to measure your character. Prospective collectors
will always review at least one of your credit reports before
granting you credit. Today, it is increasingly common for insurance
companies to review your credit before extending auto or health
insurance. Many employers now check credit before they consider
you for a position. If you rent, you may have already been through
a credit check to determine your worthiness as a renter. (Continued
in "Secrets" Ebook...)
10 Favorite Myths about Bad Credit Top of Page
When I pay off a past-due account, such as
charge off or collection account, it will show "paid" and will
no longer be negative. It is practically impossible to restore
your credit without somehow satisfying your outstanding debts.
However, the act of paying off a debt actually hurts your credit.
Negative credit is allowed to stay on the credit report for a
maximum of seven years, except for bankruptcy which may remain
up to ten years. This seven year clock begins ticking on the "date
of last activity," or, in other words, when the last action took
place on the account. By paying an outstanding, delinquent debt
you will change the account status to "paid collection," "paid
was late," or "paid was charged off"-which will stand out as a
very negative listing. Furthermore, you will create a new date
of last activity on the day you settle the account. The seven
year clock will reset and begin all over again. When you have
outstanding debt, it is almost always prudent to seek professional
aid so that you may settle your debts without further damaging
your credit (see Should I Use a Professional?)
If I succeed in deleting a negative item,
it will just come right back on my credit report. The credit bureaus
have very cleverly spread this myth through the news media and
even government regulators. In truth, the credit bureaus will
often temporarily delete a negative listing if they haven't heard
back from the credit grantor after approximately thirty days.
If the credit grantor reports in tardy, say after six weeks and
verifies the negative listing, the credit bureau will often reinsert
the negative listing on the credit report. This is often known
as the "soft delete." Eventually, though, the creditor simply
fails to respond to respond and the negative listing is permanently
deleted. If the item is verified by the credit grantor, either
before thirty days or after, the account may still be challenged
again at some future time.
There are some types of negative listings,
such as bankruptcies and foreclosures, that are impossible to
remove from the credit report. There is no type of negative listing
that hasn't been removed from a credit report a thousand times.
Some types of negative listings, such as bankruptcy or unpaid
debts, are certainly more difficult to remove from the credit
report, but this has more to do with the operational systems of
the credit bureaus than it has to do with the severity of the
bad credit item. For example, judgments and tax liens are severely
negative listings, yet are easier negative listings to remove.
Disputing the credit report is easy and any
consumer can do it himself for the price of a few postage stamps.
Disputing the credit report is easy. Getting results from the
credit bureaus is amazingly difficult, complex, and infuriating.
It isn't a coincidence that the Federal Trade Commission receives
more complaints against credit bureaus than any other type of
business. Remember, the credit bureaus are primarily interested
in protecting their profits. Investigating your challenge consumes
these profits. Short of sparking mass numbers of lawsuits, the
credit bureaus will do everything in their power to discourage
consumers from making progress with their credit restoration.
Restoring your own credit is like repairing your own transmission
or representing yourself in court: it is possible, but you must
decide if you are willing to take the time and assume the risks
of doing it yourself.
If I declare bankruptcy, I can begin my credit
report all over with a clean slate. Many bankruptcy attorneys
do not adequately understand of explain the effects of bankruptcy
to their clients. Stated simply, bankruptcy is to the credit
Establish AAA Credit in 30 Days Top of Page
To work this plan you need at least $400 to
begin. You should borrow this from your friends if necessary.
Then go to a bank of your choice and deposit the $400 into a regular
passbook savings account.
Wait a few days for the account to be posted
and return to the bank to ask for a $400 loan - you offer the
passbook as collateral. Since the bank is already holding your
$400, you go to another bank open a savings account lending you
another $400 and they won't even make a credit check. Then, with
your borrowed $400, you go to another bank, open a savings account,
return a few days later, borrow $400 from that bank using your
passbook as collateral.
Then repeat the process at a third bank with
your borrowed $400. Wait a few days to go to a fourth bank where
you open this time a CHECKING account. Wait a few days and make
a payment on each of the other three loans. A week later, make
payments again on the three loans, and continue paying each week
until you have almost paid off the balance.
A credit investigation at this point will
show you with three active bank loans (which are considered hard
to get), a checking account, and a paying history for the three
bank loans - with you having paid up in advance. Thus, you have
AAA credit in as little as 30 days. From here you go on to apply
for loans, credit cards, and other items on credit.
Credit Repair Kit Book Top of Page
The Credit System - Learn exactly how the
entire credit system works so that you can utilize your rights
under the Fair Credit Reporting Act.
Credit Reports -Obtaining and Translating
- Learn all about the (3) major credit bureaus and how to use
the provided forms to obtain your credit reports.
Disputing - How to do it Effectively - Learn
how to successfully dispute items off of your credit reports using
the federal laws and the tactics of an experienced credit restoration
Specific Credit Report Items - If there is
an item on your credit report you will learn more about it in
this in depth section which is filled with proven effective dispute
phrases for every item. Forget the theory, use the information
that has been tested! (Slow pays, Medical bills, Student Loans,
Repossessions, Foreclosures, Civil Judgements, IRS, Tax Liens,
Child Support, Inquiries, Felony Convictions, Personal Information,
Basic Credit accounts, Etc...)
Understanding Bankruptcy - You will be taught
all of the essentials of bankruptcy from the common Chapter 7
through the more complex Chapter 13. Legal contacts are also provided.
SECTION Six Top of Page
Compromising With Creditors - Learn how to
make a compromising offer to a creditor or collection agency with
beneficial results to your credit report. Sample Letter included.
Handling Collection Agencies - Learn how to
deal with debt collectors on their level. You will be provided
with a sample cease communication letter, so that you can immediately
STOP collectors from ever harassing you again.
Resolving Bad Checks - If you have ever bounced
a check you will learn how to quickly resolve it inexpensively
and without it affecting your credit.
Debt Reduction & Lowering Your Bank Card
a.p.r. - You will learn eight easy and different methods for getting
out of debt. You will also learn how to lower your interest rate
on your bank cards in about 5 minutes.
Rebuilding Your Credit with Secured Credit
cards - After you clean up you credit you will have to learn how
to rebuild it. We make rebuilding easy by providing you with a
comprehensive list of banks offering secured and unsecured credit
cards. But first, we instruct you on what to do and what not to
Important Offers & Opportunities - This
section has been dedicated to help the consumer with improving
their financial well being by providing a select group of offers
and benefits that we highly recommend our consumers to take advantage
SECTION twelve Top of Page
Frequently Asked Questions - This is where
you will find an entire series of answers to the most common and
frequently asked credit questions. You name it and it has probably
been asked and answered in this informative section.
Cut To The Chase - We have included this section
because of popular demand! Not enough time to thumb through an
entire book for credit restoration answers and instructions; or
just simply hate reading and want to cut to the chase, then this
section is just for you. Simple step-by-step instructions and
which forms to use in the book to cut to the chase and get your
credit back on track, the quick way!
This appendix is overflowing with essential
information to restore your credit. You receive all the needed
forms, examples, and contact information to deal with the credit
bureaus, collection agencies, and creditors. You also receive
a glossary of terms and an extensive list of banks offering unsecured
and secured credit cards.
About FICO Scores More Credit
Education from our FICO partners....
with the credit report, lenders can also buy a credit score based
on the information in the report. That score is calculated by
a mathematical equation that evaluates many types of information
that are on your credit report at that agency. By comparing this
information to the patterns in hundreds of thousands of past credit
reports, the score identifies your level of future credit risk.
order for a FICOŽ score to be calculated on your credit report,
the report must contain at least one account which has been open
for six months or greater. In addition, the report must contain
at least one account that has been updated in the past six months.
This ensures that there is enough information - and enough recent
information - in your report on which to base a score.
Credit bureau scores are often called "FICO scores"
because most credit bureau scores used in the US are produced
from software developed by Fair Isaac and Company. FICO scores
are provided to lenders by the three major credit reporting agencies:
Equifax, Experian and TransUnion.
scores provide the best guide to future risk based solely on credit
report data. The higher the score, the lower the risk. But no
score says whether a specific individual will be a "good" or "bad"
customer. And while many lenders use FICO scores to help them
make lending decisions, each lender has its own strategy, including
the level of risk it finds acceptable for a given credit product.
There is no single "cutoff score" used by all lenders and there
are many additional factors that lenders use to determine your
actual interest rates. However you can now see
what interest rates lenders typically offer consumers based on
FICO score ranges.
Other Names for FICO Scores
FICO scores have different names at each of the three credit reporting
agencies. All of these scores, however, are developed using the
same methods by Fair Isaac, and have been rigorously tested to
ensure they provide the most accurate picture of credit risk possible
using credit report data.
|CREDIT REPORTING AGENCY
||Experian/Fair Isaac Risk Model
than one score
In general, when people talk about "your score", they're talking
about your current FICO score. However, there is no one score
used to make decisions about you. This is true because:
bureau scores are not the only scores used.
Many lenders use their own scores, which often will include
the FICO score as well as other information about you.
- FICO scores
are not the only credit bureau scores.
There are other credit bureau scores, although FICO scores
are by far the most commonly used. Other credit bureau scores
may evaluate your credit report differently than FICO scores,
and in some cases a higher score may mean more risk, not less
risk as with FICO scores.
- Your score
may be different at each of the three main credit reporting
The FICO score from each credit reporting agency considers
only the data in your credit report at that agency. If your
current scores from the three credit reporting agencies are
different, it's probably because the information those agencies
have on you differs.
- Your FICO
score changes over time.
As your data changes at the credit reporting agency, so will
any new score based on your credit report. So your FICO score
from a month ago is probably not the same score a lender would
get from the credit reporting agency today. Top of Page