Credit Repair Tool Box

Transcription

1 Credit Repair Tool Box There s no such thing as a HOPEless credit situation. We know that bad credit happens to good people all the time. The good news is that we ve been there before and we can help you through it now! By HOPE Credit Experts Ron Lambright and Michelle Black

2 By: Ron Lambright Executive Director HOPE (Home Ownership Program for Everyone) And Michelle Black Junior Executive Director HOPE (Home Ownership Program for Everyone)

3 All Rights Reserved by HOPE USA, Inc. All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by author. For permission requests, write to the publisher at the address below. HOPE USA, Inc Centre Circle, Suite 101 Fort Mill, SC 29715

4 Important Information About This Book Introduction Credit scores impact every single aspect of your life. If you try to purchase a home, purchase a vehicle, get a new insurance policy, apply for a credit card, activate new utilities, rent an apartment, turn on new mobile phone service, or even apply for a job, someone will look at your credit report in order to decide whether or not you can get the things you need. This book is a great tool to help you take some initial steps toward a healthier credit report. However, please be aware, this book alone is not designed to be a substitute for professional advice and assistance. The HOPE Credit Repair Tool Box will provide you with extremely valuable information from experienced HOPE Credit Experts, Ron Lambright and Michelle Black. You will learn insider secrets that many credit professionals do not even know. This book is your first step towards the healthy credit you deserve! Important Reminder: You may become confused or overwhelmed during the reading of this book. In fact, that is to be expected. It takes many years of study and experience to properly master the intricacies of credit scoring and credit improvement tactics. However, you are not alone! Please reach out to our caring HOPE team if you have any questions. We are happy to share our knowledge and expertise with you! info@hope4usa.com Courtesy of HOPE Page 4

5 What Is a Credit Score? Time for a Quick History Lesson... Years ago, individual banks would make individual decisions regarding whether or not they would loan money to an individual person. A bank loan officer would meet with a potential customer and take an application viewing a credit report and asking questions to help to loan officer determine whether or not the person sitting in front of him was likely to pay back a loan plus interest and make the bank a profit. However, this system was flawed and prone to errors. In 1956, engineer Bill Fair and mathematician Earl Isaac founded a company named FICO. The idea behind FICO was that data could be used to improve business decisions. In 1958, FICO built the first credit scoring system for American Investments. For the next 30 years, FICO slowly began to be used in banks, department stores, credit card companies, and other companies whose business relied upon making decisions regarding whether or not to offer credit to a customer. Equifax was the first credit bureau to begin using the FICO score, and they introduced the BEACON Score (Equifax s version of the FICO score) in Just 2 short years later, FICO credit bureau risk scores were made available at all 3 major credit reporting agencies in the United States Equifax, Trans Union, and Experian. Trans Union debuted the EMPIRICA score and Experian debuted the Experian/FICO score. Now, with FICO scores being used by all 3 credit reporting agencies, a loan officer no longer has to make an individual decision on every loan. In fact, in almost all cases, loan officers are no longer ALLOWED to make individual credit decisions, but they must now base their decisions primarily upon an individual s credit scores. In short, if a consumer applies for a loan and the credit score is lower than the minimum score accepted by the lender, the loan officer has no choice but to turn the consumer down. The individual is reduced to a number. If the number is high enough, the lender will extend credit. If the number is too low, the lender will decline the application. The individual is reduced to a number. If the number is high enough, the lender will extend credit. If the number is too low, the lender will decline the application. Courtesy of HOPE Page 5

6 The Credit Bureaus and the Ugly Truth What do the credit bureaus do? When it comes to credit, the things that you do not know or understand can hurt you tremendously. The credit bureaus are not a government agency and they do not exist to help consumers. The credit bureaus are in business for one purpose and one purpose alone to make money! So, the question becomes, who are the credit bureaus and what exactly do the credit bureaus do? The bureaus (also known as the credit reporting agencies) are mega, billion dollar companies who will control and exert influence over you for your entire adult life. They will compile data and information regarding your spending habits, your ability to make loan payments in a timely fashion, how often you apply for credit, whether or not you borrow money and don t pay it back, etc. Then, with the help of FICO, each bureau will assign you a number. This little 3 digit number, also known as a credit score, will tell future lenders whether or not you are a good credit risk whether or not you should receive a loan. Your credit scores are like a report card for future lenders to read. If you have a history of paying your bills on time (among other things) you get an A. If you have a history of not paying your bills on time (among other things) you get an F. The bureaus hold power over you every single time you try to purchase a home, a car, when you apply for a credit card, when you shop for car insurance, even when you apply for a job. Now comes the scary part. We ve covered who the credit bureaus are and what they do (collect data). The ugly truth is that the credit bureaus do not want you to have a high credit score! Let me repeat THE CREDIT BUREAUS DO NOT WANT YOU TO HAVE A HIGH CREDIT SCORE! You may ask why the credit bureaus want you to have a low to fair credit score. Well, get ready for the answer. It is because the bureaus make MONEY, and a truckload of it, off people with low to fair credit scores. The credit bureaus do not want you to have a high credit score! Courtesy of HOPE Page 6

7 The Credit Bureaus and the Ugly Truth How the Credit Bureaus Make Money. Check out the following list of some of the ways the bureaus make money off you and your information: Selling your credit report to lenders. Selling your credit report to you (the consumer). Selling credit report monitoring services to you (the consumer). Selling identity theft protection services to you (the consumer). Selling your information to companies for marketing purposes. (Think of all the credit card offers you receive in the mail.) Charging creditors and collection agencies when a consumer disputes inaccurate information on his/her credit report. Charging consumers to place a freeze on their credit file to protect it from fraud. -Etc., etc., etc. As you can plainly see, the bureaus are in the business of selling information. We will show you, on the next page, an example of how the credit bureaus make massive profits off individuals with low to fair credit ratings. The credit bureaus do not want you to have a high credit score! Courtesy of HOPE Page 7

8 The Credit Bureaus and the Ugly Truth How the Credit Bureaus Make Money. Let me show you an example of how the credit bureaus make massive profits off individuals with low to fair credit ratings. Joe Consumer goes to his local bank to apply for a car loan. The loan officer meets with Joe, takes his application, and pulls Joe s credit report. (The bank pays $$$ to access Joe s information.) Joe, who recently faced an illness and was out of work, has some negative items on his credit report. The loan officer turns Joe down but tells Joe if he can boost his credit score just 45 points he can qualify. Joe goes online and pulls a copy of his credit report. (He pays the credit bureaus $$$ to access his own information.) Joe is upset when he discovers inaccurate information on his credit report and even some identity fraud! He joins a monthly monitoring program (for which he pays $$$) and signs up for identity theft protection (for which he pays $$$). Joe then works with a professional credit restoration service to dispute the inaccurate items on his credit report. (Each time an account is disputed the creditor or collection agency has to pay the bureaus $$$ for researching the accuracy of the account.) Once Joe s credit has been restored he goes back to the bank to reapply for his car loan. (The bank pays $$$ again to access Joe s information.) Now, look at what happens when Henry Highscore applies for his loan. Henry goes to his local bank to apply for a car loan. The loan officer meets with Henry, takes his application, and pulls Henry s credit report. (The bank pays $$$ to access Henry s information.) Henry has a great credit score and is approved on the spot. Joe Consumer (Mid Range Credit Scores) Credit Bureaus Made Money 6 Times Estimated Income for Bureaus In Example: $390 Henry Highscore (High Range Credit Scores) Credit Bureaus Made Money 1 Time Estimated Income for Bureaus in Example: $15 Joe Consumer is 26 time more profitable to the credit bureaus than Henry Highscore! Do you see the difference? Consumers with a low to fair credit score are cash cows for the credit bureaus! Why in the world would the bureaus be motivated to help these consumers learn how to achieve and maintain high credit scores? A consumer with a low to mid range credit score can be about 26 times more profitable to the credit bureaus than a consumer with a high credit score! Courtesy of HOPE Page 8

9 Credit Scoring Models Not All Credit Scores Are Equal. There are hundreds of different credit scoring models. Most of the commonly used models come from a company named Fair Isaac. This company does statistical calculations of risk and summarizes it in a numerical value, i.e. credit score. Basically, Fair Isaac creates scoring models which gauge a consumer s risk. To be more specific, their calculations are designed to gauge a consumer s risk of going 90 days late on an account in the next 2 years. Fair Isaac then sells their scoring models to the credit bureaus Equifax, Trans Union, and Experian. Fair Isaac also sells hundreds of other specialized scoring models to other industries. There are Mortgage Industry and Auto Industry Option scoring models, credit card models, banking industry models, global models, and hundreds more. Many industries want their own specific models. So how do these different scores affect you? If on the exact same day you pulled a credit report online yourself, a mortgage company pulled your credit report, and an automobile company pulled your credit report, all 3 reports would have different credit scores. Here is another example, the Auto Industry Option scoring model rates 6 specific auto history accounts types heavier than all other accounts. These variables are known by Fair Isaac as scorecards. Therefore, if you have had repossession or a late payment on a car loan, this will have a much greater effect on the Auto Industry scoring option than it would on a Mortgage Industry score or a score you can pull for yourself. Credit card models will rate credit card late payments heavier than other models will. Each industry specific model will be impacted more if accounts are paid late or defaulted on within that specific industry. To confuse matters even further, there are also different versions of credit scoring models like Classic FICO and FICO 08. (Think of these different versions of credit scoring models like you would think of different versions of your computer software.) The credit bureaus even have their own score named Vantage Score. All together, hundreds of different credit scoring models are used to determine a consumer s credit worthiness in other words, the risk of lending money to that specific consumer. All together, hundreds of different credit scoring models are used to determine a consumer s credit worthiness in other words, the risk of lending money to that specific consumer. Courtesy of HOPE Page 9

10 The Anatomy of a Credit Score Payment History 35% Your payment history is the most important factor considered in your credit score, as you might expect. In total, your payment history accounts for 35% of your total score. This aspect of your total score calculation is based on your prior payment history with your creditors. Late payments, defaulted accounts, bankruptcies, and all other NEGATIVE information on your credit report have the greatest effect. Late Payments Late payments damage your credit scores more quickly than any other activity on your credit report. The more recent the late payment, the greater the damage will be to your credit score. If you pay your mortgage late this month, the Mortgage Industry Option scoring model could drop your scores over 120 points. That potential 120 point drop can occur with only a single 30 day late payment! REMEMBER, the scoring model is designed to predict the potential for you to become 90 days late on an account within the next 2 years. ANY recent late payments are a BIG reflection that you will default, and your credit score plummets as a result. Your creditor cannot report you late unless you are 30 days late. HOWEVER, the creditor can claim they need 10 days to process your payment. So, don t think just because you mailed your payment on the 25 th day that you will not be reported to the credit bureaus as late. All together, your entire history of payment counts for 35% of your total scores. The more positive accounts you have and the less negative means a MUCH higher credit score. Late payments damage your credit scores more quickly than any other activity on your credit report. Courtesy of HOPE Page 10

11 The Anatomy of a Credit Score Debt Level 30% The second largest factor considered in calculating your credit scores is the amount you owe in relation to your high credit limits aka your utilization ratio. If you are carrying high credit card balances, you can actually hurt your credit scores almost as much as if you were paying the account late every month. The Debt Level aspect of your credit score is made up of several different factors. The first factor is the relation of balances you owe on all of your accounts combined in relation to the high credit limits on those accounts. Factor number 2 takes into account balances in relation to high credit limits on your individual accounts also. For example, you will be scored higher if you owe 30% or less on your credit card accounts. This means if you have a high credit limit of $1,000 you will have a higher score if you maintain a balance of $300 or less. In fact, it is best to keep your credit cards at a 1% balance (or at a $0 balance if 1% is too difficult to maintain.) High balances on installment loans, car loans, mortgages, and other non revolving accounts can also negatively impact your credit scores. In fact, your credit scores will ALWAYS be immediately lowered if you open new accounts from the aforementioned categories. A new car loan, for example, will lower your scores as soon as it appears on your report. As your loans and mortgages are paid down over time, your scores will steadily increase. This is why one of the BEST things you can do for your credit is open accounts, and pay them as agreed. Your score will be affected by how many open accounts have balances, how much of your total credit lines are being used, and how much of a balance you have on installment loans, like car loans. You can directly improve your credit scores by maintaining lower balances on your accounts and sometimes by spreading balances over several different accounts. If you are carrying high credit card balances, you can actually hurt your credit scores almost as much as if you were paying the account late every month. Courtesy of HOPE Page 11

12 The Anatomy of a Credit Score Length of Credit 15% The age of your credit report accounts for 15% of your credit score. The older you are and the longer the period of time during which you have had credit accounts, the higher your score can become. The Length of Credit component in the calculation of your credit score is why it is near impossible to get to an 800 score at a young age. As you establish more credit accounts throughout your life, and as your credit history grows over time, your scores will naturally increase. Being added as an authorized user to an account with a long pay history is another pay to increase your scores. HOWEVER, exercise this strategy with extreme caution. You should never, ever, ever pay to be added as an authorized user to a stranger s account. Paying to be added to a strangers account is frowned upon and becomes downright illegal if you use a falsely elevated score (as a result of this illegal piggybacking tactic) to receive a loan. As our client we show you a little more about how to obtain legal and legitimate authorized user status with someone you know. The older you are and the longer the period of time during which you have had credit accounts, the higher your credit score can become. Courtesy of HOPE Page 12

13 The Anatomy of a Credit Score Inquiries 10% This Inquiry component of your credit score is comprised of how much new credit for which you apply. This category takes into consideration how many accounts you currently have open, how long it has been since you opened a new account, and how many requests you have for new credit within a 12 month time period. Whenever you apply for credit, the creditor requests information from the credit bureaus. This information request counts as an inquiry on your report. If you have a lot of inquiries in a short period of time, your scores will be impacted negatively. There is no exact number of points deducted from your score when an inquiry occurs. However, here is a hypothetical example: if you apply for a mortgage today, your scores might drop 1 point. Then, if you apply for a car, a mortgage, and a few credit cards this week, your scores could drop significantly. A large number of credit pulls in a short period of time will have a negative impact on your scores. You do not want to apply for too much new credit in a short period of time. Note: A consumer can pull his or her OWN credit report as often as he/she likes. These are considered soft inquiries and do not damage your credit scores in any way, shape, or form. You are entitled to a free credit report every year from (This free report does NOT include your credit scores.) If you would like to see your credit scores you may want to check out or other similar sites. Note: A consumer can pull his or her OWN credit report as often as he/she likes. These are considered soft inquiries and do not damage your credit scores in any way, shape, or form. Courtesy of HOPE Page 13

14 The Anatomy of a Credit Score Mix of Credit 10% Your credit scores also consider the mix of credit items you have on your report. The Mix of Credit component of your credit score is affected by what kinds of accounts you have and how many accounts you have from each of these individual categories. FICO will award you a higher credit score if you have an open mortgage, 3 credit cards, 1 auto loan, and a small amount of other open accounts than if you have little or no diversity on your credit report. If you have a ton of credit cards, your scores may be lowered. If you have several mortgages, your scores may be lowered. Any, unhealthy account mixes lower your scores. The preferred number of credit cards is 3. This means you will actually have a higher credit score if you have 3 open credit cards than if you have more or less than 3 open. HOWEVER, don t run out and cancel your cards just yet. REMEMBER, 30% of your score is comprised of your balances in relation to your high credit limit. So keep your cards open, but focus on having 3 LARGE balance cards for maximum impact. Maintain a healthy mix of accounts and this aspect of your credit score will be golden. Tip: Avoid finance company loans. Finance companies are the lenders of last resort. The terms and rates on these loans are not as favorable as traditional bank loans. Therefore, having finance company accounts on your credit report could likely cost you points in this category. Tip: Avoid finance company loans. Finance companies are the lenders of last resort Therefore, having finance company loans on your credit report could likely cost you points in this category. Courtesy of HOPE Page 14

15 How Can HOPE Help Me? Signs You Could Benefit from a HOPE Membership: *You want to be a homeowner. *You have made mistakes in the past, but want to get your credit back on track. *You are sick of being turned down for loans. *You have faced a hardship or circumstances that were out of your control and you have a damaged credit report as a result. *You desire professional guidance to help you rebuild your credit. *You have tried to fix credit problems on your own in the past, but have failed. *You are tired of getting ripped off by paying high interest rates. *You are tired of fighting the credit bureaus alone. The TRUTH About People with Bad Credit... We know that having bad credit can be embarrassing. It can make you feel like a loser or less than. The truth is that bad credit does NOT have anything to do with your value as a person. When difficult circumstances arise (i.e. job loss, accident, divorce, illness, death of a loved one, etc.), good people are forced to make touch financial decisions. So you decide that it is more important to feed your family than to pay a car payment. Protecting your family is the natural and honorable thing to do! In fact, don t you think that most collection agents would do the very same thing in a similar circumstance?! What you must remember is that bad credit happens to good people all the time! The good news is that you don t have to stand up to the credit bullies in your life alone! Yes, you absolutely have the right to try to correct credit problems all by yourself. You also have the right to represent yourself in a court of law or to pull your own teeth. Fixing credit problems can truly be as difficult as pulling teeth just ask anyone who has ever tried it before! Remember, just because you have the right to do something yourself does not mean that doing so is the right decision. HOPE has the experience, the knowledge, and the program to help you! You don t have to spend another day in credit prison, trying to overcome past credit mistakes and errors on your own. Call today to learn more about how HOPE can help you! Bad credit happens to good people all the time! Courtesy of HOPE Page 15

16 Real Examples, Real Results Over a Decade of Proven Success! On this page and the following pages you will see real life examples, just like those our HOPE team receives every single day, from HOPE members working with our credit experts to achieve the healthier credit they deserve! There s no such thing as a HOPEless credit situation! Courtesy of HOPE Page 16

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24 The HOPE Process A Brief Overview Step One: Schedule a No-Obligation Credit Analysis *Visit or call to reserve your analysis with a HOPE Credit Expert today. A small analysis fee of $30 for an individual or $40 for a couple will be charged on the day of your appointment, at the end of the analysis. Step Two: Professional Credit Analysis *A HOPE Credit Expert will review your full credit report with you, in person or over the phone, and will help you discover everything which is lowering your credit scores. Together, you will uncover mistakes on your reports, and make a plan to move you toward your goals. You DECIDE if HOPE s plan is right for you. We have a strict, nopressure policy. We value the opportunity to earn your business. If HOPE is a good fit for you, your first-work fee of $199 is scheduled (3 days after we begin the initial work on your file). HOPE customizes an online client portal which you can log into 24/7 ensuring complete transparency for you during this process and making sure that you are 100% in the loop regarding the progress on your file. Then, a $99 monthly fee is schedule each month, for work completed the previous month. Fees are never charged in advance. There are no hidden fees. You can cancel any time. Step Three: An Experienced Credit Professional Prepares the Dispute *A legal challenge letter is prepared and mailed to the credit bureaus on your behalf. You can rest assured that a professional team, with years of experience, who has helped thousands of clients to correct credit inaccuracies before, is working their hardest on your behalf. Once you join HOPE, you are a member of the family and we don t let anyone get by with pushing our family around! Step Four: Responses *By law, the credit bureaus have 30 days to respond to your dispute and to send you the results of your investigation. Add on a few days for mailing documents to and from the bureaus and you can expect to receive your replies from the credit bureaus in around 45 days. Forward these replies to your personal HOPE case manager. The letters are reviewed and you are updated with the results which accounts have been deleted and which accounts remain. Your personal case manager will be corresponding with you regularly, via and/or phone, to be sure that everyone is on track with the plan which was developed for you during your initial credit analysis. You plan is customized, and can be adjusted anytime to be sure that you continue to move successfully toward your goals. Once you join HOPE, you are a member of the family and we don t let anyone get by with pushing our family around! Courtesy of HOPE Page 24

25 The HOPE Process A Brief Overview (Continued ) Step Five: Appeals *Once we receive the first round of response letters from the credit bureaus, your HOPE team can elevate the intensity of your next disputes with the credit bureaus. Remember, the credit bureaus and your creditors will likely fight this process just like they would if you were working on your own. The difference is that, as a HOPE member, you have our team s combined experience of over 30 years in the credit industry. We literally have strategy books that are over 1,000 pages thick on ways to help you correct the issues and mistakes on your credit! Step Six: Results *Update letters are received in the mail, just like after your initial disputes. Forward the update letters to your HOPE Case Manager. Results are posted to your client portal and you are able to review the results. Step Seven: Rinse and Repeat *Most HOPE clients repeat the appeals and results processes again at an escalated level. Step Eight: Review a Fresh, New Copy of Your Credit Report *After 3 rounds of disputes, it is time for you to pull and forward a new copy of your credit report, with scores, to your HOPE Case Manager. Don t worry, we ll point you in the right direction and help guide you through this step. Step Nine: Plan and Complete Your Final Steps *You and your HOPE Case Manager will make a new plan to help walk you through the final stages of your HOPE Membership. This plan will vary for each individual, depending upon results from your previous rounds of disputes. Step Ten: Graduation! *Once you have completed the plan designed for you by your HOPE team, it s time to graduate! Nothing makes us happier than to see our members complete the HOPE Program and to see their dreams come true! Remember, the goal of your HOPE team is to teach you how to maintain healthy credit for life. We ll be sure to offer you exit strategies and educational materials to help you maintain your healthier credit in the future. Nothing makes us happier than to see our members complete the HOPE Program and to see their dreams come true! Courtesy of HOPE Page 25

26 Discover the HOPE Difference Experienced. Reliable. Trusted. The credit repair industry has a bad name, for a good reason. There are a lot of scam artists out there taking advantage of people in desperate situations. At HOPE we are never offended when our prospective clients are skeptical about whether or not this process can really work. As a smart consumer, we EXPECT you to have questions and concerns as you decide if the HOPE Program is a good fit for you. We strive to operate with integrity and honesty a company of which our clients can be proud. Whether or not you choose to work with HOPE, you should be aware of few facts in order to protect yourself. 1. Yes, you do have the right to work on your credit yourself. *Again, just because you can do something doesn t mean that you should. However, if you ever come across a credit repair company that doesn t inform you of this right then our advice is to RUN AWAY QUICKLY! 2. There are no guarantees with credit repair work. *It is important to understand that there are no absolute guarantees with any credit repair or restoration work. HOPE cannot offer any guaranteed outcomes and neither can any other company. If a company makes a promise such as 720 Credit Scores in 30 Days, our advice, again, is to RUN AWAY QUICKLY! Why HOPE Is the BEST Choice for Your Credit Needs 1. No Upfront Fees *Work is performed first, fees are charged afterwards. 2. No Promise of a Magic Wand, But the Promise of a Solid Plan. *We don t tell you what we think you want to hear. We tell you the truth. 3. NACSO Certified * 4. Proven Results *Visit 5. Cancel Anytime. Call today or visit to schedule your no-obligation credit analysis with a HOPE Credit Expert. Courtesy of HOPE Page 26

27 HOPE USA 3525 Centre Circle, Suite 101 Fort Mill, SC Phone: