The ABC’s of Repairing Your Credit

By Tony Bellenger

The fact that you’re reading this article means that either you or someone one you know has less than perfect credit, and you would like to learn a few simple steps one can implement to drastically raise one’s credit scores. That a smart thing to do, because in the past, if you didn’t pay your credit card bills on time, you were called a “deadbeat,”  yet today if you play your credit card bills in full each month you’re now called a “deadbeat?” In the credit industry the definition for the word “deadbeat” sure has changed, hasn’t it? Wow!

That’s because today’s credit system really profits off of people having “bad” credit rather than good credit. Think about this, and it will become clear as water, when you apply for credit your credit score immediately goes down because you now have an inquiry on your credit report, right? Now since your credit score has been lowered you now get charged a higher interest rate because your lower score means that you’re now a greater risk. This is all because of a simple inquiry on your credit report.

I bet you didn’t know that there are approximately eight different scoring variations because the credit bureaus don’t actually score you? Here’s a little know secret, all your credit scores come out of San Rafael, California, not the credit bureaus themselves.

But wait there’s more; our last economic meltdown has left a lot of hard working American’s with less than stellar credit. Let’s face it, never before in the history of mankind did we have a period in time when average people could just go out and buy homes with no money down and with no job, and it was okay. Heck, it didn’t take long before people went out and brought lots of houses that way. Then the same people then went out and brought cars and other consumer items with no money down.

Now think back to a few years ago, remember when everybody from the guy cutting your grass, to the girl taking your ticket at the movies went out and did this and all of a sudden they felt that they were financial geniuses. They were written up in Forbes and Fortune magazine’s, and you saw them on TV. Get this, credit allows people to APPEAR rich, when in fact they aren’t.

Did you know that 7 out of 10 employer’s use credit checks prior to hiring someone for employment and that this has further compounded our current state of high unemployment? Why? Because so many hard working and extremely qualified American’s have been and are currently being denied a job simply because they have a few blemishes on their credit report. God help you if you’re one of the millions of American’s who have also fallen victim to identity theft.

Not only do the ID theft victims get denied jobs, but as soon as they get the their credit reports cleared of the negative entries, the collection agencies sale the erroneous collection files to other collection agencies, who then turn around and put the erroneous information back on their credit reports “re-aging” the account. Their credit file now shows the negative account as brand new, which dings their credit far worse than before.

Here’s a thought, instead of giving billons in foreign aid to strangers in places we’ve never heard of and can’t pronounce, we should be putting that aid into stopping this practice right here in the good ole U.S. of A., which would put more hard working Americans to work. How’s that for an economic stimulus plan? More American’s with a job means more American’s with money to spend, which means more American’s spending money, buying goods and services here in America, and this increase in demand for goods and services means a further increase in even more American’s getting hired and or going back to work to meet the increase in demand. That’s just common sense, in fact, I’ve been quoted as saying, “common sense just ain’t common, common sense has been replaced with nonsense, which makes no sense at all.”

Well back to the subject at hand, were you aware that our government doesn’t count individuals who have exhausted their unemployment benefits yet are still unemployed? Our government only counts those who are currently receiving unemployment checks. Gee talk about “cooking the books” for the love of God.  Well here’s some really “good news you can use.”

We all have heard credit score terms from credit repair companies and other institutions that can be very deceptive and confusing. Such phrases include New Empirca score, Fico score, Beacon score, credit score, Experian score, Equifax score, Vantage score, and TransUnion score. Don’t be alarmed. Many wonder how you can get three different credit scores at one business location, then when you travel to another business location in the same day and have three totally different credit scores that can differ by as much as fifty points.

As a consumer you should beware of any credit repair company charging an upfront fee before the service has been completely preformed. Here’s why, the Credit Repair Organizations Act – Public Law 90-321, 82 Stat. 164 “404. Prohibited practices. Payment in Advance. “No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed.”  Oftentimes credit repair firms will try to get around this and violate federal law by requiring up-front fees disguised as “account set-up” or analysis fees. They may even ask you to purchase a training manual for hundreds of dollars. Use this link to get the complete law.

Now if you need or want a higher credit score, check to see if you have some of the following being reported on your credit files:

1. Negative trade lines that appear in your credit report.

2. Late payments.

3. Charge offs.

4. Collections.

5. Foreclosures.

6. Repossessions.

7. You may also have too many inquires.

8. A.K.A.’s, (Also Known As)

9. Addresses or places of employment that may be injuring your credit score.

If you have any of the above, there is light at the end of the tunnel. The good news is it is absolutely legal to remove erroneous derogatory or negative items off your credit report and have your credit score improved. Please note that if the credit bureaus determine that you’ve filed false disputes, they can lower your credit score.

The first thing you’ll need to do is to obtain your credit reports from the 3 major bureas mentioned, then check it to see if any of the above items or on your reports. Remember also that the account must be obsolete, outdated, misleading, erroneous, the dates opened on the account are incorrect, the dates closed on the account are incorrect, or if you cannot recall the account as well as many other reasons. If you are among those unfortunate individuals with bad credit history, don’t despair. Below are a few tips to follow and you can always contact me for more information, also from now on do the following:

  • Be sure you pay all of your bills on time.
  • Keep only the number of credit cards you really need. 
  • Prevent having bankruptcies, collections, and tax liens. These records will stay to your credit report until 10 years unless you learn to challenge them.
  • Lower the credit limit of your accounts so you will have a lower available credit and in time can control the way you spend your credit limit.
  • Ask a friend or a family member to help you improve credit by having them to co-sign on a credit card or small loan.
  • Re-establish your credit history by getting secured credit cards and secured loans to show that you can make timely payments. Contact us if you need help with this.
  • Make sure to get a yearly copy of your credit report so you can assess any credit errors and fix them in time.

Well here’s more “good news you can use.” If you’re currently serving in the armed forces or merchant marines you should make an appointment with your local Judge Advocate General’s office if contacted by a collector.  Did you know that the Servicemembers Civil Relief Act (SCRA), previously the Soldiers’ and Sailors’ Civil Relief Act (SSCRA), provides protections for military members whose financial life is affected by military service? In fact, were you aware that you, your spouse and your dependents may be protected from evictions, foreclosure and repossessions just because you’re serving to protect us? Use this link for more information: 

With that being said, here are a few improvements that I feel should be in the credit model. For example; many of us pay on accounts every month that never appear on our credit report, such as phone bills, car insurance, medical insurance, gym membership, rent, and home utilities. Do those accounts show up on your credit report? Oh no! Then your real concern should be improving the key components that do show up on your credit score, that only makes sense, right?

Here’s where the rubber meets the road, you’re now aware that you have the legal right to dispute and remove negative items off your credit report to help increase your score. This should only be initiated once you’ve learn the appropriate methods in disputing and removing negative items off your credit report.

You should have the following in place prior to starting any credit repair on your own:

1. A copy of your credit report from all Experian, Equifax, and TransUnion. Here’s a link to obtain a free copy all 3 of your credit reports: www.annualcreditreport.com/cra/index.jsp

1. You will need a calendar to time your letters, disputes, and continual correspondence.

2. You will need the addresses of the credit bureaus, subsidiary bureaus, creditors, collectors, your State Attorney General, Federal Trade Commission, and possibly a local attorney that you can cc (carbon copy) all your correspondence that you have documented.

3. You will need a handful of certified mail green cards as well as a notary.

4. You need a system that will allow you to track what items have been taken off your credit report so that you don’t continually dispute items that are removed. Please be aware that if you fail to do this the credit bureaus may consider and declare all your letters to be frivolous in nature and they will legally reserve the right not to investigate or not to correct your credit file.

5. You should be familiar with both the federal and your state’s credit laws. Not to mention the statue of limitations for your state.

Once you have this in place be sure to get familiar with the credit laws as noted in step five. Here are a few things to look out for:

a. When viewing credit restoration laws it is important to decipher whether the law is pertaining to a credit report or the legality of a debt. It is a myth that all consumer debt is owed for seven years. Almost all debt is governed by state statutes and not by federal law. Check the laws within your own state that govern the legalities of debt before you start any credit improvement.

b. Fair Credit Reporting Act (FCRA) – The Fair Credit Reporting Act was enacted
approximately 30 years ago and has had numerous revisions over that time period. FCRA benefits the consumer by putting time restrictions on creditors and credit bureaus to respond to any disputes made by a consumer. If the creditor’s or the credit bureaus fail to respond within the allotted time frame then the credit bureaus must change the credit information in accordance with the consumer’s disputes. This is the basic principal that simple credit repair companies use to fix your credit – “Not very effective in today’s world!” The FCRA also grants creditors and credit bureaus certain conditions to request additional investigative time periods into a consumer’s dispute. Furthermore, the FCRA also gives the credit bureaus the option to permanently verify a dispute and never remove it if certain methods weren’t procedurally done by the party disputing the credit item. The FCRA also covers fraud alerts, the statutes of items in dispute for consumer reports, in addition to civil liability of damages for both parties.

c. Fair and Accurate Credit Transaction Act (FACT Act) came into law several years ago. The FACT Act allows the consumer to receive a credit report annually free of charge.
These will not contain credit scores and maybe a little more difficult to decipher. The FACT Act covers rules of “prevention of reinsertion, blocking information due to identity theft, statute of limitations, and credit wholesaler requirements, etc…

d. Uniform Commercial Code Laws (UCC Laws) – These are the laws that govern
transactions that are paid by personal or corporate check. The UCC laws also govern the differences and superseding definitions between contracts and legal agreements.
There are many state adaptations and variations to the federal law which cover addendums and legal stipulations when satisfying a debt.

e. Fair Debt Collection Practices Act (FDCPA) – Is a law that contains procedural rules for third party collectors, consumers and the penalties that may be levied against either party. The FDCPA governs how many times a collector can call a consumer, a consumer’s place of employment, family members, friends and neighbors. The FDCPA also covers the rules of the assigning of a debt. The FDCPA also notes when state law can override federal law when it comes to collection or credit disputes. The FDCPA covers the rules that a collection company cannot use abusive language, or make false threats, and much more. The FDCPA is by far the best law available to remove negative items placed with a 3rd party collector because it places the burden of proof on the collector who never has the complete file as per the FDCPA. Of course this means the 3rd party collector has to remove the negative item from the 3 major credit bureaus ASAP.

f. Equal Credit Protection Act (ECPA) – Contains rules governing when a creditor or collector can report your trade line to the credit bureaus. It also covers if a creditor is obligated or not obligated to report borrowers, co-borrowers, and authorized users on an individual account to the credit bureaus. The ECPA also protects against discrimination for age, race, gender, and religion.

There are so many credit laws that affect positively and negatively both the consumer and creditor. Therefore, when viewing credit laws it is important for you to determine whether the law is pertaining to a credit report or the legality of a debt. In addition, it is a myth that all consumer debt is owed for seven years.

Almost all debt is governed by state statutes and not by federal law. Check the laws within your own state that govern the legalities of debt and debt collection. You should also check you state laws governing collection agencies to ascertain if any collection agency contacting you is licensed, registered and bonded in your state because some states have a complete prohibition against collecting from its residents unless the collection agency has complied with licensing or bonding.

One final tip for the do it yourself credit repair person, it’s recommended that your balances should preferably be kept under 20 percent, but at a maximum of no more than 50 percent your available credit. It is understandable if you can’t do this right away. Here’s another helpful tip, start with one of your lower balance cards and get this to under the 20 percent then work on the next card.

By now, after reading this informative article, you may want to learn more about how you can improve your credit or someone else’s? You may contact Tony Bellenger (The Money Doctor ) for more information concerning seminars, speaking engagements, investor trainings, personal consultations, business financing, and hard money loans, contact Tony Bellenger at tonybellenger.com/contact-us.

People perish from a lack of knowledge, and many would do better, if they knew better!

Tony Bellenger, The Money Doctor

Tony Bellenger is CFO of Tony Bellenger & Associates, LLC and he’s a financial and real estate expert as well as a successful author who has authored two books titled “I Met God in Heaven” and “How To Put Green-In-Your-Jeans.” In addition, Tony is also an inventor, speaker and teacher. His vision is to stay driven, persistent, caring, and funny so that he can continue to be a BLESSING to his fellow man.

Connect with Tony Bellenger via phone 702.703.4460, email at info@tonybellenger.com, on Twitter at https://twitter.com/TheDebtBuster or LinkedIn.

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