My credit cards are paid off so that’s not a problem… or is it?
As a credit expert I always get clients telling me exactly what their credit issues are. Now for a small portion of them who do not have many issues a portion of them are correct. After all if you’re currently a 680 credit score then you may only have one or two issues that are hurting you.
However many times there are many other factors affecting their score so I will always tell them what you look at is most likely not what I am going to be looking at.
This is a huge advantage when you have been doing this for over 12 years and have analyzed over 16,000 credit reports in that time frame. Dissecting them, analyzing how the underwriting process behind the scenes looks at them and approves or denies them.
All of this behind the scenes underwriting reviewing is all for your benefit to help you achieve your goals for you and your family.
Many times I have clients that have made recent late payments on their credit cards or car loans, mortgage etc.. (basically recent late payments).
And then if it was a credit card for example which majority of the time it is, they tell me I don’t have to worry about it as its been paid off so it’s no longer a problem.
This is where the education portion of my program begins and I start explaining to them it does not matter that the car is paid off and it is a problem. Explaining the issue to them during the conversation as why it is an issue they will understand it but many times the information leaves them once the conversation is over.
So what I like to do is create a visual picture as most people are visual so painting a picture helps them retain the information for the future.
Think of your credit score in the same way as a crystal ball “works”. The concept is to predict the future. So if a credit score operates along the same lines then a recent late payment gives the lender an indication there may be a financial problem as they are looking at lending you money in the hopes of you paying it on time for the next few years or even the next 30 years if it’s a mortgage.
It’s a math equation, granted a very complicated one but still a math equation. So if you were delinquent in making an arranged payment on time they have no clue if that was a one-time slip up of a foreshadowing of future issues.
They see it two different ways, the first is there is some financial challenges you are going through which of course would give anyone pause on lending you money or lending you money at a low interest rate as those loans are for people who don’t make late payments.
The 2nd you are not going to like a may even take it personally but you can’t argue with a mathematical equation so it’s looked at as if your financially incapable of paying your own bills on-time. Another way it can be called is you’re financially incompetent (at least at this time).
An excuse I hear people say is they never got a bill. The answer which I try to say with a good deal of tact is the credit scoring system reads it as:
“But you know you owe that bank money and that you make payments every month so why didn’t you call them”. It’s not their responsibility to remind you of your financial obligations.
Is it harsh? Yes it is, Realistic in how the world works, yes it is also. What you need to understand is these banks do not know you, they look at how past bills are paid in order to identify if you will pay future bills on time.
I also get people saying they have had excellent credit for 10 even 30 years. And then I have to inform them “that’s great and I will guess that if you even needed to get something during that time you benefited from that great score but you do not have that score now and then lender thinks there could be a future issue now that you did not pay something”.
The hardest thing in credit repair is removing late payments or what is nicknamed “slow pays”, ESPECIALLY when it’s on a current open account as it’s very easy to prove.
So many times I have heard clients tell them that other credit repair companies said it’s not a problem at all so they signed up and paid them money only to later find out months later they were lied to.
UNDERSTAND, when it comes to your credit report and your credit score when it relates to qualifying for a loan and even when credit repair is added to the mix that even if you paid the credit card (for example) down or off does not mean the problem has been fixed.
The RECORD of you not paying that bill on time for that particular month is marked in your credit report and depending on how recent it is will reflect as to how damaging it is to your credit score.
The older it is, the less it affects your credit score as how you pay your bills today counts a lot more than how you paid them 5 years ago.
I hope this helps to increase your credit knowledge when it comes to how the credit system works and the issue with this situation in relationship to credit repair.
But if the late payment is an honest mistake on the banks part while you may get incredibly frustrated to how little help you get to rectify the late payment on your credit if that’s the only issue then the credit repair company should only charge you a small fee after going through a series of questions to create an investigation on the matter.
Want to learn more about how the world of credit works? Contact me today and get my book in full blown color. No nonsense direct answers and easy to understand.
How the “Real world of credit” works:
wayne@waynethecreditguy.com
And of course if you need some credit work to increase your credit score then call me today to discuss!
