Credit Repair or No Credit Repair…..Are you a Candidate?

Credit Bureaus say credit repair doesn’t work and it’s all a scam, the Federal Trade Commission tells people (and so do the credit bureaus) that there is nothing they can do that you can’t do yourself.

BUT ISN’T THAT TRUE ABOUT EVERYTHING TODAY???

You can repair your own car yourself; fix your own plumbing or electric issues in your home. You can even represent yourself in court. So why this is not also called a scam?

Economics for one thing, the credit bureaus bring in approximately 11 billion according to a survey that came up in the last year or so. Most articles that you see on the internet are done by seasoned reporters who are good at their job but smart enough to need the expertise of a credit expert for some quotes. I have done many of these. When I first started I was excited and was ready to talk about the type of scams the credit bureaus pull but was told that can’t be mentioned.

When I asked why I was told it’s because the article is being sponsored (paid for) by one of the credit bureaus.

So that means most articles you see out there may be sponsored by the companies who sell your data. That is why you hear the phase “don’t believe everything you read on the internet”. Now its not like they are out there spreading tons of false information of course but understand when they say the main things like pay your bills on time and don’t overspend that is 100% excellent information.

Funny how they never mention much about if the companies that pay them illegally… sorry “make a mistake” on your credit report that hurts your credit score. I have looked at over 15,000 credit reports and never once have I seen a mistake that was in favor of the consumer.

Don’t real mistakes go both ways? At least some of the time?

So how to know if you’re a good candidate for credit repair. Our job is to provide a service, sometimes clients don’t want to bother with trying to figure it all out, others know they are in way over there head like I would feel when I lift the hood of my car.

Of course remember when you call companies to check them out going with your gut feeling helps but understand 98% of the time you are talking to a sales person who’s job is to make you feel comfortable with them and like them so you need to keep your eyes open on a few things first.

#1, after every question you ask after answering they say are you ready to get started?

#2, do they make it sound very easy and there are going to be no problems getting you fixed up. ALERT, unless the negative information is not your (ID THEFT or if you share same name as dad etc) IT’S NEVER EASY! This is one of the things that the warnings about credit companies are warranted.

#3, Do they make claims they can’t verify? For example, they are the number one rated or Industry leader in credit repair. ALERT: there are no surveys done on this, ask them who did the survey and watch them do the Michael Jackson moonwalk backsliding.

So those are just a few things to be on the lookout for, so now let’s talk about when it’s not worth wasting a single dollar of your hard earned money. I have had several people come to me wanting to fix their credit and after reviewing the credit report they would be a fool to pay me or anyone else for that service. They were just lucky they got one of the honest ones and I told them why and if they don’t believe me when calling others what to look out for.

UNDERSTAND the number one thing is if you recently stopped paying on your credit cards don’t expect to be able to pay someone to go in and fix that huge mess.

If the credit card is still open or just closed and your 90 days late and letting it go it will still keep reporting late payments until it’s charged off (180 days).

I have had many people come to me after they started to or stopped paying on all their credit cards or car payments and then ask me to help them as they want to buy a house. This I hate to say are people who are not living in reality and would not be a candidate for credit repair. Why would you expect a bank to loan you maybe 100-300k for a home when you can’t pay a $50 or $100 a month payment on time? It makes sense when you say it out loud but unfortunately very few people put thought into things or make the attempt to educate themselves on the subject matter of interest.

If you were investing in homes and put debt on credit cards and you had to let them all go, paying a credit repair company may not be a good option for you especially if they are large debts as at least in Texas (other states vary) you can be sued for 4 years after the charge off date.

So two main reasons why you may not be a credit repair candidate is brand new delinquent late payments or recent charge offs and very large credit card debts or car repossessions that put the difference of what is owed on your credit file.

Many times if there is a large amount of debt I suggest they talk to a bankruptcy attorney which of course I am not but after 11 years in this business I know enough to tell them the ramifications on any option out there that they have and tell them what I believe is best and point out future ramifications of the decisions they will make today.

When trying to find a credit repair company look for credentials, number one are they registered and bonded with the state they are doing business in?

NOW…. This is really not a credential it’s the law, that’s like an attorney bragging they passed the bar; you kind of have to do that.

Asking for referrals at first glance sounds great but a referral for credit repair is like a referral on a resume…. Do you really think they are going to give you a bad one?

So look for things they make claims to for things you can verify. Telling you they have 30 years of experience and finding out they are personal banker’s means absolutely nothing. So just be wary.

If the credit person you’re talking to tells you what will or should be easy, what will be more difficult or certain things they can guide you on but you have to do yourself that is the making of what sounds to be a good honest credit company who understands the credit bureau frustration tactics and demonstrates what sounds like the ability to help you.

Doing nothing doesn’t make your credit better over time

While technically the above statement is not true not many people want to wait 7 years for all their negative information to fall off their credit report based on the Fair Credit Reporting Act.

Its human nature to bury our heads in the sand and ignore the problem. Hoping it just “goes away”. If you have 7 years to spare then sure it’s not a problem….Or is it?

If you have a tax lien (state or federal) or if you were sued and had a judgment placed against you that judgment can be refreshed every ten years to make sure it remains in the system due to its age and not fall between the cracks.

Banks do not expect you to have perfect credit. If you do then the rates will obviously be better as it means you are a good risk and worth a low interest rate. Having collection accounts, charge offs, car repossessions and medical bills are not deal breakers but it depends on numerous factors, too many actually to list here.

What you need to understand is these problems cannot have happened last month or in the last few months.  Every file is different and specific recent problems, late payments or collections make banks nervous when someone is asking them for tens of thousands of dollars or even several hundreds of thousands of dollars for a home.

I had one executive of a finance company come to me who was originally from England, she had a bad divorce and left the country not expecting to come back but as life has it she returned about 6 years later and needed to buy a home. However, a collection account ballooned up to approximately $50,000 so we had to implement a plan after I gave her the options that were available to her. She said after the divorce she didn’t plan on coming back for a long time until plans changed business wise but she was forced to return and confront the problems of her past.

So the moral of this story is, sticking your heard in the sand for 90% of the time if not more, does not help. We all need to be proactive. Whether that means doing something now or speaking to some professional to gather advice on what to do in the future.

Hope this little blog helps and if you need to speak to me just send me an email to wayne@waynethecreditguy.com and we can set a time to speak!

 

About Wayne the Credit Guy:

Wayne Sanford, also known as “Wayne the Credit Guy“, is the owner of New Start Financial Corporation. With nearly a decade of experience working in the credit industry, Sanford has personally reviewed more than 13,000 consumer credit files for mortgage professionals, investment groups and consumers. – See more at: http://waynethecreditguy.com/waynes-bio

When NOT to “fix” your credit

It seems like a silly statement but, when should you not “fix” your credit? So the statement may not be WHEN to not fix your credit but when NOT to hire someone to fix your credit.

I recently had two possible clients come to me a few weeks ago referred by a real estate agent and a loan officer. They told me they really wanted to get their credit fixed and buy a home. I asked to get a copy of their credit reports to review their files first before we speak further as I want to assess the credit situation they are in first.

When I reviewed the credit files, one file had 3 credit cards all maxed out and had late payments for 2 of them up to 60 days late. This means they have not paid these credit cards for the last 60 days and are coming close to 90 days of nonpayment.

The other credit report had almost the same issue, only just 30 days-three months in a row, BUT also had what we call “rolling 60’s” for the last several months on their mortgage.

I started explaining to each of them a little bit of how the credit system works in relationship to their immediate issues and then addressed numerous collection accounts getting some more detail on each account.

For the couple without the mortgage late payments I told them the best thing they can do is not pay a credit company like me at the moment but catch up on all of their bills. Surprisingly the response they gave me was unexpected. Even after I explained to them how the credit system worked, they still actually expected me to just charge them a fee and “fix everything”.

That is part of the problem with our industry, most of the people consumers talk to are the sales people, who get paid either commission only or a very small base pay and then a good commission when they close a deal. These people; whom I understand the situation; just don’t provide a benefit to the consumer as they have no clue what’s going on but only refer you to an actual “expert” once you have paid their fee.

For example, what is the use for that couple to pay me, when every month their current bills are not getting paid? It’s not going to happen. Lenders look specifically at how you pay your bills today as does the credit scoring system.

It seemed this couple wanted to be told everything will be alright and if they could just pay someone to make things “go away”.

Folks, it just does not work that way. It’s one of the many reasons why the credit industry has such a bad reputation. I told them why pay someone when you still have the same problem that will be occurring every month? It’s like putting a small band aid on a huge gash. Yes we can get the negative accounts eliminated based on several things, but you still would have the accounts that are not being paid today and tomorrow.

The couple with the mortgage late payments didn’t seem to understand that’s why a bank doesn’t want your business if you’re late on current mortgage and maxed out on credit cards with recent late payments.

And I said all of this a lot nice, but what I want you to understand is, I was telling them to not pay someone or let them talk you into thinking about paying them to “make it go away”, because that is a flat out lie.

Life always hits us with speed bumps and knocks us down, but we just get back up like we have to. I told them there is no way I’d take their money and tell them what they want to hear and then come up with excuses later.

So here is the game plan. I have been around for 10 years so I am not going anywhere. Use the money you were going to pay a credit company and catch up on ALL of your bills.

After that, make all of your payments on time for one year. Try to keep the credit card balances low when you start to catch up, then come back to us and let’s have your credit report pulled again and see what has changed.

Once you are out of the immediate danger zone is when a plan can be established to help you get what you want financially. If this isn’t the course of action you take then all you’re doing is looking at delaying the immediate issues as well as always looking over one shoulder.

*REMEMBER*— Paying a company does not mean all your problems or issues go away. You need to get with someone who can give you a plan, stick to that plan, and help you see that glowing light at the end of the tunnel for you and your family.

About Wayne the Credit Guy:

Wayne Sanford, also known as “Wayne the Credit Guy“, is the owner of New Start Financial Corporation. With nearly a decade of experience working in the credit industry, Sanford has personally reviewed more than 13,000 consumer credit files for mortgage professionals, investment groups and consumers. – See more at: http://waynethecreditguy.com/waynes-bio

Debt collector’s new way of cell phone harassment under attack!

It is said that a debt collector’s biggest problem is an educated consumer. I constantly preach that at all my seminars. It’s the classic phrase “Knowledge is Power”.

One of the biggest things to know is Can you actually be sued? You can find this out by going to Google and type in “State Statute of Limitations for debt collectors in (insert your state). Then for most accurate information click on the link from your states site. As an example in Texas and California it is 4 years. Some states are less, some are longer.

In the 11th Circuit case, Osorio v State Farm Bank the court reinforced restrictions under the Telephone Consumer Protection Act .

The main thing it accomplished was prohibiting debt collectors from using automated dialing systems (nicknamed Robocalls) on a consumer’s cell phone without their express permission.

Many lenders now if you pay attention on a collection call to your current lender asks if it is ok to keep in touch with you via cellphone or by text message and has a code to type in to stop it.

Many people have been using this law to sue debt collectors over harassment rather than the Fair Debt Collection Practice Act as studies have recently shown.

No one ever gets a product, service or line of credit with the intention of defaulting on that obligation, but life does happen. And thanks to the government and a special provision that lender can take a tax break (exact amount unknown) and then still sell the debt for collection efforts and then try to sue you for the full amount. The example I give is from Seinfeld in the scene where George “double dips” the chip.

Like everything in life it’s not what you said or did but what you can prove so keeping a notebook for accurate records is a MUST. Claiming you told them to stop calling you is stopped by the other party saying “no you didn’t”

While technically a debt can be owed forever once it passes your states statute of limitation and becomes over 7 years old if you still get harassed by a debt collector the nickname we have for them is “Zombie” debt collector. Someone who most likely got the debt for free and tries to get any money they can from you.

While I always tell my clients while I never advise them to not to pay their debt as a credit expert and consumer advocate I also need to inform them of the consequence good or bad of doing what they perceive is the right thing.

So beware of anything you sign where you are giving permission to them to utilize you r cell phone for debt collection as its your right to have them contact you via mail to your home thus lowering the stress of cell phone harassment. While this issue is far from over it’s a great positive step toward preventing harassment by debt collectors.

Most people do not realize the debt collector does not have to just curse and threaten you to break these laws. Implying they can sue you when they can’t or stating they are calling the constable on you for breaking a car lease is a civil matter.

Hope this helps everyone and go to my website www.waynethecreditguy.com for more and feel free to call me if you need help with your credit or just to get to that next credit level in life!

 

The ABCs of Establishing Good Credit

Wayne the Credit Guy discusses the keys to establishing good credit in this new article on FreeCreditScore.com.

“The credit game has become a business, and in order to make money that business must keep consumers in debt,” says Wayne Sanford, aka “The Credit Guy.” “Not knowing the rules of the game and having no knowledge of the fine print keeps the consumer tied to the system.”

Read the full article here.