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.

Do You Really Need to Worry About Your Credit Mix?

Analyzing The Credit Mix that Goes into Your FICO Score

Wayne the Credit Guy discusses the impact your “Credit Mix” has on  your FICO score in this article on CreditCardForum.com.

Excerpt:

If you want to keep things simple, credit can be broken into two categories that contribute to your account diversity: (1) Revolving lines of credit (ie, credit cards) and (2) installment accounts (student loans, mortgages, car loans, etc.), says Wayne Sanford, founder of Dallas-Fort Worth–based New Start Financial.

Why does FICO reward those who have both? Keeping up with installment loans demonstrates the reliability lenders like – but these loans also come with a big incentive to make payments on time (they’re often secured with your house or vehicle). Revolving accounts give you a lot more freedom to fail, since you don’t run the risk of losing the things you bought with them.

Be Honest and Karma does the right thing

Successful Credit Repair Companies Rely on Honesty and Earning Trust

One thing I always promise future clients and the professionals that recommend them is that I will tell them the truth whether they want to hear it or not. If you don’t really need my services and need just a tiny bit of directional advice I give it to you free. All I ask is that if the situation arises and you know someone who needs credit help please refer them to me and let them know how I informed you how you didn’t need our services and just a little advice which tells that new individual that this sounds like a company you can trust.

This exact situation happened two days ago. I had told a client about four months ago he doesn’t need my help to qualify for a home as he does need to correct some items on his credit file in order to qualify for a home mortgage, just do “x, y and z” and then in 3 months you should be ready to go.

It turned out that in order to get the size home they wanted they needed his wife’s income which ended up being needing some credit help. Then a few collections popped up on his credit dropping his credit scores below qualifying approval standards.

He said “Wayne, you were the only person we were going to call due to your honesty with me the first time and a buddy of mine has a few issues he needs help with and I told him all about you”.

Karma always says do the right thing and it will come back to you a tenfold. No one likes to be “sold” especially me treat people right, don’t take advantage of them and do the right thing and good things will come.