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

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.

Clean Up Credit Before Finding New Apartment

Clean Up Credit Before Finding New Apartment

Wayne the Credit Guy discusses the impact an eviction can have on your credit report in this article on FoxBusiness.com.

Excerpt:

Credit reports do not show records of evictions. According to Wayne Sanford, president of the credit consulting company New Start Financial, “If you are evicted, then it will show up as a collection as any apartment debt a consumer owes, such as cleaning fees or lease breaking.”

My Credit Repair company did nothing… Or DID they?

Credit Repair is a Two-Way Process Between You and Your Credit Repair Specialist

Many people I speak with said they have hired a credit (repair, restoration, management) company before and they did nothing as they claim. “I paid them and nothing happened”.

But then I start asking a few questions and then what comes up is they really didn’t pay attention to instructions and even didn’t pay a few bills on time which depending on the bill dramatically drops their credit score or even had a few new collections pop up on their credit.

Then a few more questions later I find out the company was a “no contract company” with “unlimited disputes” and a monthly fee. There was no follow up, no procedures in place to help the client along.

Most people expect to pay a credit company and everything gets fixed. HOWEVER, what most fail to understand is that your credit report is a mathematical equation. It does not care how old you are, what your race or religion is or how much or little money you make.

Just because you pay a company to fix something doesn’t mean it’s going to get fixed. A credit report must be reviewed an analyzed to determine if the score is able to be increased in the time frame a client is trying to achieve to reach a certain goal.

The main problem is 99% of credit repair sales people (aka- National Sales manager, National Sales Director, Area Manager, Senior Credit Consultant) are commission based. Which brings the problem that they are being told what they want to hear in order to sign them up so they can get paid. While this is totally understandable the issue is their goals are not aligned with the customers goals and time lines.

It is human nature to blame everyone but yourself. People need to understand that correcting credit issues is a two way street. Both parties have responsibilities in the transaction. The customer needs to understand they are paying for a service and needs to know that the company they are hiring have a system in place to help them if they forget part of their responsibilities due to life situations.

While you can’t blame the credit company for you not paying your current bills or new negative information popping up on your credit report. But you can blame them if they do not have a system in place to help you along this credit repair/restoration process, after all is this also not what you’re paying them for?

Understand credit is a fluid concept.. information is typically always being added to it and depending on the type of information being added a score may dramatically jump up (ex: paying down a maxed out credit card) or dramatically drop (current late payment or new collection).

Before hiring a company, take some time to do a little research to make sure they have your best interest at heart. If after every question you are getting pushed to sign up that may indicate they just want your money or they need you money. Either one does not sound like your interests are being placed first.

About Wayne Sanford:

The majority of consumers have no working knowledge of the credit system and the game it plays with their lives. A consumers’ basic credit education has come from late night infomercials, the internet and other sensational media outlets. They have no real idea of how the credit game is played and how they can stack the deck in their favor. Wayne The Credit Guy is the “go-to” advisor willing to put his name and reputation on the line – giving no-nonsense and answers as consumers ante up to the credit game. Roll the dice and learn how the Real World of Credit works and how you can play too.