CREDIT CARD BALANCES (REV) ARE REPORTING TOO HIGH
- If you pay your credit card off in full each month, call the credit card companies, and ask them what day of the month they report or look on your credit reported specifically for Date Last Reported or updated and then put a reminder in your calendar to pay it two days before that date.
- If the balance is reporting correctly, pay off, or pay down your credit cards and never spend more than $20 monthly.
- If you cannot pay down your balance right now, call the bank and ask them to increase the credit limit so without you having to pay it down, it helps your credit utilization amount and will improve your credit score
- Look into an installment loan with a three or five-year term to consolidate the credit card debt into one loan you pay back monthly. Do not transfer balances to a new credit card or one that offers 0% interest. 30% of your credit score is based on each credit card you have open and how much of the credit limit is reporting monthly as a balance. Installment loans are not included so by transferring the debt to an installment loan, your score will reflect as if the credit cards were paid off with cash.
A tax lien is currently showing on your public records. you will want to submit the tax lien release to all three of the credit bureaus as soon as you receive notification that the debt is satisfied. Contact a CPA
to discuss payment options if nothing has been setup
RECENT COLLECTION REPORTING
When a credit card has not received a payment from you for 6 months, they charge off the debt (or write it off) and either keep it in house or sell it to a debt buyer or collection company. Once the collection company receives it, they will report on your credit report as a new account referencing the original creditor. Call the collection company, and request them to delete the account if you are willing to pay in full today.
What to say:
“Hi! I have a collection reporting on my credit report and I was not aware of it and have not received anything. I am willing to pay it right now but I need a letter from you stating it will be deleted. I need to get this letter emailed or faxed to me or I can go to your office and pickup the letter, if need be, but it must be deleted. I am in the process of getting a business loan and it is destroying my credit score.”
Forward us the deletion letter once you receive it.
LATE PAYMENT REPORTING IN LAST 24 MONTHS
- Contact the company reporting the late and beg for them to give a goodwill removal of the 30 day late.
What to Say:
“I have had this account for a long time and never been late and I am in the process of buying a home and this one late is destroying my credit. “Can I please have a goodwill removal?”
- Then get them to send you a letter saying it is to be deleted and send it to me.
NO CREDIT CARDS WITH ACTIVITY – NOT COUNTED INTO CREDIT MODEL/ALGORITHM
- Don’t forget to use the open credit cards, and put a reminder in your calendar to rotate usage of this to keep it in the mix of items that move your credit score.
- As soon as you have not used your card in 6 months, it falls out of what makes up your score.
- Just going out and using that JC Penney or Victoria’s Secret card you forgot about and buying something for $20 with credit could greatly improve your credit score.
STUDENT LOANS IN DEFAULT:
- Student loans will not go away with Bankruptcy and will prevent you from buying a home while in default.
- Go to https://www.nslds.ed.gov/nslds/nslds_SA/ to find out the status of your student loans and see what your options are. They will likely want a small payment three months in a row to bring them out of default and into a current status. They do not be paid off to buy a home, just out of default.
NO OPEN, REVOLVING CREDIT LINE (credit card)
SOLUTION: Follow the Easy as 1-2-3 system.
Whether you are Square One just graduating from school OR Back at Square one with no credit reporting or no good credit reporting, this is the system for you to set up and it will cost you $200 to get started.
PROBLEM: CHARGE-OFF REPORTING
- To remove a charge-off, you should contact the original creditor to start negotiating the removal of the charge-off before they sell it to collections. You want to convince the creditor to remove the charge-off from your credit report in exchange for payment.
- Before you make the call, know how much you’re able to pay on the account. The more you can pay and the sooner you can pay it, the more negotiating power you have. If you can pay in full, you’re in a better position to negotiate for deletion. Ask to speak to someone who has the authority to remove the charge-off from your credit report.
- Let the creditor know you’re interested in paying the account and would like to offer a settlement amount in exchange for having the charged-off status removed from your credit report. Speak politely and professionally. Avoid blaming the creditor, making excuses, or giving your life story. Keep it short and to the point. Best case, the creditor will agree to remove the charge-off for a fraction of what you owed. When they do sell to a debt buyer or collection company, they usually purchase it for 30% of the balance so when negotiating start around 30% of what you owed.
- Sending a pay for delete letter is another way to negotiate a charge-off removal. The letter essentially asks the creditor to remove the account from your credit report in exchange for full payment. The key to a successful pay for delete letter is getting it in the right hands. Try to get the name and direct address of someone who works in the company, a manager or other higher-up rather than sending your letter to general correspondence address.
- Credit card companies are contractually bound to report accurate credit information to the credit bureaus, so it can be difficult to get a creditor to agree to remove the charge-off from your credit report. Even so, some cardholders have been successful in making a pay for delete agreement. If you can’t get the creditor to agree to remove the charge-off completely, try for something less negative like a simple “Closed” or “Paid derogatory” rather than “Charged-Off.” At some point after the charge off, the company will contact a debt buyer or collection company to buy your account and a new trade-line will appear on your credit report with the name of the collection company so it is best if you can try and settle or pay off the charge off before this happens or continues to damage your credit report. Please request written confirmation of the deletion or account paid in full so we can update your report with the information.
TOO MUCH CREDIT CARD DEBT
DEBT PINBALL METHOD TO SAY GAME OVER TO CREDIT CARD DEBT:
Go to www.lendingclub.com or www.prosper.com and apply for a personal installment loan up to 40,000. Apply online and fill out some information and it will tell you instantly how much you are approved for.
Lending Club is a soft inquiry (not affecting the score) and Prosper is a hard inquiry (does affect the score). If your credit cards are maxed out, this is greatly hurting your credit score but by transferring the debt to an installment loan like these banks, where they give you a three or five-year term for the loan, you can transfer the balances and keep your credit cards open. Thirty percent of your score is based on the balance on credit cards versus the limit on the credit card but installment loans don’t count and are not factored in.
After your cards are paid to zero, pick the two cards you have had open the longest to use for setting up the Easy as 1-2-3 system.
Within three months, your credit score will greatly improve and look like you just paid all your credit cards off. Once the credit score has increased, you
can shop for a new car and home insurance and possibly look at refinancing your car or home and apply the savings to the installment loan to pay it off even faster.
While you are on a roll, analyze your bank statements with a pack of markers to highlight the activity that you could potentially shop around and save money on or that you could delete in your life and continue to add the savings amount monthly to that installment account. Before you know, you will be debt free!