If you have amazing credit, scores above 750 then you can pretty much call the shots on what credit card you get, what the terms are, and what kind of incentives you can get with it. If you have a 700+ score you are still in real good shape. About 42% of Americans have a sub 680 credit score, and that was last check. So what about those with tarnished credit? What about those with credit that is in the process of healing? How do you build credit when you have collections and accounts with bad history on your credit report?

I know it may seem like a uphill battle that may seem to never end. If no one will give you any type of credit instrument to build credit, go with a pre-paid card. Make sure that the card is reporting on your credit. Try to get a card with no annual fee (if possible), and find one you can afford! I know it may be a bit hard to make demands, as the old saying goes “beggars can’t be choosers”; and while that is true, you sill do not want to get ripped off in the process. Or we will call it, minimizing the collateral damage.

Remember, you didn’t ruin your credit history overnight! You did not go out and run up all your cards and the very next day, woke up with terrible credit. NOPE, it happened over time. So just like trashing your credit, repairing and restoring your credit will take some time. I generally see people with tarnished credit having to spend about three times the amount of time repairing their credit, than they did destroying their credit (sometimes that figure is even higher)!

Most people have about a 6-12 month period where everything goes bad. The time frame will extend a bit further depending on some other factors like Bankruptcy, garnishments, judgments, and how long it takes to pay the bad debt on your credit report to 0. But as a general rule I normally see people spend 3-5 years restoring your their credit after they have stopped the bleeding!

Now there are two different schools of thought here. Some people will tell you to suffer the extra 2-3 years or so and wait out your debt to fall off your credit report. And the other half of people will tell you pay it off (or settle it). To be honest with you, it comes down to personal preference.

There can be circumstances where someone would want to wait it out and let it fall off. For instance, what if you didn’t make a lot of money, or have a lot of money. Your probably reading this right now and saying “well isn’t that most everybody?” Not really, depends on if you can afford to pay it back. If you don’t make a lot of money, all money you do have is dedicated to paying bills and living day to day, then you may not have the resources to pay off your debt. Sometimes people go through medical issues, failed marriages and businesses, or even a death in the family. I also have some friends who went into schooling debt, paying for tuition, books, and room and board; only to get out of school and find their degree to be 100% worthless! Happens a lot now with the economy being in turmoil.

I highly recommend paying your debt, making payments, calling your creditors and settling your debt. Sometimes a $0 balance card with a few lates can help your credit more than having NOTHING there at all. Being a credit ghost with a 0 FICO can suck too, without a credit score of any kind. I have seen people with terrible credit get approved for credit and watched people (including myself at one point in time) get turned down over and over with a 0.

Which ever route you decide to take, paying it or waiting it out; you have to make sure what you decide is what is best for you. Listening to people tell you what decision to make at this crossroads is the worst thing you can do! People who will tell you this do not know your situation, do not fully understand your morals (they may, but most likely will not), they do not have the same credit score you do, they do not have the exact same financial situation you have. No two situations are exactly alike, so do not trust anyone who tells you. Make your decision, stick to it, and hammer out a plan of attack.

I have set up an online resource, for the every day person to learn about credit. You can get the information you need as you need it. You can sign up for a FREE newsletter to stay up to date about all things credit. Check out The United Credit Authority! And if you have not gotten started on cleaning up your credit, then crab my 100% FREE Credit Repair Course. It has a step by step walk-through and 4 letters to get you going. If you want everything, all at once, all in one place; check out our Credit Repair Systems page. There I have reviewed some of the top web courses on the market…everything from an attorney’s handwritten course to a program that you point and click! It can be that easy, depending on what your time is worth!

As always, if you have any questions at all, just shoot me an email and I will respond within a day.

Good Luck!

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The FCRA says that anything that is inaccurate on your credit report can by disputed, however anything that is not inaccurate cannot be disputed. You want to be careful though, you do not want to dispute everything on your credit report if it can be avoided.

By disputing everything you may turn yourself into a credit ghost. Having no credit will make you a ghost and it is VERY hard to establish credit without having any credit. Some financial advisors tell people that having no credit is worse than having bad credit. You have to start all over again, get a secured credit card or a department store credit card and build your way back. This could take 6 months to a year.

I ran a survey over the summer of 1000 and asked what was their target time frame on a resolution to raise their credit score. over 85% of the people responded with 30 days or less. it was apparent that the majority of the people I surveyed were looking for a quick fix because they wanted to purchase something. Normally this is a house or an asset of substantial value.

So you have your credit in your hand, and your looking t all the numbers on it. What now?

• Make sure the account numbers all match (yes, go pull out your old bills or credit cards in your wallet! This is a very common mistake, believe it or not).
• Check your 24 month aging, make sure that if there are any late pays you were truly 30+ days late those months. You can refer back to my post on “What Do All Those Numbers On Your Credit Report Mean?” for a breakdown.
• Is the account even yours? More and more items are appearing on people’s credit report that aren’t even theirs. With the growing number of fraud cases doubling every year for the past couple of years, this has become more common. Make sure someone is not using your social security number.
• Is the balance correct?
• Id the Date of Last transaction correct?
• Do you recognize all of the companies that have inquired on your credit report?
• Is the date of birth correct?
• Are there multiple social security numbers listed? You may find the social from your significant other listed here also.
• Are there any addresses that you never lived at?
• Places of employment you never worked at?

All of these above could be dragging your credit score down. That is why it is important to ensure your credit report is 100% accurate. Any of this information that is not accurate is subject to be disputed by you.

Make sure that when you send your dispute letters to the bureaus, you send them return receipt requested. you need to have record of when the bureaus receive your report and start their investigation.

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The 1st thing you should review for accuracy when you get your credit report is:

• Name
• Address
• Phone (if listed)
• Place of Employment (if listed)
• Credit Score *should be at the top or towards the top)

   

Tradelines:

You will see the name of the creditor, and under (or next to that) you’ll see your account number. Very close to the beginning you should see a Date the account was opened. Going to the right you will see a High Credit (highest balance that item has ever had), Credit Line (your max credit avail on that item), and Current Balance. Then moving more to the right you will see a DLT/DLP (everyone calls this something different Date of last Transaction/Payment – most will use transaction from what I have seen) and a DLA/DLR (Date of Last Action/Reporting). If there is a term loan like a fixed amount that is lent to you and you are scheduled to make X payments at $X.XX you will find this in this line somewhere. It will say something like 48mo/$250. You should also see something showing what status you are on the account (i.e. I-individual and C-Cosigner).

Monthly Aging:

Then you should see something like this:

211111111114

311111111111

This is a 24 month reporting on your pay history. The way to read this is, the top line far left is the last reporting from the creditor. This monthly reporting correlates to the DLA/DLR. Meaning that this is the last time the creditor reported your account to the bureau. Not always is this date this month’s date; some creditors have (or used to) a quarterly reporting schedule contract with the bureaus. When you go delinquent, when the creditor may have financial problems, or when a creditor is bought; you may see a lag in these dates and reporting. Then from the top left you count backwards in months to the right to the end of the line. Then you start again on the bottom left and count to the right.

Example, using the above for reference:

The 2 would represent this month (assuming the DLA is 10/09), then the 4 would be 11/08, then the 3 would be 10/08, and finally the 1 on the end of the bottom line right side would be 11/07. It’s a 24 month aging of your account.

What do these numbers mean?

• 1=paid as agreed (you are not more than 29 days delinquent – from the creditor’s billing cycle date; meaning if your bill is due on the 15th, you have paid every month before the 14th of the following month).
• 2=30 days late (paid after the 15th of that following month but before the 14th of the next month)
• 3=60 days late
• 4=90 days late
• 5=120 days late
• 6=150 days late
• 9=charge off
• 0=too new to rate or no activity that month
• X=no activity, closed, cancelled, charge off (this is a pretty broad range but it is relevant to what the current status of your account is. I have seen it on brand new cards meaning no activity, I have seen it on charge off meaning closed and dead card in collections. So it really is dependent on what the status of your card is when you are looking at this).

Rating:

You will see a rating on each line item, either in the front (far left) or the end (far right). There are 2 aspects of the rating system.

1. Type of account:

• O = Open line of credit, can fluctuate up and down (normally these are signature loans that you can continually take money out of as you pay it, or an equity line that operates the same way); normally this is a loan.
• R = Revolving, not to be confused with O because these are normally credit cards. They operate much like the O but the O is normally a loan.
• I = Installment, this has a fixed lending amount and normally cannot be used like an O or and R. The more you pay this down the lower the balance gets but you cannot increase this loan. Normally this is mortgages, car loans, and household goods.
• M = Monthly, this status isn’t used much anymore, but it is pretty much the same as the I.

2. Number rating:

This is a bit harder to define. The bureaus will rate your performance on that trade line. The X below represents the type of account as described above.

• X0 – meaning too new to rate
  
• X1 – best rating possible
  
• X2 – pays late occasionally
  
• X3 – has a few late pays
  
• X4 – pays late more frequently
  
• X5 – collections
  
• X9 – Charge-off
  

That is pretty much it. There is a lot of information here, but you can use this as a reference guide. The credit report you order should come with a full definition of terms. There are a few other items tossed in there that I may have mentioned, but those are rare cases.

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Before I get started here, I want to share something i found today.

Now in 15 years of working as a bill collector, I have seen a ton of companies come and go. This company is the most legit company I have seen out there. They will do everything for you, legal advice, discuss your credit, and help you fix it. I know, I know, you’re asking yourself “why is he writing a blog about credit and fixing your credit; then advertising another company who can do the same thing?” Well, truth is…some people don’t have the time to go through all these motions to fix their credit, some people don’t want to go through all of this to fix their credit, and some people their credit score doesn’t matter much to them so they will let someone else deal with it. So there you go, if you’re going to go with a company to fix your credit, this is a real good one.

Now onto your credit types (that may appear on your credit reports):
1. Assets – Cars, houses, recreational vehicles, etc… these are items that appear on your credit report that have real tangible value. They are secured by the property or item, normally are high ticket items but can be household items too.
2. Secured Debt – A loan that is collateralized. Meaning you have something that you have put up as collateral (like assets). A collateralized loan or secured loan can also be an asset, but there are other types like quick car loans, household furniture, or any other item you buy that the lien holder can come take back if you default.
3. Unsecured Debt – This is normally credit cards and signature loans.
4. Collections – Don’t really need to say much more here.
5. Judgments and liens – This is what you will see if you fail to pay your taxes or are sued for any reason and a judge has issued a court ordered judgment. It has to be recorded with the county recorder’s office (or the like).

This covers most of the types of things you may see on your credit. There may be a few other types, but most of them do not show up much.

In my next article, I will cover the common things you need to know about all those numbers all over your credit report.

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In the debt collection world we rate them A, B, C, D, etc… In reality the terms are defined as follows:

A Credit (aka Pristine) = No blemishes, all accounts paid on time. Usually having assets (house, cars, and recreational vehicles). Usually defined as 800+ credit score.

B Credit (aka Good) = May have some late pays OR medical bills. If there are any collections they are paid. Most of the time there are some assets on the credit report, although with a high enough credit score, long term good pay history, or good debt to income ratio; it is possible to be a B     credit and not have assets. Usually defined as 700+ credit score.

C Credit (aka Middle of the road) = Some credit good and some credit bad. Normally reflecting some behind bills, but also having accounts in good standing. Normally this is the cross roads to D credit if the consumer is falling or B credit if they are repairing. Normal credit score ranges from the low to high 600’s.

D Credit (aka Falling) = Showing late pays but not quite 5+ months past due. A reflection that things are going in a downward spiral. There is a fine line between D and F credit. Normally credit scores in the upper 500’s to lower 600’s.

F Credit (aka Trashed) = Late pays all over the place 5+ months, most of the time with multiple collections, sometimes with judgments, no accounts in good standing. Normally with a credit score in the 500’s.

No Credit (aka Credit Ghost) = no credit at all. You don’t exist on paper. Credit score 0.

So which credit score are you? if you have ordered your credit report or already have one, you should be able to recognize one of these types. At worst you should be able to attribute your credit to 2 of these, which means you’re in the middle of those 2 types. The good news is no matter where you rank, there is light at the end of the tunnel.

Now that you can recognize what type of credit you have, that is the first step. You have to have a starting point…now you can get on the road to fixing it!

In my next article, I will discuss the different types of credit. Then will move on to how to fix the bad credit, and debt collectors.

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Welcome to our Credit & Credit Repair Blog.

My name is Clay Bowden, I live in Ft. Lauderdale, FL. I have been a debt collector for 15 years, and I wanted to start a blog on the ongoing issues that is plaguing this country with credit and debt. I want to arm you (the consumer) with very valuable information to assist you in understanding the industry a bit more.

What you will see here is inside information from a debt collector’s perspective, a common understanding of credit and how it’s built and used, helpful tips on how to avoid the common pitfalls consumers get into everyday, help resolving and finding ways out of debt, and more importantly tools to get it done.

Your credit profile is something you (the consumer) builds everyday of your life. While the credit bureaus are responsible and bound by Federal Statutes to gather and hold this information; what is in your credit file is solely YOUR responsibility. Yep, that’s right…the control of your credit file is 100% up to you.

My 1st recommendation to anyone, before discussing their credit, or before getting too deep in, is to get a copy of their credit report. I know your thinking “great, this is going to cost me n arm and a leg”. Some of you may have been burned in the past by those companies who tell you they will get your credit report for a cost, etc… NOPE! Your elected officials have given power to the The Federal Trade Commission to act on the following statutes: Fair and Accurate Credit Transactions Act (FACTA) and Fair Credit Reporting Act (FCRA) which will allow you 1 FREE credit report from each credit reporting agency (Equifax, Experian, and Trans Union) per year. This is to allow you to verify all the information on your credit report is true and concise and to allow you remedies to resolve them if it is not.

You can get your free credit report here. This is on The Federal Trade Commission’s website. You may want to read that article about credit reporting. in a box on the right hand side is an 800 phone number for you to call and get your credit report. This is a recording from the FTC that is forwarded to each of the bureaus for processing. Don’t be alarmed, they are going to ask you for some personal information like address, social security number, date of birth, etc… After giving that information, and the request has been sent to the three major bureaus, you will either receive your credit report or you may get a request letter from the bureau asking for you to send in verification of your identity. Like a phone bill, water bill, lease agreement to verify your address and a copy of your driver’s license. If you do get that notice, just comply and mail it back to them. Once they verify your identity they will send your credit report to you.

This process normally takes a couple of weeks, so why not get started now? In order to repair your credit, you need to know what is on your credit report!

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