Inquires
Charge Off
Bankruptcy
Late Payments
Judgements
Divorce
Credit Reporting and Credit Reporting Agencies
How to Correct Errors
Credit Report Access
How Does Divorce Affect Consumer Credit?
Should I use one of those companies that promise to correct my credit?
How do I find out the maximum HUD amounts?
Credit Guide Scoring

Inquiries:
Many people are concerned about having too many inquiries on their credit report. This is not without cause as many applications are rejected because the applicant has too many inquiries. By general rule, too many is defined as more than 6 - 8 inquiries on your report. Credit bureaus have told creditors that if a person has more than this on their report it usually means that they are bouncing around looking for credit which generally indicates that they are either desperate or careless. Of course they never consider that you may just be shopping! If you have more than 6 - 8 inquiries on your credit reports you have two options. The New FCRA says that no inquiry can stay for longer than 1 year. So if they are showing older than that you can have them removed. Secondly you can remove duplicate inquiries as well. A good rule of thumb is that if you are going to do the kind of shopping that requires filling out applications you should request copies of your credit reports from the credit bureaus first and then take them with you to the car dealer, mortgage broker, or finance person. Make them tell you whether or not based on the reports you are showing them you will be accepted or rejected. This avoids lots of inquiries gathering on your reports. You can contact the bureaus by going to the following link http://www.86credit.com/serv02.htm then follow the links to the bureau you need.

Charge Off:
If you had credit cards in the past and couldn't pay for some reason or another you almost certainly have some "charge offs" listed on your credit reports. A charge off simply means that the bureau wrote the debt off to profit and loss (charged it off). The problem is that now it's showing on your credit report as an R9 rating (REAL BAD). You can remove a charge off from your credit report using the SDCRC . Some people make the mistake of going to Consumer Credit Counseling for help and end up worse off than before. They end up worse off because all CCCS is as a wolf in sheep's clothing. A collection agent that is actually smart enough to get you to come to them! That's right, they collect the money from you and get a FEE regardless of the fact that they advertise as a "FREE" service. They also get a fee from the creditors which is why they sit you down like the grand inquisitor and ask you about every nickel you make or have. They then use that info to decide for you how much you WILL pay everyone. They do not however guarantee that once you pay that your credit will be restored to a positive rating again. That's because the creditors leave the negative marks on your reports and even update the date of last transaction so that is stays longer. What a deal!

Bankruptcy:
If you have considered filing a bankruptcy and feel that it is the only way out of your financial woes you may be making a huge mistake. Ask yourself this question. Do I have any real-estate or assets that would be protected by the filing of a bankruptcy? If the answer is yes then you should consider it. If you do not know the answer then you should talk to an attorney. But remember that they don't know how the credit system works so anything they say credit related you should take with a grain of salt. If the lawyer says that you do have assets or property that would be protected that's another matter. Keep in mind that bankruptcies are not reported to the credit bureaus by the federal court system. They are reported by the creditors involved in the case. For the most part people file bankruptcy because they can't take the pressure and harassment anymore and figure that they can get a secured card after if they need a credit card. The problem with bankruptcy is that unless you have property or assets to protect it is the equivalent of using a nuclear weapon to kill an ant. If you are wondering whether or not a bankruptcy can be removed from a credit report the answer is yes. It doesn't matter whether it was a chapter 7, 11, or 13. It does in some cases matter when it was filed with respect to the time it will take for you to remove it from your credit file. The Self Defense Credit Repair Course has an entire chapter on how best to remove bankruptcies from your credit reports and sample letters to help get you started. Don't use bankruptcy just because you are under pressure. There are many other ways to deal with the pressure of phone calls and collector threats. In the SDCRC we show you how to stop them from calling and harassing you. We show you how to put them in a position where in many cases they can no longer pursue collection efforts. Give yourself a break, get a copy of the SDCRC today!

Late Payments:
This is one of our favorite subjects because somehow people are under the impression that even though at some point they were late they brought the account current and that should make everything OK. In fact we find that when you ask people about this subject they say "yes, I had late payments but I took care of that my credit is fine". Not so fast my friend. Your credit is no fine. You may think it is but I can assure you that the lenders of America won't agree. Sure if you're buying a car it won't matter much because it's a secure loan. But if you are applying for a house or unsecured loan of some sort you WILL have a tough time getting it. Late payments are interpreted by the lender as meaning that either you are lazy in paying your bills or not very good at managing your money. They will either charge you more in the way of down payments, interest and fees. You don't want to leave these on your credit report. Even if the late payments were due to circumstances beyond your control the bureaus will leave them on your reports. Late payments are defined as payments that are "posted" after 30 days from the original due date. What if your check really did get lost in the mail? What if you were the victim of crime and it just through you off for a couple of months? Should that be reported as if you were lazy? NO and we can help you. In the SDCRC we show you 3 powerful ways to remove late payments from your credit report legally. Stop paying extra fees, interest, and larger down payments. Get your copy of the SDCRC today!

Judgments:
If you have had a company either threaten you or go to court and get a judgment against you have a serious credit problem. A judgment is when someone sues you and wins. The court decides in favor of the plaintiff because you didn't show up for the hearing (default judgment) or because you lost in court. This means two things. First that you almost certainly have a notation on your credit report regarding the judgment(s). Second that you owe the money to the plaintiff legally. Regarding the first problem. Contrary to what you might have heard, judgments are not reported by the courts to the credit bureaus. They are reported by the plaintiff or their attorney. The credit bureaus do not download every single court case in America every day. They rely on the different creditors to report that information. So when you dispute a judgment you are not battling the court you are battling the credit bureau and plaintiff involved. A judgment like any other issue can be removed from a credit report legally without an attorney. Like any other type of account it must be reported in accordance with the law. The fact that you owed someone money is one issue. Whether or not it was reported to the credit bureaus in accordance with the law is another issue. In the SDCRC we show you how to approach this problem from several different legal angles. We even provided you with sample letters to help you get started. Remember, the credit issue and the debt issue are separate and apart from each other in so far as your credit report is concerned. As far as the money part of it goes and whether or not they can garnishee your wages or bank account. You should definitely talk to an attorney. How ironic huh? The reality is that there are things that can be done to stop such actions but you should seek legal advice because everyone's circumstances are different. As far as what to do if you just received the summons to appear? GO to court. At least show up and ask for a continuance so you can find a lawyer. If you don't the court will enter a default judgment against you and you will definitely have a bad hair day.

Divorce:
If you have been through a divorce or severed a business partnership you may experience some damage to your credit files if your ex-partner / spouse has financial troubles. In the event that this happens, depending on the level of damage you will need much more than the divorce decree or court order to show the credit bureaus that the debt is not yours. You see they don't care. If the original creditor reports the debt as yours that is all the credit bureau is concerned with. Their only responsibility is to confirm with the creditor. Once that is done even if the creditor reports incorrectly the credit bureau is off the hook. You need a strategy to deal with the creditor and force them to remove the negative mark from your file. The law does provide some protection but you need to know how to handle the situation in such a way that you succeed with all three major bureaus. Here is some advice to prevent such an occurrence. First, never apply for anything together. Not a house, car, loan, credit card or education. NEVER! If you both sign you are both liable. Thinking positively let's assume that you stay in love or in business together and one of you gets sick and can't work. If both of you signed everything then both of you will suffer. If on the other hand you listened to the guru and kept your credit lives separate, you will have one to fall back on. A divorce decree does not absolve you of debt. Just because you went through the unfortunate experience of divorce and have a piece of paper to show for it you are not absolved of debts incurred and signed for during the relationship. You must get it in writing from your ex-whatever that you are no longer a signer on that account. If a spouse or business partner dies (g-d forbid) you must not notify the banks, credit card companies etc... right away. There is an excellent likelihood that they will either close your accounts or freeze them making a tragic situation much worse. Keep it quiet until you are calm enough to make those decisions and then make them. After that notify everyone. Remember this is money and credit we are talking about, "NO EMOTIONS".

Credit Reporting and Credit Reporting Agencies
Credit reporting is big business. And it is a very profitable business earning in excess of $1 billion a year. Credit reporting as an Organized business came about as a result of lenders needing a way to measure a clients creditworthiness. Years ago, this wasn't a very necessary service. People didn't move around the country much and generally did all or most of their business at their local bank. But, like in many areas of our lives, progress has changed and complicated this banking relationship. The advent of computers allowed for new credit instruments like credit cards to come into existence. They also allowed banks and other companies to communicate with each other and to transfer money and information back and forth easily and quickly. Also during this revolution, people became more mobile, moving from one part of the country to another with little more thought than packing the car and going. Lenders now needed a more effective means of determining an individuals credit history. To service this need, several large companies set up credit reporting bureaus. With just a few central repositories of data and several branch offices, any lender could find on( all about your credit history with a simple phone call. A lender could also update your credit report at these credit bureaus to reflect the current status of your loan with them.

The Big Three Credit Reporting Agencies Currently, there are three credit reporting agencies that cover everyone in the country. They me TRW, TransUnion, and CBI/Equifax. Each company is dominant in certain parts of the country. What this means is that every lender, big and small, in a certain region of the country uses one agency, say TRW, for all their credit information gathering transactions. For bigger loan transactions, or when someone just moved from another part of the country, creditors will pull an additional report from another credit bureau to be sure they get an accurate picture of your credit history. The same scenario is true for when you are late with payments, in default, etc. If it is a small loan, this negative information is generally reported to just the dominant credit reporting agency in that region. If it is a large loan, such as a house loan, that is affected, it will be reported to all three credit reporting agencies. As you now probably realize, credit reporting agencies are nothing more than repositories of information about you. When they receive information about you, whether if be positive or negative, it goes into your credit file. Whenever they get a request for information about you, they send the information in your credit file to the requester. This is both good and bad. It is good that lenders have a standardized source to measure the risks before granting a loan. It is bad because the data is never checked for validity. If incorrect information is entered, it is assumed to be correct until the credit reporting agency is told by you that this is incorrect. Only at this point, will they take steps to verify its validity. How Credit Reporting Agencies Operate Credit reporting agencies work with creditors on a subscription basis. For an annual fee, a creditor (lender) has access to the credit reporting agencies databases. This allows a creditor to both get credit information on you and also allows them to post credit status on any loans you have with them.

Typical information on a credit report includes:

• Bank credit cards (Master Card, Visa, American Express, etc.)
• Retailer credit cards (Sears, Macys, Etc.)
• Student loans
• House loans
• Other types of loans

Additionally, it is common to see the following information on your credit report if you are in default:

• Utility bills (phone, electric, etc.)
• Rent payments
• Medical bills
• IRS Liens
• Property tax bills
• Attorney's bills
• Other suits and judgments against you

Each persons credit information is stored by his or her social security number. When a creditor requests or reports information, the credit reporting agency uses your social security number to work with the correct data. This is why many community protection groups advise against you giving out your social security number to too many people. With it, someone else can get your credit report via computer and use that information to commit fraud (and have the undesirable side effect of damaging your credit report and your creditworthiness). This system unfortunately has many imperfections. There me not enough checks and balances to guarantee the integrity of the data. Each entry has the potential for human error at any point in the reporting process. The person applying for credit may accidentally put down the wrong social security number. The person at the lending institution may make a typing error and enter the wrong social security number or check off an incorrect field in the report, making your payment late instead of on time. These simple mistakes that occur because we are less than perfect can have a very devastating effect on you, One of these errors could cause you to get rejected for a car loan or a home mortgage. Fortunately, all of these types of errors can be easily repaired. Unfortunately, it can take up to two months (or more) from the time you discover them till the time you can get them removed from your credit history. There is no way to protect yourself from these errors or from people committing fraud with your social security number. The only defense you have is to actively work to keep your credit report clean. Every year, get a copy of all your credit reports and examine them. If they have incorrect information on them, take steps immediately to get these items repaired or removed. A clean, positive credit report is a very valuable resource in your financial life. Protect it and keep it clean and it will serve it well when you most need it. Additional Credit Reporting Agency Services As credit reporting agencies grew in sin and completeness, they have added several additional services to clients based on the information they have about you. They offer the following additional services (with more services being added all the time): Prescreening - Many of us receive credit card offers saying that we are pre- approved. This happens via a process called prescreening. The creditor gives the credit reporting agency a list of criteria for granting credit. The credit reporting agency matches this list against all of the people in its database and provides the creditor with a list of the people matching the creditor's prescreening criteria. Targeted marketing lists - Since the databases generally contain some information about our income and spending habits, many companies make use of this information to send you sales catalogs and other mail offers. Consumer ratings - At a creditor? request, a credit reporting agency will give a rating of how good a risk they feel a customer will he based on the customers payment history, etc. in the credit report. Collections - Many credit reporting agencies are now offering to perform collection duties for creditors. The US credit system is a disaster. In fact, the US Federal Trade Commission receives more complaints against credit bureaus than any other type of complaint. Adding insult to injury, the media has formed a widespread myth that nothing can be done about bad credit. But, credit privileges are absolutely essential to life in the United States - credit is almost a public utility. To most Americans, "living on cash" means living as a second class citizen. Yet credit privileges are commonly and unfairly revoked by the faceless credit bureaus. If you have been a victim of the credit system, then you know the effects of credit denial firsthand. Even if the credit mistakes appearing on the credit report were yours, you almost certainly sensed that the penalties were harsh and unfair. The New Legislation This widespread unfairness has finally, after twenty years, prompted Congress to push aside the powerful credit bureau lobby and to pass a new Fair Credit Reporting Act (FCRA.) The new FCRA goes into effect on September 30, 1997, and with it comes a bright era in consumer rights. The new FCRA increases the responsibilities of credit bureaus and creditors. Furthermore, they have greater risk of lawsuit if they fail to provide every right under the FCRA. Most importantly, the new FCRA increases credit bureau responsibilities when derogatory credit is disputed. The catch is: you must take action to gain these new credit rights. You must demand fairness before the law will help restore your good credit. Protecting Your Credit Rights Outline below is a brief, 3 step plan to defend your credit rights. Examine your credit report every three months. Before you begin the battle, you must know the battlefield. Your struggle to restore your credit will be fought between the lines of your three credit reports. These reports will generally cost $8.00 each. You must order all three credit reports (TRW, Trans Union, and Equifax) as they are all used frequently by credit companies. When you first receive your Trans Union and Equifax credit reports, you will find them difficult to read. The information is coded in a way that is not immediately readable by the average consumer. Each credit report should arrive with a key which interprets the codes and indicators on the credit report. Sit down with the credit report and study it until you understand what each code means. You must monitor your credit report religiously to prevent the appearance of bad credit. Dispute credit report listings which you feel are unfair or inaccurate with the credit bureau. The dispute letter is the single most powerful weapon in your arsenal. The new FCRA requires the credit bureaus to handle your dispute with precision and reliability. However, the credit bureaus still have some loopholes to escape their responsibilities if you don't compose your dispute properly, including the determination that your dispute is technically "frivolous or irrelevant." After you've analyzed your reports and marked every negative listing, you may begin to draft your dispute letter. Do not use "form-type" dispute letters as they will be quickly spotted and rejected by the credit bureaus as "frivolous or irrelevant." Instead, follow these general strategies: Always indicate whether the disputed listing is being challenged as "not mine" or "not late." While you must never say that an account isn't yours or that you weren't late unless you believe that it is true, the credit bureau must know if you are disputing the existence of the listing or just the information within the listing. If you are unclear about the nature of your dispute, the credit bureau will promptly return your letter. Remember, the credit bureaus see all disputes as either "not mine" or "not late." Tell the credit bureau of the desired outcome of the investigation. You must always state what you would like done with the listing. There are two options: delete the entire listing or erase the late pay notations within the listing. Provide a reason for your dispute. If you don't give some kind of explanation as to why you think the credit report is wrong, then the credit bureau may return or ignore your dispute. Never sound like an expert. The credit bureaus receive over 10,000 disputes per day. Your dispute should look like an average dispute. If you quote legal statute or if you remind the credit bureaus of your rights under law, they will probably determine that you read a book about credit repair or you are using a credit repair company. If the credit bureau believes that you are attempting to systematically restore your credit, your dispute will be tossed into the "frivolous or irrelevant" bin. Patience and follow-through are the keys to this process. Don't bombard the credit bureaus with disputes. Sending one dispute right after another is wasteful and counterproductive. You should send no more than one dispute every ninety days. If you dispute more often, the credit bureau will simply return the dispute as "frivolous or irrelevant." Dispute the listing with the creditor who reported it. Under the new FCRA, the creditor is now responsible to adhere to proper procedure in verifying consumer disputes You should take your challenge to the creditor by writing letters directly to that creditor. If you still owe money on the credit item in question, you may use a powerful negotiation tactic known as "debt settlement" to reduce your payoff AND to accomplish the removal of the negative listing. Debt Settlement requires negotiation and is usually best performed by an attorney.

How to Correct Errors
You have the right, under the Fair Credit Reporting Act, to dispute the completeness and accuracy of information in your credit file. When a credit reporting agency receives a dispute, it must reinvestigate and record the current status of the disputed items within a "reasonable period of time," unless it believes the dispute is "frivolous or irrelevant." If the credit reporting agency cannot verify a disputed item, it must delete it. If your report contains erroneous information, the credit reporting agency must correct it. If an item is incomplete, the credit reporting agency must complete it.

For example, if your file showed that you were late in making payments on accounts, but failed to show that you were no longer delinquent, the credit reporting agency must show that your payments are now current. Or if your file showed an account that belongs only to another person, the credit reporting agency would have to delete it. Also, at your request, the credit reporting agency must send a notice of correction to any report recipient who has checked your file in the past six months.

For those items in your credit profile which you feel deserve further explanation (such as an account that was paid late due to the loss of job, military call-up, or unexpected medical bills), you may send a brief statement to the appropriate credit reporting agency. The information will be placed on your credit profile and will be disclosed each time your credit profile is accessed.

Credit Profile A Credit Profile refers to a consumer credit file, which is made up of various consumer credit reporting agencies. It is a picture of how you (as an individual) paid back the companies you have borrowed money from, or how you have met other financial obligations.

There are usually five categories of information on a credit profile:

• Identifying Information
• Employment Information
• Credit Information
• Public Record Information
• Inquiries

What is NOT included on your on a credit profile:

• Your race
• Your religion
• Your health
• Your driving record
• Your criminal record
• Your political preference
• Your income

Credit Report Access
The Fair Credit Reporting Act (FCRA) outlines specifically who can see your credit profile. Businesses must have a "legitimate business need," and a "permissible purpose," as stated in the federal law to obtain your credit file. Otherwise, only you, and only those who you give written permission, can access your credit files. Your neighbors, friends, co-workers, and even your family members cannot have access to your credit profile unless you authorize it. Any company that receives a copy of your credit profile will be listed under the "Inquiry" section of your report. Some examples of those who can access your credit files are:

• Credit grantors
• Collection agencies
• Insurance companies
• Employers

The Fair Credit Reporting Act (FCRA) is the federal law regulating credit reporting companies like Equifax, Experian, and Trans Union. It has been in effect since 1971. A revised FCRA became effective October 1, 1997. This law protects consumers' rights, such as the right to review and contest information in their credit profiles. It also specifically defines who can access the information in a credit profile, and how you are notified of this activity.

How does divorce affect consumer credit?
A divorce decree does not supersede the original contract with the creditor, and does not release you from legal responsibility on any accounts. You must contact each creditor individually and seek their legal binding release of your obligation. Only after that release can your credit history be updated accordingly.

Should I use one of those companies that promise to help correct my credit?
It's your choice. However, beware of companies that promise to remove accurate information from your credit file. Accurate information cannot be removed from a credit file. There is nothing they can do for you that you cannot do for yourself by contacting the credit reporting agencies directly. Only time will heal a delinquent credit history.

How do I find out the Maximum HUD loan amounts?
Just click on this link HUD Maximum Loan Amounts and they are displayed by state and updated daily. Loan limits are sorted by loan amount, county, and state.

Many home buyers are very worried about how their credit report will affect their ability to buy a home. We even heard one story that an applicant was denied a mortgage because he had returned a rented videotape late!

Of course, that could never happen. Most people will not need to worry about the effects of their credit history during the mortgage process. However, you can be better prepared if you get a copy of your credit report to review before you apply for your mortgage. That way, if there are any errors you can take steps to correct them before you make your application.

If you have had credit problems, be prepared to discuss them honestly with your mortgage lender and come to your application meeting with a written explanation. Responsible mortgage lenders know there can be legitimate reasons for credit problems, such as unemployment, illness or other financial difficulties.

If you had a problem that's been corrected, and your payments have been on time for a year or more, your credit may be considered satisfactory.

• Other Things Being Equal - When your have derogatory credit, all of the other aspects of the loan need to be in order. Equity, stability, income, documentation, assets, etc. play a larger role in the approval decision.
• Worst Case Scenario - When determining your grade, various combinations are allowed, but the worst case will push your grade to a lower credit guide. Mortgage late payments and Bankruptcies are the most important.
• Going Once, Going Twice - Credit patterns are very important. A high number of recent inquiries and more than a few outstanding loans may signal a problem. A "willingness to pay" is important, thus late payments in the same time period is better than random late payments as they signal an effort to pay even after falling behind.

Credit Guide Scoring?
In a nutshell, credit scoring is a statistical method of assessing the credit risk of a loan applicant. The score is a number that rates the likelihood an individual will pay back a loan. The score looks at the following items: past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit, number of inquiries.

Credit scoring will place borrowers in one of three general categories

• First, a borrower with a score above 680 and above may be considered an A+ loan. The loan will involve basic underwriting, probably through an "computerized automated underwriting" system and be completed within minutes. Borrowers falling in this category may have a good chance to obtain a lower rate of interest and close their loan within a couple of days.
• Second, a score below 680 but above 620 may indicate lenders will take a closer look at the file in determining potential risks. Borrowers falling in this category may find the process and underwriting time no different than the past. Supplemental credit documentation and letters of explanation may be required by lenders before an underwriting decision is made. Loans within this FICO scoring range may allow borrowers to obtain "A" pricing, but loan closing may still take several days or weeks as it does now.
• Third, borrowers with a score below 620 may find themselves locked out of the best loan rates and terms offered by lenders. Mortgage professionals may divert these borrowers to alternate funding sources other than FNMA and FHLMC. Borrowers may find the loan terms and conditions less attractive than the "A" loans, and it may take some time before a suitable funding source is located.