If I Get a Negative Item Removed From My Credit Report, What Kind of Impact Will It Have on My Score?

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This question is one of my favorite questions because I LOVE the answer. Did you know that the removal of even one negative entry can improve your FICO score by 25 points or more? So if DCR can delete four to five derogatory late payments, you could essentially add 100 points to your score. THAT my friends, is a huge jump. While many of our competitors dispute only one or two items at a time, we tackle 6-10 derogatory late payments in each round of disputes and we dispute multiple times per month with all three credit bureaus. So basically we hit them hard and FAST. What does that do? It helps your clients exit our program more quickly.

If your client has late payments AND open collections, we specialize in negotiating collection debt and negotiating to have items deleted upon payment. As with all industries, ours is constantly changing. So we are seeing an increase in companies that will not agree to “pay for deletion”. That’s ok..because with a 75% chance of removal through our credit restoration system we can have the derogatory account deleted legally and permanently by utilizing the most common law the CCPA or Consumer Credit Protection Act. This law also regulates the credit reporting bureaus, collection agencies, and creditors. The Consumer Credit Protection Act is divided into four important sections which we utilize in our credit disputing methods. 1). The Fair Creidt Reporting Act 2).The Fair Credit Billing Act 3).The FAir Debt Collections Practices Act 4). The Equal Credit Opportunity Act.

We have mastered multiple systems of disputing derogatory items which result in legal and PERMANENT restoration for your clients. Nothing that we have removed will ever be re-reported on a credit report because the system we use is proven and ethical. Excited to use us? Watch this short video of “how we are different” and let’s start working together!

The “Chicken or the Egg” Game

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You have to have credit but you can’t obtain it without having a credit history. 30% of your credit score is having 3-5 open lines of credit but in order to establish those lines of credit you will receive a point deduction first known as a hard inquiry (10% of your score), and you will automatically start in the hole for having “new credit” versus well established credit (15% of your score). You can’t carry a zero balance but rather a 30% balance or your score won’t improve. Oh and all of these rules you must learn first, by doing things incorrectly because we don’t teach any of these fun facts in high school, which is when our youth are just about to be bombarded with credit offers as they enter college.

Coincidence? I think not! Ok, stepping down from my conspiracy theory soap box for a moment, I have to tell you that many of these factors although extremely annoying are the thread of our FICO system. Although one could argue that this system is broken, it is in fact the system that we all live and die by. The sooner we accept it and begin educating our youth the better. Power through education, right?

Let’s start with you the professional first. DCR prides ourselves on education. Have we been to your office recently to discuss some of the upcoming trends in the credit industry? What about the trends relating to settling collection accounts incorrectly? Many of our competitors offer credit restoration but they don’t offer collection settlement. July 1, 2012 the FHA program which will require that open collections in the amount of 1,000 or more be settled. Did you know that we are the leaders in collection negotiation with negotiated DELETIONS upon payment?

I’d like to come in to your office and educate your team on one of our recent credit topics. Call us if you are interested in getting one scheduled. If you are not in the Southern California area, we will gladly put on a complimentary webinar for your office.

Let’s talk soon!

5 Tips on Secured Credit Cards

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One of the most common misconceptions about credit is that new credit immediately impacts a FICO score. 15% of your FICO score is calculated on the length of credit history. What does that mean? It means that FICO wants to “see” that a consumer keeps and maintains long standing accounts. In other words the ol’ “pay it off and close it” strategy is NOT a good one. However, many clients do not have enough credit. Many have only one open account or perhaps many of their accounts were “closed by credit grantor” due to missed payments. Our real estate referral partners are often asking us which secured companies to send their clients to.

In addition to saving www.myfico.com (as a professional favorite) to your computer desk top, I also recommend that you keep www.creditcards.org as a favorite. Visit the “Secured” card page of that site and provide a list to your prospective clients. Keep in mind that the same rules apply for secured cards as a standard tradeline.

1. Never charge over 35% of the credit card limit
2. Do not pay them off and close them
3. Do not keep them at zero balances every month (this will not BUILD credit)
4. Do not expect an immediate point increase from opening a new secured line.
5. Do not pay off the credit card balances in full each month. Pay minimum payment one month and then pay the balance off the following month on a rotating cycle. Otherwise, the payment history may not be reported on credit history.

Last, please advise your clients NEVER to open a new credit line while they are in “escrow”. This strategy should be reserved for clients who are proactively trying to work on their credit. Not for clients who are home shopping. For more information on this topic, please contact our office.

If you are interested in any of my blog topics, and would like me to come speak to your real estate office team, please contact us and we can put something on the calendar.

We appreciate being your professional credit expert.

Update for All Lenders

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VERY important update! As of April 1st, FHA made some “changes” that require collections that total $1,000 to be settled. This is GREAT news for us because our collection resolution program is a QUICK and affective way to accomplish this in a timely manner. But we are noticing some trends that are happening amongst our referral partners’ daily practices that are not serving them well. I wouldn’t be doing my “job” if I didn’t help clarify some very important facts. I am here to serve as your credit expert business partner. So I need to offer some suggestions to help make your referral process more efficient and successful. Ready or not, here I go…

1. Please remember it is never ok to continue to pull credit inquiries on a client while they are still in our collection resolution program. Doing this negatively effects the score and can actually cause a disruption in the “recovery” process. We have lenders doing this every time their clients advise them that an account was negotiated off their report. Keep in mind, many of your clients have 20-30 collections. So pulling credit after each settlement would be unwise.

2. Remember that just because an account has been negotiated and paid does not mean that the client is ready for you to start working on the loan. A payment without a deletion will “stop the bleeding” from additional derogatory late payments but can actually bring the scores down because the recency date of the collection activity appears brand new. So please, please, please let us continue our work of disputing the paid collection account before you advise your clients that it’s time to move forward.

3. Remember that there are more than just “underwriting guidelines” that you need to be concerned with. If a client has a FICO score that is in the 500′s…there needs to be a FICO score increase. Therefore, there will be items that we need to dispute and have removed in order for you to meet that min FICO requirement for your loan. Be careful advising your clients that derogatory items aren’t affecting their report because your underwriters are “ok with them”.  We need to have successful removals of most derogatory remarks removed in order to have a FICO score increase. So the FICO score increase goal and the underwriter requirements are not always the same. This is confusing to your clients.

4. NEW CREDIT and minimum tradelines will report on a consumer’s credit report within 30 days. But remember that just because it is reporting immediately does not mean that FICO has granted point increases. Quite the contrary. NEW credit (inquiries) 10% and the Length of credit history equation 15% are two factors that require seasoning. Therefore if someone does not have adequate tradeline history, they need to contact us to learn how to establish this effectively.

5. Help us help you! Please do not set your clients up for the “Are we there yet?” attitude. Fixing credit with DCR is a fast and effective process. However, we have experienced an increased amount of lenders contacting us with the ol’ “WE ARE IN ESCROW and we need his scores up 80 points and these 10 collections settled in 2 weeks” type of referrals. The reason why you are trusting us with your clients is because we are honest, upfront, and realistic with your clients. We need to make sure that that mentality is shared by you and your clients as well.

Please know that it is our pleasure to be on your team. We are constantly evolving and growing and we have just as many graduates from our program each month as we have new enrollee’s which is unlike any other credit repair programs. Please call me if you have any questions whatsoever.

No Credit Score? Now What?

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There are many different reasons why a client would have absolutely NO credit score.  The first is typically that the consumer is young and hasn’t had a sufficient amount of exposure to credit opportunities and therefore hasn’t started building a credit portfolio (score).  The second reason is most commonly that a consumer had a credit score at one time but became derogatory on all accounts for an extended period of time, resulting in a lack of positive credit history.  This plays havoc on the credit scoring algorithms used to determine one’s risk.

The quickest way for a young person to establish credit is to become an authorized user on an existing account of a parent/guardian.  This was supposed to have been removed from the FICO score calculation a few years ago, but to date it is still a way to positively impact one’s score within 30 days.  The “key” to having the authorized user added to the reporting process is to actually request in writing and or over the phone that this happen.  It’s not an automatic occurrence.

In order for a parent’s credit line to help in a positive way, the following factors must be considered.

  • The card must be a seasoned account (1 year or more)
  • The card owner must not have a balance over 50% of the available credit limit
  • The credit card holder can have no recent lates on the card.

Authorized usership is still the quickest way to help someone establish a credit score.  Other than that, secured credit cards are always an option.  Just like with any type of industry though there are the “good guys” and the “bad guys” in the secured credit world.  Look for lower interest rate cards and ones that do not require placing an inquiry on your credit.  They DO exist.

If you encounter a credit report that does not have one or more of the scores, they are a GREAT candidate for our services.  Please consider forwarding them to our office for a complimentary consultation.  Remember…  we are the “good guys” in our industry.

Pay Off a Credit Card or Keep a Low Balance?

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The most unpopular way to answer any question is with the response “It depends”.  However, in this case, the answer truly depends on two factors.

Do you have good credit?  or  Are you credit challenged?

If you fall under the category of a “good credit risk” you can only help your credit scores by carrying zero balances on revolving debt.  In fact, history shows that when a consumer carrys 3-5 open tradelines kept at zero balances, most good credit consumers have approximately a 720 or higher FICO score.

However, if you are credit challenged, carrying a zero balance on revolving credit can actually hinder any increases in your FICO score.  Remember that in order for 30% of your credit score to be in tact, a consumer must be able to demonstrate an on-time payment history.  By carrying a zero balance you are not able to demonstrate any positive payment history which will negatively impact the score.  So the general rule of thumb is that a person wanting to see quick increases in a FICO score will want to carry small balances and make timely payments for 6 months or longer.  Doing this will start to increase and repair credit scores.

Get more useful tips by reading other posts on our credit repair service blog.

Safeguarding Your Wallet

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Dedicated Credit RepairRemember the last time you misplaced your keys or your glasses?  As frustrating as it was, losing your wallet is downright dangerous. Whether it is misplaced it or stolen, you can’t help but feel nervous about the exposure of your personal information.

The things you carry in your wallet form your identity:  driver’s license, debit cards, credit cards and many other forms of ID that could be sinister in the wrong hands. Thus, a stolen wallet can become the basis of identity theft. Be sure you’re prepared to act quickly in order to minimize your risk of identity theft in the event of a lost wallet or stolen wallet.

Smart Wallet Tips:

  • Don’t carry anything you don’t need in your wallet or purse. This includes your Social Security card, extra credit cards, birth certificate, voter’s registration card and never keep PIN’s or passwords in the vicinity of the corresponding cards.
  • Know what’s in your wallet so you know whom to contact in the event it becomes lost or stolen. You can make copies of the front and back of your cards, including driver’s license and medical insurance, or write down the account numbers and contact information. Store the copies or list in a secure file at home.  Beware, these copies could also be an identity risk so they must be kept somewhere secure.  Do not leave them out on a desk or in plain site.
  • If available, request credit and debit cards with your photo on the front.  This may be just enough deterrent to keep a thief from attempting to use a stolen card.
  • Help prevent fraud by alerting local law enforcement, your bank, your credit card issuers, your medical insurer, your state’s DMV and other appropriate agencies immediately if you realize you have a lost wallet or stolen wallet situation on your hands.  You may also want to contact the credit agencies and request that an alert be placed on your accounts.  This will “alert” the credit agencies if anyone tries to apply for new credit using your name and social security number.

Thieves today are getting smarter and smarter!  The time to protect yourself is BEFORE something bad happens.  Take necessary precautions and be smart with your personal information.

Get more information and credit help from Dedicated Credit Repair!

5 Tips for Maintaining Your Credit History

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Did you know you’re making history? Every time you pay a bill on time — or don’t pay it on time — you’re building your credit history. When you’re ready to make big purchases such as a home or car, this history will either come back to please you or haunt you. Preparing properly can help you to avoid a nightmare.

 

Here are a few suggestions for building and maintaining a good credit history:

Tip #1
Create a budget so you know exactly where all of your money is going. Keep daily records of everything you spend for a month and decide where you can cut. Sticking to a budget means you’ll always have money to pay the bills and therefore avoid late and missed payments.

Tip #2
Start a savings account and commit to contributing to it regularly. One reason people run into credit problems is that they don’t have cash on hand for everyday purchases.

Tip #3
Balance your checkbook regularly to prevent checks from bouncing. Too many bounced checks can have a negative impact on your credit report. Plus, bounced checks lead to increased bank fees, late fees from creditors, and derogatory marks on your credit. Often, you could be declined for a loan if you have even one late payment on a major account such as a car or mortgage in the past 90 days.

Tip #4
To avoid late fees from creditors, schedule automated minimum monthly payments directly debited from your checking account. This prevents potential issues such as mail delivery delays and forgetting to send in payments on time.

Tip #5
Review your credit report at least once a year. Mistakes do happen and if you erroneously have negative items on your credit report, you’ll want to know about it and address the issues sooner rather than later.  Credit repair service is much easier when the proper action can be taken right away.

For more credit-building tips, contact Dedicated Credit Repair for help. You can also learn more on our website, http://www.dcrusa.com

Credit Repair- Help Your Clients Eliminate the “Head in the Sand” Mentality

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It’s a new year and what better time to encourage your clients to investigate their credit reports.  Perhaps you helped a client with a short sale not very long ago.  Maybe you have an entire data base of clients who fell in to the “not qualified” file in your desk drawer.  No matter what the situation, we all know of friends, family, former clients, current clients… who have expressed dissatisfaction with their current credit scenario.

We need to help them realize that the “head in the sand” method of dealing with credit is not working.  Help them realize that the FICO score is designed to very easily move from the low scoring ranges to the mid ranges.  In other words, moving from a low 500 FICO to a high 600 FICO is fairly easy to accomplish.  In fact, most of our clients realize an average increase of at LEAST 90 FICO score points in 90 days.   No joke.

The hardest part is taking the first step… scheduling the consultation.  It’s a NEW YEAR so it’s time to start thinking about over-all health.  Spiritual, emotional, financial, and of course CREDIT HEALTH.

Let’s face it, we know that there are very few legitimate credit restoration companies out there.  We get it.  We have completely tailored our programs around the FHA loan guidelines and underwriting requirements of most major lending institutions.  We know what you are trying to accomplish for your clients and we can be a huge resource to you.

Help your clients realize that putting their head in the sand isn’t the right approach.  One foot in front of the other.  We can help!  Call us for a NEW YEAR consultation.  Why not? It’s free!

Hidden Truths About FICO Scores

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Over the past few years we have legally and successfully disputed and removed thousands of derogatory late payments from the credit reports of our customers.  Bankruptcies, 30 day late payments, collection accounts, late medical payments, school loan defaults… you name it, we have them successfully removed.  On average we operate at approximately a 65% to 75% chance of removal per each derogatory account.   In order to successfully remove derogatory trade lines from credit reports, we have had to spend years researching the credit bureaus and their verification practices.

We have invested thousands of dollars to uncover the hidden truths about the FICO score and how it relates to the three major credit bureaus’ reporting practices.  You may not realize this, but the contributing factors of the FICO score were designed specifically by the credit card companies.  What does that mean to a consumer?  Simply put, “Common sense” and “Fico Score sense” rarely are the same.

A perfect example is this:

Have you ever paid off a large revolving account and then closed the account afterwards?  Common sense would tell you that once you have successfully met your financial obligation, it would “help” your score to then close the account.  “Common sense” would mean that less financial obligation shows responsibility.  The contrary is true.  “FICO score sense” means that if you pay off an account and close it your scores will rapidly depleat.  What does that tell us?  The credit card companies do NOT want you to have closed accounts.  How can they earn money from a consumer if the consumer closes their revolving credit card debt?

Yet another example:

Have you ever noticed that 30% (the second largest piece of the FICO score calculation) is based on the idea that a consumer should ideally carry 3-5 open lines of credit at all times.  “Common Sense” might tell you that if you have no credit obligations you are a better risk than someone who has 3-5 lines of credit open and used. “FICO Score sense” tells us that if you do not have any open credit, you will actually have worse credit than someone who has had a history of missed payments.

Last example… the concept of paying off collection accounts.  Have you ever had an account sent to collections?  Did you know that if you pay off a collection account to a zero balance you could actually lose FICO score points?  If you pay off a collection and do not negotiate to have that derogatory account deleted upon payment, the account will re-activate the recency factor of the account causing your points to drop again!

If you have common sense questions relating to credit, and would like an honest answer, please give our office a call.  We can set up a complimentary consultation with you to discuss how you can quickly and permanently repair your credit challenges.