Q&A: 4 Major Credit Questions

The Major Questions

 

While working at Credit Law Center and speaking with many of you over social media, I have been asked many questions over the credit repair process. Below I have posted the top questions and my answers to help get you started on the road to better credit!

 

Question #1: “Why should I care about my credit reports accuracy? Are Credit Reports Accurate?”

Answer: Your credit report defines if you can acquire a home loan, vehicle financing, credit card rates and even affordable car insurance! The misconception among most Americans is that we have just the one credit report. Each of the three main credit bureaus (TransUnion, Equifax and Experian) has their own credit report to show. Over 75 percent of credit reports contain errors and it is extremely important that you review all three credit reports to make sure the information is up to date and accurate! A lender may pull just one of your reports or all three when considering a loan, so it is paramount that you keep a close eye on ALL 3 reports.

 

Question #2:  What affects my credit score and why isn’t it rising?”

Answer: There are many things that can affect your credit score, but for now let’s go over the main negative and positive factors.

-Negative- Collections, Charge- offs, Repos, Loans, Delinquent accounts, closed account, Medical Bills and Late Payments.

-Positive- Long and Positive Credit History, Low Credit Utilization, Positive Trade Lines, On-Time Payments and Paying More Than the Monthly Minimum On Payments.

Each person’s credit report is different and each item on the report holds a different weight. If your score isn’t rising or is declining slowly; the main issue causing this is simply that the weight of the negatives is outweighing the positives. If you have been making your payments on time, but your credit utilization rate is above 30% then you may see a slow increase. If you are to remove any negative items but don’t have much positive credit recorded underneath, then you may experience a small decline in your score or a very small increase. On the other hand, if you remove many negative items and underneath you DO have positive credit, your score will rise 90% of the time! If you would like to dive deeper into what affects your credit and how click HERE.

 

Question #3: “What are some common errors on credit reports?”

Answer: Let’s Make A List!

  • Names- Is your name listed correctly or are multiple names present?
  • Is your address accurate and up to date?
  • Are items listed properly or missing?
  • Manner of Payment- This one is a little difficult to start looking for at first, but we have a handy dandy video to show how to find these discrepancies! – MOP Mistakes
  • Do you not recognize an account/ is the account even yours?

 

Question #4: How can I dispute an error on my own?

Answer-If you find information that you believe is inaccurate, you should dispute the item with the credit bureau. If said error appears on more than one report, you need to file a dispute with each on separately.

Even though you can always file your dispute online, it is highly recommended to dispute errors via mail!

Using certified mail to send a dispute gives you access to a paper trail that shows that your dispute was received. According to the FCRA, credit bureaus have 30 days to investigate and update you with their findings and result.  Some people don’t always have the time to sit down and type up multiple disputes to multiple bureaus and balance the responses and logging with their work and home schedule. No worries, we are here to help!

Inquire for free credit review & consultation.

Contact:  1-800-994-3070

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Author- Joe Peters

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What Is The BRRRR Method?

Reach Financial Independence and Retire Early through BRRRR

Everybody’s dream is to reach financial independence at an early age an enjoy the rest of their life without having to worry about making money to pay their bills. Thankfully there is a way to reach retirement early and enjoy your life.

Recently there’s been a growing movement named FIRE, which stands for financial independence and retire early. Just as the name states, the action focuses on reaching financial freedom at an early age and retiring. However, this is not an easy feat, especially the achieving financial freedom part.

Thankfully, there is a real estate practice named BRRRR, which can help you in reaching financial freedom at an early age. The name stands for Buy, Rehab, Rent, Refinance, and Repeat, a method that has proven to be successful with real estate investors looking to reach financial independence.

The FIRE movement

How realistic is the FIRE movement for your lifestyle

Taking part in financial independence and retire early (FIRE) movement requires that you adapt your lifestyle and make several changes to reach financial freedom. There are several steps you could take to achieve this. All these steps will help you save money, avoid spending on unnecessary things, and boost income.

Your ultimate goal if you’re someone who seeks to implement FIRE into your lifestyle is to have enough savings so that you can live off of it for the rest of your life. It is here where real estate investments are so significant since, when done right, they can generate passive income, which needs little work to be maintained.

Financial independence with a passive income can happen through real estate. Still, you must first choose a real estate investment method that works for you. It is here where the Buy, Rehab, Refinance, Rent, and Repeat (BRRRR) method comes into play. This method is one of the most popular investment methods among real estate investors since it has proven it can work time and time again.

The BRRRR Investment Method

Buying, rehabbing, renting, refinancing, and repeating are the base components for practicing the BRRRR investment method. However, there is certain information that you must know to make the most out of each step in your journey towards financial freedom.

The BRRRR Method: A Real Estate Portfolio-Building Blueprint

Step 1: Buy

The first and perhaps most crucial step in the process is to find the right property. You must conduct an extended amount of research to calculate the potential return on your initial investment. Ensuring a maximum return on your investment depends on what property you get, and what home loan you use to get that property.

Several home loans are available to purchase a property. However, there are some which are insured by the United States government. These government-insured loans come with several incentives which include low to no down payments, more flexible credit score requirements, and low monthly payment options.

Step 2: Rehab

After finding a suitable property and purchasing it, the next step is for you to begin the rehab process. The process will address all repairs and improvements that must be made to the property to increase its value. Also, to ensure the best fixes to your property, it is recommended that you get the home looked at by an inspector. The inspector then will make determinations as to what repairs need to make; these will include fixes like:

– Repairing the roof

– Installing new carpets and replacing kitchen appliances

– Upgrading bathrooms and wall paint in the property.

– Improving the outside of the property by landscaping it

– Building extra bedrooms to single-family homes and upgrading multi-family residences by making more rooms.

These repairs and upgrades will raise the property’s value and increase your investment once refinancing takes place.

If you need financial assistance in paying for these upgrades, government-backed loans offer great loan programs like FHA 203k loans and VA Rehab Loans. Both loans offer several benefits. However, VA Home loans provide some of the best incentives out of any home loan available.

Step 3: Rent

Once the property rehab completes, you will begin the process of finding renters who will make their monthly payments on time. Finding the right tenants will require that you screen potential tenants; this will require some work. However, it is essential that you understand that you shouldn’t be too stringent since we are all human and no one is perfect.

Moreover, after the tenant moves into the property, you will be required to do an appraisal on the property. You must notify the tenant about when the appraiser will inspect their property. Furthermore, it is vital that you make sure that the property looks clean and organized before the appraiser check it.

Step 4: Refinance

After you find a suitable tenant and they’ve been living in the property for a few months, you will have built the right amount of rental history. After that, you will start the refinancing process.

In this step, you need to find a lender who will offer a cash-out refinance, which is recommended by most real estate investment experts. For the BRRRR investment to work appropriately, after the property refinancing completes, the money that you borrow must equal the appraised value of the property.

Step 5: Repeat

After the BRRR processed is completed, you will have to repeat it. However, you will use all the lessons that you learned from your last BRRR process cycle. It will enable you to make better decisions and make the process more straightforward since you’ll have gained experience as a landlord.

Summary

Retiring at an early age is possible by adopting proven real estate investment techniques like BRRRR. Still, early retirement requires much work, and using the BRRRR investment method is one of the best ways to generate passive income. As a result, you will be able to gain financial independence and retire early.

Phil Georgiades is the CLS for FedHome Loan Centers, a brokerage that specializes in first-time buyer home loans. He has been a practicing real estate professional for 22 years. To learn more about programs available to you or apply for a home loan, click here.

Is poor credit hurting your chances for financing? Call Credit Law Center  for a free consultation and learn what we can do for you today!

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Too Many Inquiries

Getting Ready To Finance A Vehicle

Time For A New Car?

Several years ago when I was broken down on the side of the interstate in my 92 Jeep Cherokee I thought to myself “My next car is going to be brand new so I don’t have to deal with this gain!”  I new that I would need to finance as I was just a twenty something with a low end painting job, but I was hopeful that I would be approved. I was quite ambitious for a boy with little to no credit reported or open trade lines.

Fast forward to later that evening; I sat in the Nissan dealership for hours, hoping one lender would overlook my credit score and provide me with anything! Spoiler: No lender would even consider me and my abysmal credit score. At that moment I knew that I would have to go about this a different way if I ever wanted to even be considered for financing and began my research over how exactly credit worked.

 

Understanding Your Credit

First off I had to get a hold of my credit report and see just exactly what was going on. My credit adviser directed me to Free Credit Hub where I was able to sign up for credit monitoring and finally see what was dragging my credit! I was greeted with a cacophony of different numbers, phrases and names that filled the pages and made my stomach drop. My adviser walked me through each  line on the report and explained that there were multiple categories that made up the report. Those categories were:

1. Payment History-  35% of your credit score is based on your past bills and how they were paid.

2. Amounts Owed- 30% of your credit score is based on the available credit card limit you’re using and the amount you owe across your accounts.

3. Length of credit history – 15% of your credit score is determined by the credit history you have built. This is based on the average age of your accounts  along with a few other factors. The longer the history, the better the results!

4. Credit mix – 10% of your score is from the mix of revolving credit (credit cards) and installment credit (car loans, mortgages, etc.) you have.

5. New credit – 10% of your credit score comes from new credit accounts that you have established.

 

Time To Build!

Alright, now that I know what exactly makes up my credit, it is time to start building it up! I took 3 easy steps to start building positive credit and the foundation for a strong credit score.

  1. Lowering My Card Utilization– When I got my first credit card I was told to never use more than 50% of the allowed credit and I would be fine. If we look at our credit utilization like a grade card, a 50% utilization rate is a solid F. 30% is about a C rating and the lower you go the better your rating. Keeping your utilization under 10% is an A rating and is sure to build your credit the fastest.
  2. Becoming An Authorized User– Becoming an authorized user is by far one of the easiest ways to build credit and is kind of like passive income. If you are listed as an authorized user on a trusted family members card, their history is listed on your report as well and you don’t even have to use the card! Be sure you work with someone you trust because the negative history will be placed on your report as well.
  3. Pay Your Bills On Time-  Paying off those balances on time is extremely important when building credit as it provides positive credit history and establishes a exceptional trade line. Late payments are one of the largest discrepancies on most Americans credit report!

 

Your Car Loan Will Help Build Credit.

After about 6 months of building up my credit, I was able to acquire financing toward a new vehicle. You don’t need to have perfect credit to acquire a car loan, but it will affect your financing options and future payments. The wonderful thing about this loan is that it establishes another line of installment credit to your account. As long as you are making your payments on time, this installment credit will soon become a wonderful trade line that builds a long credit history. In the end it is all bout finding the right lender for you and managing a positive ascending credit score. If done correctly, you will be on the road that that fabled 800 credit score!

 

 

Do you have questions about your credit report? If you would like to speak with one of our attorneys or credit advisors  and complete a free consultation please give us a call at 1-800-994-3070 we would be happy to help.

If you are hoping to dispute and work on your credit report on your own, here is a link that provides you with a few ideas on how to go about DIY Credit Repair.

Mistakes On Your Credit Report?

The 3 Credit Reporting Companies: Equifax, Transunion, and Experian

There are three entities that your FICO scores are provided by: Experian, Transunion and Equifax. Each credit bureau reports your scores, which can sometimes vary based on the information they have. Do you wonder why your scores are so different? To ensure that the most accurate information is being given to the credit agencies, there are a few things you will want to double check when you receive a copy of your credit report. You are not alone! It is very common for consumers to have three different credit scores, however, understanding your report will help you piece together why each is so different.

Your Personal Information

The report will have important information that is specific to you. If you notice that there are other names, incorrect date of birth or incorrect address information, you may have a mixed file. If you are married, your credit report is still separate from your spouse so you each will want to check your report. Pay close attention to:

  1. Name
  2. Social Security Number
  3. Date of birth
  4. Address
  5. Phone number

Common names in large cities post a potential risk for mixed files. It is important to check your credit report often and look for mistakes. If you find errors, you will want to dispute this with the credit bureaus to change it. Just this small correction can make an impact on your scores. If one bureau has correct information, but the other two do not, you may notice one is higher than the other two.

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Work History

This section of your credit report is used in order to verify your identity. If you are missing employer information, you can have it added although it is not likely for this to have much impact on your file.

Account Information

One of the most important sections of the report is where your accounts are showing status. In this section of your credit report, you will want to look closely at the dates of when the accounts were added and reporting bureaus. You will see:

  1. Open accounts
  2. Closed accounts
  3. Disputes
  4. Payment history
  5. Dates the accounts were opened or closed (by creditor or consumer)
  6. Balances
  7. Loan payment history/status

Each account you have can report to the bureaus at different times. This is another reason that you may notice a variation in the credit scores. To get the best possible scores and outcomes for major things like a home loan purchase, call your creditors and see what day they report to the bureaus. There are a many moving parts to the puzzle, but knowing when each reports will allow you to know when your scores will look the best they possibly can and then you can time it right for when a lender or bank pulls your credit.  

Public Record/Inquiries

Credit Inquiries are not what is typically impacting your credit if your scores are low. Often times, this is what clients think is causing a low FICO but in reality, negative marks in the public record section or accounts with high balances/late payments are where the score is taking a hit.

 

Credit Repair Attorneys Are Ready

If you need credit help, there are credit repair attorneys that can work for you to dispute items on the credit reports. Mistakes on a credit report can hinder you from buying a home, car or even qualifying for a job. Whether you think you have a mistake on your report or not, a second opinion is never bad. 79% of credit reports contain errors. Check your accounts regularly or invest in credit monitoring.

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5 Questions You Should Ask Before Starting Credit Repair

So You’re Saying There’s A Chance?

All jokes aside, credit repair is a very serious matter.  We have come into contact with many companies that over promise and under deliver when it comes to the services they offer. Have you been teetering back and forth between companies but have been unsure what to ask? Well here’s your guide for working through the sales pitch, and getting to the hard facts.

What is credit repair and how does it work?

When a consumer decides that they are going to attempt credit repair there is often a “pain point” involved that has led them to this decision. For many of our clients, they have visited a lending institution and have been denied financing. Being denied for a home loan or car loan can really get a person in gear and ready to go because credit is important when it comes to major financial purchases. Have you been denied financing recently and are trying to start making your way back toward better credit?

You may find yourself looking for ways to improve your credit score and running into a dead end with “repair” companies. Another thing you may have found is that you may have heard that you can work on your credit repair yourself.

A law firm, like Credit Law Center has the ability to do more than both a consumer and what a credit repair company can. The side by side shows just a few things that you may want to start quizzing your current or potential credit repair company you hire on and start to look for companies that can help you out in all aspects of credit repair.

1. What Will I Need To Get Started?

In order to enroll in credit repair with Credit Law Center you will want to speak with a credit advisor first. They will walk you through our process and what you can expect as far as cost and time frame goes. You will know after your consultation what the cost could be for credit repair if every item came off the report.

You will notice we said if everything comes off. Each item is priced per line item as we only want to charge a client for the successful removal of what we dispute. You would receive a contract ceiling price and be billed accordingly after each round is completed. We are a pay for performance company, which just means you will only pay us for results as opposed to a monthly repair company.

Next, you will need a copy of your credit report, which the credit advisor will pull with you. They will go through line by line with you and educate you on how you can improve scores while we work on any derogatory items on the report. You can expect to pay $1 at the consultation and then decide if you would like to work with our Law Firm. Again, you will be quoted all pricing before ever signing a contract.

Although the cost may sound cheaper per month for a monthly program, and manageable for your budget, it might hurt you more in the long run.  Too often we see consumers that agree to this and they end up signing up for something that takes years for them to improve their credit. Our typical time frame is 60-120 days depending on what other items are positively reporting on a report.

We will work inside anyone’s budget!

Finally, a contract will be emailed to you and after a few ID’s submitted to your credit advisor, you will be ready for credit repair! We are built for speed and this is why 53% of our business comes from referral partners like loan officers and real estate agents. They can expect that their clients will get results quickly, and be ready for financing.

2. Is There An Attorney Involved/Working For Me?

We currently have 3 attorneys in the office that our clients can speak with about their credit reports or any legalities they may come across during or after credit repair. These attorneys also have the ability to work on your behalf, to stop collection calls as well as work with you on what you can say now that you are a client. When a collection company calls you and you are represented by a law firm, you have the ability to request no further communication at that time. Should you continue to receive calls, you may be able to sue for continued harassment.

Does your current “law firm” have the ability to do this? Ask the hard questions!

 

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3. Do They Have The Ability To Negotiate And Sue?

Credit Law Center has sued all three major credit agencies: Experian, Transunion, and Equifax. Ask your current or potential company in questioning if they can do this!

Unfortunately for a consumer, there are many ways that these agencies and collection companies go in and break the law. The main reason for this is due to the lack of education out there about credit and what can or cannot be done. You want a legal team guiding you and informing you of your rights through this process.

Our legal team is versed in the FDCPA (Fair Debt Collection Practices Act) and  FCRA (Fair Credit Reporting Act).

Although your credit advisor will not give you legal advice, you can rest assured that as a client you have access to any of the attorneys on staff about matters such as harassing phone calls and items being misreported. They can also negotiate debts on your behalf or sue for damages if you have been impacted by misreporting on a credit report.

4. Who Will Be Monitoring My Credit?

There seems to be many companies out there right now that do not monitor the clients credit while in repair, or do not let them know if they have new activity or items reported. We will monitor your credit with our monitoring service and will update you every 45 days or so on your report. You have access to a copy of the report at all times.

Do you receive updated copies of your credit report with your current service?

This is vital for us, as it allows us to see what items are being removed when we dispute and allows us to also see if you are ready to go from a credit score standing on financing. We will never hold a client in repair any longer than need be. If they are at a point that a lender says they are ready to move forward, we will pull them out of repair and send them on their way!

5. Am I Being Billed Monthly Regardless of Items Being Removed or Not?

Lastly, and most importantly, ask what you are being billed for. If you are working with a credit repair company and spending money monthly with no activity as far as your score moving at all, it may be time to make a switch. We are saying there’s a chance! If you work with the right company that can provide you with great results and you listen to the education our credit advisors provide, you may be off to your dream home or dream car sooner than you thought!

If  you are currently working with a credit repair company and are not satisfied with your results, please let us know. We would be happy to help you get financially ready for whatever your next steps might be (house loan, car loan, etc.) Please  contact us today for your personal consultation with a Credit Advisor. We have helped over 30,000 clients improve their scores. Let us get you back on the path toward financial freedom.

Article By Breana Washington

A Note From The Author: The opinions you read here come from our editorial team. Our content is accurate to the best of our knowledge when we initially post it.

Check out Credit Law Center’s infographic on 4 myths of collections reporting on credit reports.