credit make over
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The Credit Repair Bible
All the Sec rets to Neve r Be Turned Down for a Loa n Ag a in a nd Save Thousands
of Dollars in interest Payments
Copyright 2008 Chris Linus
Notic e of rights
All rights reserved . No pa rt of this boo k may be rep rod uc ed or transmitted in any
form or by any means, electronic, mechanical, photocopying, recording, or
otherwise, without the prior written permission of the publisher.
Disclaimer
This boo k is intend ed to b e used as a guide and it d oes not rep lac e the figure of
an a tto rney. The informa tion c onta ined in this rep ort is for informa tiona l purposes
only and is not lega l advic e.
While the author and/or publisher have carefully researched information from
c red ib le sources, they cannot guarantee the a c c urac y, c orrec tness or intend ed
use of the informa tion presented.
The autho r and / or pub lisher hereby d isc laims any liab ility for loss, risk, damage,
inc onve nienc e (rea l or ima gined ), tha t ma y be incurred by or resulting from the
use o f any idea s, informa tion, or op inions c onta ined or presented in this boo k. As
with any credit or legal matter, a consumer should seek the advice of a
c om petent leg a l p rofessiona l before a pp lying a ny of the informa tion p resented
in this book.
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TABLEOFCONTENTS
Contents
TABLE OF CONTENTS................................................................... 2
Contents...................................................................................2
PREFACE WHY YOUR FINANCIAL FUTURE DEPENDS ON
HAVING A GREAT CREDIT SCORE.............................................. 4
PART 1 - HOW A BETTER CREDIT SCORE CAN SAVE YOU OVER
$100,000 ON YOUR MORTGAGE ALONE...................................8
Case Stud y: The Impac t o f a Cred it Sc ore on a $250,000
Mortgage .................................................................................8
Case Stud y: The Impac t o f a Cred it Sc ore on a $20,000
Car Loan...................................................................................9
Conc lusion: The Highest Pa id Work You Will Ever Do ........10
PART 2 - THE BASICS................................................................... 12
What is a Cred it Sc ore? ........................................................12
How is Your Cred it Sc ore Ca lc ulated? ............................... 14
Do You Have Good Cred it? ................................................16
What is Your Sc ore? ..............................................................17
PART 3 - IMPROVING YOUR CREDIT SCORE: BASIC PRINCIPLES
....................................................................................................19
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Cred it Repa ir Ag enc ies (For Busy Peop le) ......................... 68
PART 6 - BONUSES...................................................................... 70
EPILOGUE...................................................................................78
PREFACE WHY YOUR FINANCIAL
FUTUREDEPENDSONHAVINGAGREAT
CREDITSCORE
There is som ething tha t makes the Americ an ec ono my
unique: the easy access to credit. It has become common
to buy not only homes and c ars, but a lso home app liances,
boa ts, and even pay for vac a tions with c red it c a rds.
The truth is tha t c red it c an be rea lly good and very ba d a tthe same time. It just depends on how you use it. If you are
responsib le a nd know how to p lay the game, then you can
use your credit to build a business, invest in real estate, or
maybe in the stoc k market. But if you don t know what you
are d oing, c red it c an be d angerous, very dangerous. Think
about it: you c an buy almost anything that you w ant even if
you d on t have the money to pay for it! They make it soundgreat: get this, get that. You dont have to pay for it, just
slide your card! And then you realize that all these small
monthly payments are eating up all your income. And the
worst part is that your debt never decreases, you are just
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paying interest. You are working really hard to make
som eb od y else ric h!
Again: credit can be a really good thing; you just have to
lea rn how to use it in your favor instead of aga inst you. I like
to say that there a re tw o d ifferent kinds of deb t: good deb t
and b ad deb t. Good deb t is money you use to make some
kind of investment (start or grow a business, invest in stock,
buy investment real estate, etc.) Bad debt is when you use
your c red it to buy consumer good s: a b igger TV, a week in
Hawa ii, expensive resta urant m ea ls, etc .
Essentially, good debt can make you wealthy; bad debt
c an make you broke.
The one question tha t you need to ask yourself to find out
whether a debt is good or bad is this: Will this put money
into my poc ket o r take it out?
If you are rea d ing this book, you p robab ly have som e c red itproblems. But I want you to know that you can solve them.
In fac t, I am sure you w ill. The fac t tha t you boug ht this book
is a good sign that you are committed to solve your credit
problems. But let me warn you: reading this book is just the
first step . Nothing will happen until you ac tua lly DO wha t this
book teac hes you. If you d on t go out there a nd d o w hat it
takes to improve your financial situation, nobody will do it
for you.
This book is about improving your c red it sc ore. But w hy is
tha t so important? Bec ause w ith a bad c red it history you will
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miss the best opportunities: the best mortgages, the best c ar
loans, and the best credit card rates. Many lenders will just
avoid doing business with you, and those who dont, will
c ha rge you outrageous inte rest ra tes. They will see you as abig risk, so they will make sure they get paid well for taking
that risk. You will end up paying thousands of dollars extra in
interest.
But don t frea k out. It d oesn t matter how bad your c red it is,
you now have a step-by-step plan to dramatically improve
it in a short period of time.
The first thing you need to keep in mind is tha t informa tion is
pow er. This is a game, and if you know how to p lay it, you
can radically benefit from it. Unfortunately, most of the
information contained in this book is not available to
everybody. If it were, we wouldnt see so many people
suffering from financ ia l p rob lem s.
I will teach you the rules; I will teach you the secrets. I will
reveal the truths and the myths. Once you know how the
system works, you c an make it wo rk to your ad vantage. You
will notice that a lot of times the system doesnt make a lot
of sense, or it just doesnt seem fair. Dont waste your time
judg ing it. There s nothing you c an d o about it, exc ep t for
lea rning how it works and take a dvantage o f it.
If you want to read the Fair Credit Reporting Act, visit this
website: www.ftc.gov/os/statutes/031224fcra.pdf
You dont need to if you dont want to, because I will
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explain to you exactly what the FCRA is all about and how
c an you take advantag e of it.
I hope you enjoy reading this book and I can guarantee
that if you do at least a couple of the things that this book
will teach you, you will see your credit score getting a lot
better, you will save thousands of dollars, and your financial
situation will improve in a way you never thought possible.
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PART 1 HOWABETTERCREDITSCORE
CAN SAVEYOUOVER $100,000ONYOUR
MORTGAGEALONE
It is essent ia l tha t you understand what a huge d ifferenc e a
credit score can make when it comes to loan payments.
Most people dont understand the power of a good credit
sc ore until they see c ase stud ies like the ones I am about to
show you.
I believe that there is no better way to make a point than
show ing you rea l c ases; rea l exam ples where a good sc ore
c an ma ke a ll the d ifferenc e.
Case Study: The Impact of a Credit Score on a $250,000
Mortgage
This is an example o f a typ ic a l 30-Year fixed mortgage fo r
the amount o f $250,000. You c an c lea rly see how som eone
with a credit score of 720 will pay $1,479 a month and the
to ta l inte rest tha t he will pay during 30 yea rs will be $282,557,
slightly mo re than the p rinc ip le a mount.Now, c om pare tha t to som eone who has a sc ore of 559. This
persons monthly payments will be $2,763 (almost twice as
much as the person with a good credit score!) And he will
pay $744,524 in inte rest. Tha t is 3 times as muc h a s wha t the
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first p erson w ill pay. It is ha lf a million d olla rs more! You d on t
wa nt to pay that much more, do you?
CaseStudy:TheImpactofaCreditScoreona$20,000Car
Loan
In this case, we can clearly see that someone with a really
good credit score will be offered an interest rate of 5.8%.
Now, compare that to the almost 15% interest rate that
someo ne with b ad c red it w ill get . The first person will pay
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only $3,088 in inte rest, whereas Mr. Bad Cred it will pay
$8,500, almost 3 times as muc h.
Conclusion:TheHighestPaidWorkYouWillEverDo
I hope that by now you realize that we are not talking just
about a number that doesnt really mean that much. We
are talking about thousands of dollars you are giving away
and should be keeping for yourself. If you are paying for a
$250,000 house and a $20,000 car, you can save $1,400 a
month by just having a good credit score. How does an
extra $1,400 in your poc ket every month sound?
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To use the same deb t c a lc ula tor tool I used to c a lc ula te
these payments visit this website :
http:/ / ww w.myfic o.com/ myfic o/ Cred itCentra l/ Loa nRates.a
sp
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PART2 THEBASICS
Whatis
aCredit
Score?
A credit score is a 3-digit number that ranges between 450
and 900 and rates your credit history. Lenders use this
information to determine how much risk is involved in
lend ing money to you. The higher your c red it sc ore is, the
less risky you a re c onsidered by lenders.
Your credit score is based on your credit report. A credit
report is a snapshot of your credit history for the last 7 years.
It shows late payments, collection accounts, current debt,
and also positive items, such as bills paid on time, paid as
agreed , never late , etc .
Your credit score doesnt bring into consideration race,
c olor, na tiona l orig in, ma rita l sta tus, sa la ry, oc c upa tion, title,
em ployment history, etc .
You might think that your current credit score is fair, or
maybe you dont think it is. But the truth is that this system,
even with its deficiencies, can give the lender an idea of
how responsib le you have b een a t managing your finances,and he w ill take that into c onsidera tion w hen he dec ides if
he is going to approve you for a loan, and what rate he is
going to offer you.
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There a re 3 ma in c om panies tha t monitor your c red it rep ort:
Experian, Equifax, and TransUnion. Eac h one ha s its own
sc oring system. Experian s system is c a lled Experian/ Fa ir
Isaac , Equifax s is c a lled Beac on, and TransUnion s is c a lledEmpirica.
Each of these companies is referred to as credit bureau.
Eac h c red it burea u will have a d ifferent c red it sc ore for you.
This doesn t only happen bec ause they w ork with d ifferent
systems, but also because most creditors dont report to the
3 bureaus. For example, if you d idn t pay your phone b ill last
month, the phone company may report to Experian only or
maybe to Experian a nd TransUnion, but no t to Equifax.
In March of 2006, the 3 bureaus decided to create a new
sc oring system: Vanta geSc ore. Its ma in purpose w as to
solve discrepancies between the different scores each
burea u had for ea c h person. It made things bette r, but the
system is far from being perfect, and many times there are
b ig d ifferenc es betw een the c red it sc ores ea c h burea u will
p rovide fo r the same p erson.
FICO is a c om pany who provides c red it sc ores based on the
reports ob ta ined from Equifax, Experian, and TransUnion.
FICO developed its own scoring system called FICO
Expansion Sc ore, whose m ain goa l is to inc lude p eop le w itha thin o r inexistent c red it histo ry into the ir sc oring system.
Here is the contact information for each of the three
bureaus. You will need it when you dispute inaccurate or
incom plete negative items on your c red it rep ort.
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EXPERIAN
P.O. Box 2104
Allen, TX 75013
(888) 397-3742
EQUIFAX
P.O. Box 740241
Atlanta , GA 30374
(800) 685-1111
TRANSUNION
P.O. Box 2000Cheste r, PA 19022
(866) 726-7388
HowisYourCreditScoreCalculated?
35% of the sc ore is based on your paym ent history
This makes sense sinc e one of the p rimary reasons a lend er
wants to see the sc ore is to find out if (and how timely) you
pay your b ills. The sc ore is a ffec ted by how many b ills have
been pa id la te, how many were sent out for c ollec tion, any
bankruptc ies, etc . When these things happened a lso c omesinto p lay. The more rec ent, the w orse it will be fo r your
overa ll sc ore.
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30% of the score is based on outstand ing deb t
How much do you owe in car or home loans? How many
c red it c a rds do you ha ve tha t a re a t the ir c red it limits? The
more cards you have at their limits, the lower your score will
be. The rule of thum b is to keep your c a rd ba lanc es a t 25%
or less of their limits.
15% of the sc ore is ba sed on the length of time you've had
credit
The longer you've ha d estab lished c red it, the b ette r it is for
your overall credit score. Why? Because more information
about your past payment history gives a more accurate
p red ic tion o f your future a c tions.
10% of the score is based on the number of inquiries on yourreport
If you've applied for a lot of credit cards or loans, you will
have a lot of inquiries on your c red it report. These a re b ad
for your score because they indicate that you may be in
some kind of financial trouble or may be taking on a lot of
debt (even if you haven't used the cards or gotten theloans). The more rec ent these inq uiries a re, the worse for
your credit score. FICO scores only count inquiries from the
past yea r.
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10% of the score is based on the types of credit you
c urrently have
The number of loa ns and ava ilab le c red it from c red it c a rds
you have makes a d ifferenc e. There is no magic number or
combination of types of accounts that you shouldn't have.
These ac tua lly c om e more into p lay if there isn't as muc h
other information o n your c red it rep ort on whic h to base the
score.
DoYouHaveGoodCredit?
To determine how good your cred it is, we w ill show what the
sc ores of the entire US popula tion looks like so you c an d o
some comparison:
Up to 499: 1%
500 - 549: 5%
550 - 599: 7%
600 - 649: 11%
650 - 699: 16%
700 - 749: 20%
750 - 799: 29%
Over 800: 11%
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WhatisYourScore?
There a re free and pa id servic es tha t a llow you to ac c ess
your credit report and score. We strongly suggest that you
stick to the paid services for a couple of reasons: they will
p rovide you w ith more a c c ura te d a ta and the free servic es
usually are not that free after all, and start charging you
a fter a 30-day tria l.
According to the law, you have the right to get one free
c red it report every 12 months. To get yours, you c an req uest
it online at www.annualcreditreport.com or calling 877-322-
8228. Note tha t they will g ive you a c red it rep ort for free , not
a credit score. You can, however, purchase a credit score
from them . When you req uest your c red it rep ort, ma ke sure
they ma il it to you, as opposed to get ting the online version,since the report you will receive in the mail will be more
complete than the one you can get online. Even if you
req uest your rep ort online, you can get it ma iled to you.
Additionally, if you have been a victim of ID theft and you
have reported it to the bureaus; they will send you a free
credit report. Do this only if your identity has really beensto len. Doing it just for the c red it report d oesn t make sense,
sinc e you will be unab le to op en new ac c ounts for 90 days.
If you are thinking about b uying a p iec e o f rea l esta te a nd
your b roker or lend er gets your c red it sc ore to eva lua te your
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history, you have the right to get a c op y of tha t sc ore from
him or her.
There a re a c oup le o f c red it sc ore estima tors online.
Although they are not the real deal, they can usually give
you a very good idea of what your score could be. And
they are free . Chec k out a c oup le o f them:
MSN Money Centra l:
http://moneycentral.msn.com/investor/creditreport/main.as
p
Bankrate.com:
http://www.bankrate.com/brm/fico/calc.asp
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PART 3 IMPROVING YOUR CREDIT
SCORE:BASICPRINCIPLES
The2MostImportantConceptsYouWillEverLearnAbout
YourCreditScore
High Credit Limit
Your high credit limit is the total amount of unsecured
revolving accounts that you have in your name. It includes
credit card debt and any other kind of credit not secured
by an asset. It doesn t inc lude m ortgages or c a r loans, sinc e
these kinds of loans are secured by a piece of real estate
and a c ar, respec tively.
Lets say you have 4 credit cards, each with a limit of$10,000. Your high credit limit would be $40,000.
The higher your high c red it limit is, the bette r your c red it
score.
Deb t-To-Cred it Radio
The deb t-to-c red it-rad io is the tota l amount o f deb t in
relation to your available credit. In the previous example,
your high c red it limit was $40,000. Tha t is how muc h you a re
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allowed to borrow. Now, lets say you only borrowed
$20,000. In this c ase, your deb t-to -c red it rad io is 50%.
The low er your deb t-to-cred it ra tio, the bet ter your c red it
sc ore. The lenders assume tha t if you c an borrow $40,000
and you only have a $5,000 debt, you are managing your
financ es responsib ly.
The10CommandmentsforBuildingaGreatCreditHistory
Pay Your Bills on Time
It g oes without saying tha t la te payments a ffec t your c red it
score. Obviously, a person with a big list of items showing
never late will have a much better score than someone
with a bunch of negative hits for la te payments.
Start Early
Build ing a good c red it history takes time. You won t b uild an
amazing c red it rec ord overnight. Tha t is why it is so
important to sta rt ea rly.
Open Savings and Chec king Ac c ounts
A lot of people still rely on cash as a main method of
payment. This c an be a b ig mistake if you a re trying to build
a c red it history. Op en a t lea st one savings ac c ount a nd one
c hec king ac c ount. And use them.
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Dont Close Old Ac counts
Closing accounts can be very damaging to your creditsc ore. Keep them op en. If you have an old c red it c ard , the
first one you ever go t, and you a re thinking about c losing it
because the interest rate is 30%, dont do it. Keep it open.
Make sure you keep a really small balance, even if its $10,
so you dont have to pay a lot in interest. But dont close it.
An old account with on-time payments history can boost
your c red it sc ore.
This a lso app lies for sto re c a rds, suc h a s a Wal-Ma rt c a rd ,
Sea rs, Hom e Depot, etc . Don t c lose them . If you a re an
ob sessive shop per and a re a fra id of spend ing money just for
having the cards, cut them in half and throw them away,
but dont go to the store and ask them to close the
account.
Keep Your Deb t-to-Credit-Ratio be tween 10% and 30%
If your high credit limit is $40,000, try to have an outstanding
balance of between $4,000 and $12,000. If you really need
to go over that, never go past 50%. Tha t would hurt your
credit.
If you have 4 credit cards and you max out all of them, it is
not going to help you.
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If you decide to pay off your credit cards balances every
month, it is not a bad idea, but keep in mind that creditors
make the ir money when you pay interest to them. If you pay
your c red it c ard ba lanc es in full eve ry month you w ill have agood sc ore, but no t as good as if you kep t a 10% ba lance.
Now, lets say you have a high credit limit of $40,000. And
your debt is $15,000. Tha t is a deb t-to-cred it ratio of 37.5%.
To dec rease tha t to 30%, where is c onsidered op tima l, you
c an pay $3,000 of your c red it c a rd ba lance a nd dec rease
your debt to $12,000. But there is another thing you can do
to take your deb t-to-cred it ra tio b ac k to the 10%-30% range.
You can increase the limit of one of your credit cards by at
least $10,000 (or get a new card with a limit of $10,000 or
higher). Now your new high credit limit is $50,000, and even
though you still owe $15,000, your debt-to-c red it ratio is now
30%.
Something else to keep in mind is how to d istribute your
debt among your accounts. For example, if you have 4
c red it c a rds with a limit of $10,000 ea c h and your tota l deb t
amount is $12,000, it would be OK as long as your ba lanc e is
$3,000 on each of those cards. If one of the cards is maxed
out (you used all your credit, which was $10,000), and the
other cards have balances of $1,000, $500, and $500
respectively, that will damage your score, since you are
way over 30% on one of your cards (actually, the debt-to-
c red it ra tio for the c a rd where you have a $10,000 ba lance
is 100%).
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Make sure your debt is distributed evenly among your
accounts.
Inc rease your high c red it limit
As we mentioned before, a higher credit capacity can
increase your credit score. But you need to be very careful
about this. If you op en too m any ac c ounts in a short pe riod
of time, it will hurt your score. If last week you had a limit of
$10,000 and you went and got 3 new credit cards for
$10,000 each within the last 4 days, it will damage your
sc ore a lot .
There is no rule for how muc h you c an inc rease your limit to
get your credit to improve instead of get worse. It is just
c ommon sense. Think ab out it this way: if you were a lender
and you were looking at someones credit report, and this
person ha d a limit o f $10,000 until last w eek, and now she isopening more and more credit cards, taking more debt,
you wouldn t see tha t as a good thing. You w ould think tha t
this person went crazy and you dont know how well she is
going to manage her new credit capacity. One thing is to
manage a $10,000 credit limit, and a very different thing is
to manage $40,000 a ll of a sudden.
When you were a teenager, your pa rents let you go to your
first party and asked you to be back by 9 PM. For the next
party, you probably begged them to let you stay until 9.15
PM, or maybe 9.30 PM, but you didnt ask them to stay until
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midnight. They were going to say no. You were smart about
it and tried to negotiate little things a t a time tha t you knew
you could get . A coup le of yea rs la ter, you were fina lly
allowed to stay until midnight, because you were patientand asked for small things tha t you knew you c ould get.
The same thing ha ppens with c red it sc ores. If your limit is
$10,000 today and $40,000 tomorrow, some red flags will
ra ise and your sc ore will signific antly drop .
Open new accounts slowly but constantly. Another
tec hnique tha t a lmost nob od y uses but it has p roven to bevery effec tive is to c a ll your c urrent c red it c a rd vend ors and
ask them to raise your limit. Ask them to raise it by 50%-100%
every 6 months. If you always paid on time and kept your
debt-to-credit ratio below 50%, they will almost always
agree to d o it. You a re a go od c ustomer to them and if they
c an make more money on you, why wouldn t they?
Make Sure to Have a Mix of Revolving Debt and Installment
Debt
So far, we have only ta lked about revo lving deb t, whic h is
unsec ure c red it, such as c red it c a rds and any other type of
c red it tha t is not sec ured aga inst an asset.
In order to ha ve a grea t c red it sc ore, you a lso need to ha ve
som e insta llment d eb t: a mortgage, a c ar loa n, or any other
kind of loan sec ured by an asset .
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A lot o f peop le finance their c ars even if they don t need to,
bec ause it is very benefic ia l for the ir c red it history.
Use Your Revo lving Debt
Having a bunch of c red it c a rds is not enough. You ha ve to
use them. Try to keep small ba lanc es (between 10% and
30%) a nd use your c ards as often a s you c an. Try to avo id
cash.
The key is using your cards lightly but regularly. If you justkeep them in your wallet, they wont do much for your
credit.
Avo id Hard Inquiries
There a re 2 d ifferent kind s of inquiries: soft a nd ha rd . Soft
inquiries a re reg ula r ac c ount review s and they don t a ffec t
your c red it sc ore, so you d on t need to w orry ab out them .
Hard inquiries take place when you apply for a firm offer of
c red it or insuranc e. They d o hurt your c red it sc ore and c an
stay on your credit report for up to 2 years, even though
FICO only takes into consideration the ones during the last
12 months to c a lc ula te your sc ore.
A ha rd inquiry could lower your sc ore up to 35 points, so only
allow them if you are serious about a credit or insurance
app lic a tion w ithin the next 2 months.
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Note that nobody can place a hard inquiry on your report
unless you autho rize them to . It does happen though. Some
c ompanies will do it desp ite o f the law. If it happens to you,
contact the creditor or collector and ask them for theirpermissible purpose. We have included a template letter
tha t you can use for this c ase. If they don t have a
permissible purpose, you can ask for and collect damages
for up to $1,000 ($2,500 in California). Mortgage broker
inquiries are not rare, even when they did not process your
app lic a tion. They have to ma il you an approva l/ denia l
letter and state that you did not put the application onhold . If not, they ha d no permissib le p urpose.
Show a Stable Lifestyle
Even though this might not directly affect your credit,
showing stability can greatly improve your chances ofgetting new credit card offers, which can ultimately
improve your credit score, as we mentioned earlier in this
chapter.
Cred it c a rd c om panies a re m ore likely to o ffer you a c a rd if
you d idn t rec ently get d ivorc ed , if you have kept the same
address for a c oup le of years, if your ma iling address is not a
P.O. box, if you ha ve a land line listed as your p rimary phone
number instead of a cell phone, and if you are not self-
employed.
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Actually, being self-employed can be very detrimental to
your c red it. But there is som ething you c an do a bout it: you
can create a business entity (corporation or LLC), and you
will basic a lly be a n em ployee of this c om pany. You need toown no more than 55% of this new business, or you will be
considered self-employed anyway. Find someone you trust
to ow n the rest of this c om pany.
If you see your self-employed sta tus on your c red it reports as
a negative item , you c an a lways ma il a c oup le o f W2s and
paystubs to the credit bureaus along with a letter stating
that you a re a n emp loyee and you are subm itting p roo f of
tha t. Ta lk to your ac c ountant to g et he lp set ting this up .
A StepByStep Plan to Start Creating Healthy Financial
Records
Som e young peop le, immigrants, and rec ently widow ed or
divorced women might have a very thin credit history or
even no c red it history a t a ll.
Som e o f these p eop le think tha t c red it rep orts only c onta in
negative hits, and that they are actually better off not
having a c red it history a t a ll. This is a b ig misc onc ep tion.
Lets say you fall behind on your cell phone payments, but
after a couple of months you bring the balance current.
Lenders now know how you are likely to act if you are ever
la te a ga in on your pa yments. They know you made a
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mistake in the past b ut you a lso d id something to fix it. But if
you dont have a credit history, they have no idea about
how you are g oing to ac t if you fa ll behind sc hed ule.
If you a re a married wom an who has only joint ac c ount w ith
your husband, it is very important that you start creating
accounts of your own. Here is why: if your husband has
financial difficulties and his credit is affected by that, yours
will be too. If you have credit of your own, you and your
husband c an rely on your c red it until he c an fix his.
There is another rea son why you w ant to build a c red ithistory of your own. If you get divorced, all your joint
accounts will be gone, and you will have absolutely no
credit history. Believe me: that is a situation you dont want
to put yourself in.
If your cred it is a lmost nonexistent , you c an p iggybac k your
husband credit (more on this technique later) by having joint accounts with him. But once you have built a credit
history of your own, you need to open accounts in your
name and c lose the joint ac c ounts. I know I rec om mend ed
earlier keeping accounts open, but in this case you have
more to lose tha n you have to win.
If you have an inexistent o r very thin c red it history, you need
to get started with secured credit cards and catalog cards.
With a secured credit card, you make a deposit with a
lender and your credit limit is usually equal to the deposit.
You can find these cards on www.bankrate.com or
searching on Google for secured credit cards. Please
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make sure that they report to the bureaus. If they dont,
there is no point in do ing it. Sinc e the ma in rea son why
people get this kind of cards is to start building a credit
history, most of the secured cards published out there willreport to the 3 bureaus, but it wouldnt hurt to double-
check. Most of these cards will convert to regular,
unsecured credit cards after 12 to 18 months of on-time
payments.
You can also get catalog cards, also known as store cards.
You c an get one of these a t Sea rs, GAP, Hom e Depot, and
so many other chain stores. Again, make sure that these
cards will report to the credit bureaus, or they wont help
you at all. And I cant emphasize enough that you need to
ac tua lly use the c a rds, and pay a lways on time. If you don t
use them , they won t build a c red it history for you.
A couple of months after you get catalog and secured
c ards (and if you a lways pa id on time), you w ill sta rt gett ing
in your ma il offers for more reputa b le unsec ured c ards, suc h
as Visa and MasterCard . Sta rt filling out a pp lic a tions for
these. This is when your cred it histo ry w ill sta rt b uild ing a t a
much higher pace. Get these cards one at a time.
Remember that increasing your high credit limit all of a
sudden doesnt do you any good. Apply for one, get
approved, and pay on time. A couple of months later,
apply for another one, get approved, pay on time, and so
on.
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Ma ke sure you don t app ly for those c red it c ards offers tha t
sound too good to be true. If you get rejected, that will
count as a hard inquiry on your credit report. If you are
getting started with building your credit and you get anoffer for a 0% interest card for the first 10 years and a limit of
$50,000, well, it doesn t look like it is for rea l. Look for p re-
approved offers only. Be aware that a lot of companies
use that term as a marketing tool, so make sure you read
the small p rint befo re a pp lying .
There is a small tric k tha t a friend of mine d isc overed a lmost
by ac c ident and shared with me. She c a lled her c red it ca rd
company to cancel her card, and the telemarketer talked
her into staying with them by waiving the annual fee for her
c a rd and dec rea sing her interest ra te c onsiderab ly. The
terms were g rea t, so she sta yed with this c ompany. She then
decided to cancel her other card, since she thought she
had too many, and something similar happened: theyoffered to waive her annual fee and to decrease the
interest rate . She then rea lized tha t she c ould get g rea t
deals by using this technique and all the credit cards
companies except for one offered her much better terms.
So the re you go, try that if you don t want to w aste your
money paying unnec essary fees and high interest ra tes.
And if you are getting started and you already have a
couple of secured and catalog cards, remember to add
some insta llment c red it to your mix. You might no t qua lify for
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a mortgage yet (maybe you dont even want to buy a
home), but you a re p rob ab ly rea dy to app ly for a c a r loa n.
If you have had some secured and catalog cards for a
while (tha t you ha ve b een using) and you still d idn t rec eive
any unsecured credit card offer in your mail, you might
want to c ontac t Innovis Data Solutions. This c om pany keep s
c onsumer financ ia l rec ords, and they can filter you out from
their databases causing you not to receive credit card
offers- if they dont think you will be a good prospect for
c red it c a rd c om panies. They might have som e negative
items on your credit history that dont show on the reports
tha t the c red it burea us keep of you.
To c onta c t Innovis, visit the ir website :
http :/ / www.innovis.c om / pers_p lac eDispute.html
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remove the item from your credit score right away. Keep
your rec ords.
Why it is Not Ab out Just Rem oving the Negative Items
Remember we mentioned that poo r c red it is bette r than no
credit? Adding positive items to your report is as important
as removing the neg ative ones.
Somet imes, there a re neutra l items tha t you will want to
leave on your report. For example, if you had some latepayments on your electrical bill, but then you brought it
current; even if you find a mistake on the item, it may be
convenient to leave it, or maybe request a correction of
that item instead of deletion. Remember, it is not about
deleting a s muc h as you c an.
Lea rn the Number One Rule
You might have a number of negative items on your credit
rep ort that m ight b e leg itima te a nd you d on t think you can
d ispute. Well, let me tell you a b ig sec ret . I want you to pay
extra attention because this is what all the credit repair
a ttorneys know but they never revea l: it is not about what islegitimate, but what creditors and the bureaus CAN PROVE
is legitimate.
You will find some negative items on your report. And you
are g uilty until you prove you a re innoc ent. But if you d ispute
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the item, then the creditor or the bureau need to PROVE
you a re guilty. Do you see how it works? If they c an t p rove
something, even if the item is legitimate, they need to
remove it.
Choose Which Items You Will Dispute
Let s say you have a c ollec tion a c c ount tha t was pa id in full
2 yea rs ago. It shows on your reports. In this c ase, you should
probably not do anything about it, because even though
there was a delinquency once on that account, you have
proven to be responsib le enough to pay it o ff.
There is no rule to help you dec ide w hic h ac c ounts you
should try to dispute and which ones you should not. Just
use your common sense. It always helps to put in the shoes
of a lend er: If I were a lend er eva lua ting offering a loa n to
this person, would I consider this account a positive ornega tive one?
In addition, if there is a mistake that actually benefits you,
suc h as a delinquenc y tha t show s it sta rted 5 yea rs ago and
it was in fact only 2 years ago, dont do anything.
Remember that after 7 years that item will disappear from
your report, so if they say its 5 years old instead of 2, itsbetter for you a nd you shouldn t ask for c orrec tion.
Perform Factual Disputes
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Never d ispute ea c h sing le neg a tive item on your rep ort just
bec ause you don t want to see it there . There ha s to b e a
reason for you to dispute an item, or otherwise it will get
verified and the bureaus will classify you dispute asfrivolous and reject any further disputes for up to 12
months.
For that reason factual disputes are the way to go. If your
disputes are factual and the bureau does not make the
necessary corrections or deletions, they have violated the
FCRA and you now have some leverage. Without any
violations, all you can do is file worthless complaints to
reg ula tors (who w on t even bother to help you anyway).
Believe it or not, most of the items on your credit report will
either be incom p lete o r c onta in errors. And even if they a re
leg itima te, DON T EVER ALLOW A NEGATIVE ITEM THAT IS
INCOMPLETE OR CONTAIN ERRORS to stay on your c red it
rep ort. It is impera tive tha t you understand this. If you see a
late payment from last year on your report and you know
you did pay late, but the item doesnt show the payment
da te, dispute it! How c an you know you were late if they are
not giving you the payment date? Let me repeat what I
said before: even if you know you were late on that
payment, the entry has a mistake, so its your job to dispute
it. Often times, creditors and the bureaus make mistakes,
and that is exactly what you want, because if an item is
inc om plete or conta in errors, it shouldn t be there.
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The previous paragraph is p rob ab ly one of the most
important ones in this book. I encourage you to read it
again.
When you submit factual disputes, you need to include a
letter explaining why you are disputing a certain item and
attach evidence supporting your statement. For example, if
it was a creditors mistake, have the creditor write a letter
sta ting tha t it was the ir mista ke.
If they don t remove an item right away after you submitted
a fac tua l d ispute, keep mailing them every month until theycomply.
Learning the Different Kinds of Requests
When you dispute an item, there are 2 things you can
request: correction or deletion. If you think an item should
be removed, ask for deletion. If you want it corrected, ask
for c orrec tion. Let them know what you want them to d o. If
you just point out a mistake but dont specify what action
do you w ant them to take, they will not d o a nything.
There is a third kind of request: va lida tion. Never ask for
validation. What is the point of asking for validation
anyway? I request validation for item number #####.
And they will answer Item validated. We confirm it is
correct. It just doesnt make sense. You dont have
anything to ga in.
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Dispute the Most Harmful Items First
There a re 2 c riteria you w ill need to use to esta b lish whic hitems you will d ispute first: age and severity o f the item. The
older an item is, the less weight it has on your sc ore. So, if
you have 2 la te p ayments (one from last yea r and the o ther
one from 5 yea rs ago), go a fter the new er one first.
Seve rity of the item is a very important c onc ep t. If you ha ve
c ollec tion items on your reports, dispute those ones first. You
will a lways have time la ter to c hase the sma ll stuff.
A very important thing that you need to know is that
collection accounts are allowed to be re-aged. Do you
rem em ber we ment ioned tha t a fter 7 yea rs a ll the items are
erased from your credit report? Well, collections have an
assigned date, and collection companies often sell or
transfer your deb t to other c ollec tion c om panies. And everytime your account is assigned to a new debt collector, it
resets its date on your credit report, and can stay there
forever. Actually, debt collectors are very well aware of this
and will do it to inflict the most possible pain until you pay
your deb t.
So, d ispute the most ha rmful items first a nd leave the smallstuff for la te r.
Call the Creditor
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I am impressed by how often people dont even consider
this c hoic e, a lthough it is very powerful.
It consists in calling the creditor (the company you owe
money to) and negotiating a deal where you pay them
whatever you can afford, and they report to the credit
burea us that the a c c ount is pa id as agreed .
Most c red itors might no t even think that you will ever pay, so
if you call them and offer to set up a payment plan with
them, they are likely to be very receptive. After all, you are
g iving them money, so w hy in the world wouldn t they takeit?
Som etimes, even if you have p a id off the d eb t entirely, you
c an offer them som e kind of incentive so they remove your
negative item from your credit report forever. Again, you
are offering them something, and they dont really benefit
from damaging your c red it, so they m ight a s well take yourmoney and help you clean your credit. I noticed that
especially small companies are always willing to work
something out w ith you if there is something in it for them.
It is important that you know all these techniques because
you might use them at some point, but what you need tounderstand is that not everybody will need to use all of
these strateg ies. I am just g iving you the tools. Use only those
tools tha t you rea lly need .
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Step2:BuildingaPositiveCreditHistory
Ask Some Companies to Report the Good Stuff TooAs we mentioned earlier, your credit report doesnt only
c onta in nega tive items. It c an inc lude a c c ounts that show a
status as pa id as agreed and never la te .
Well, you can use this to your advantage. Call some
companies you do business with (only if you always paid
them on time) and ask them to report a good paymenthisto ry to the bureaus.
The truth is tha t most b ig c om panies won t even take the
time to do it, but some smaller companies appreciate your
business so much that they will be glad to do you a favor.
Dont threaten anybody with taking your business
somewhere else, just ask nice and you will be surprised by
the response you g et .
Deposit Loans
Deposit loans are a great option to build credit fast. You
see , there is one kind of mortga ge c a lled SIVA, whic h stands
for Sta ted Inc ome Verified Assets. So you d on t need to
submit p roo f of your inc om e b ut you do need to show p roo f
of your assets. The way a deposit loa n w orks is this: a lend er
will put some amount of money in a bank account in your
name. It can be anywhere from $25,000 to $10,000,000. You
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c an t w ithdraw any of that money; it is just there to p rove
tha t you have assets. This is perfec tly lega l. And you pay 1%
of tha t a mount every month. Som e lend ers will req uire tha t
you have the money sea soned in the bank ac c ount for a tleast 3 months. Having $25,000 in the account for 3 months
will cost you $750, so it isnt very cheap, but you will have
ac c ess to a mo rtga ge tha t you otherwise w ouldnt.
And the other great aspect is that the payments for the
deposit loans are reported to the credit bureaus as a
current installment loan, which can skyrocket your credit
sc ore in just a few months.
Piggyback: Borrowing Som ebody Elses Cred it
This is a rea lly grea t strategy if you ha ve a very thin or
nonexistent credit history and want to improve it
d ramatic a lly in a lmost no time.
Nearly every credit card or credit account will permit the
primary account holder to add on (at a later date) an
autho rized user or sec ondary ac c ount ho lder. In most cases,
when this is done, the entire account history (retroactively)
gets posted to the authorized users credit report regardless
of their c urrent age o r c red it history.
This strategy has been used mostly by parents with the ir
c hild ren, but it can b e used by anyone. The key he re is to
find someone who trusts you and is willing to do this for you.
It is not a lways ea sy, but you c an ask them to add you a s an
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authorized user to their account and to have the card
mailed to their address. You dont need it; you just need to
benefit from the ir c red it histo ry.
Creating an Alternate Credit Profile
Before you start reading this, let me warn you that there are
ma ny illega l wa ys to d o this and we don t rec ommend a ny
of them. Always stick to the law and you will get the best
results.
There is a leg a l way to c rea te a n a lterna te c red it p rofile a nd
it is so basic that often times it is overlooked by people with
bad c red it. It basic a lly can be p erformed by c rea ting a new
leg a l entity: a c orpo ra tion o r LLC.
At first, the new entitys c red it w ill be linked to your persona l
credit, but using all the techniques explained on this book,
you can build a strong credit history for the new company
and it will eventually have credit of its own, and will not be
linked to your pe rsona l c red it rec ords anymore.
Step3:DisputingtheNegativeItems
Incorrec t Leg itima te Items
Som e items on your c red it rep ort c an be leg itima te (when
the fact did happen), but the item is mistaken or has an
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inc omplete fie ld . You are g oing to use these m istakes in your
favor to c lea n your c red it rep ort. For example, if you pa id a
bill late and the creditor reported it but they forgot to
mention the date of the late payment, you can dispute it.The ir mista kes are your ga in.
It goes without saying tha t if an item is not leg itimate, by a ll
mea ns you w ill want to d ispute it. For example, if they report
a la te p ayment and you pa id on time, it will be easy for you
to get that item removed assuming that you have proof of
your on-time p ayment. Tha t is why I rec om mend ed you to
keep rec ords for the last 7 yea rs.
The Proc ess
You want to d ispute your items by ma il. It is the ea siest w ay.
The envelop e w ill c onta in the d ispute lette r, p roof o f wha t
you are disputing (this is critical for success), and 2 forms ofID (d river s lic ense and Soc ia l Sec urity c a rd , or any other
kind of ID).
Now, a warning about the letter: you dont want to sound
like a lawyer. Dont try to threaten them. Dont waste your
time exp la ining the law to them; it is a bunc h of lawyers tha t
you will be d ea ling with. They know exac tly how this works.Dont dispute items if you dont have a reason for it (i.e.
illeg itima te, erroneous, or inc omplete items). If you a sk them
to remove a n item from your rep ort just bec ause you don t
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wa nt to have it there, they will laugh a t you and they wont
remove a nything.
OK, I just told you what not to do. Now let me explain
exac tly how to do it right. Send them a short, c onc ise, and
simple letter. It should have your contact information, the
bureaus contact information, the date, the account or
item number you are disputing, why you are disputing it,
your nam e, Soc ia l Sec urity Numb er, day of b irth, and your
previous address (if that is the address that shows on the
report).
I have included dozens of sample letters with this kit. Use
them. Tweak them a little b it. The sec ret is tha t you don t
want them to look as templa te lette rs. But you c an definitely
use them as a guide to write your own letters, or fill in the
b lanks and then c hange the format a little b it. Tha t is a ll you
need.
Once you start reading the sample letters, you will realize
how ea sy and simp le they are. And you w ill notic e tha t they
c ut right to the c hase. They are short, conc ise, and
powerful. Basically, you need to tell them what are you
disputing, what is the reason for disputing it, and what
ac tion do you expec t them to take (correc tion or deletion).
And, of course, you want to include your personalinforma tion so they know who is writing the let ter. There you
go, that is the secret formula. Actually, the secret resides in
submitting proof. Nothing can beat hard evidence. For
illeg itimate items, if they rep orted that a n ac c ount w as not
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pa id and you have the rec eip t that shows that you d id pay,
send the evidenc e o r forget a bout see ing the item gone. If
they didnt require proof, everybody would be disputing
everything. It would be a big chaos. For legitimate items,look for mista kes or inc omplete fields and just te ll them item
# # # # # doesn t show c red itor s nam e (or wha tever mistake
the item has). I req uest immed ia te rem ova l .
Dispute 1 Mistake at a Time
Lets say an item has 2 mistakes: the account number is
missing and it s a c ollec tion item w ith a c red it limit (c lea rly, a
c ollec tion ac c ount can never have a c red it limit).
Instead of sending a removal request mentioning both
mistakes, mention just one, and see what happens. If they
remove the item, then you are d one.
But if they didnt remove it (lets say they now included the
account number), there is still 1 mistake and you can
req uest a remova l aga in.
If you mention both mistakes on your first letter, they might
correct both and now you have no reason to dispute it
anymore.
Keep in mind that you a re d ea ling w ith peop le, and peop le
make mistakes. Your creditor could have received the fax
from the bureau asking them to update your account
number, and someone at your creditors office could have
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put that fax among a bunch o f other papers and it go t lost.
It ha ppens a ll the time. The bureau has by law 30 days to
update the item or they have to remove it. Probably your
creditors employees where oversaturated with work anddidnt have the time to find your account number, write a
letter for the bureaus and fax it. Great! Now the bureaus
have to delete the item or they will be violating the Fair
Cred it Rep orting Ac t.
Tha t is exac tly why you w ant to d ispute 1 mistake a t a time.
The m ore d isputes you submit, the more c hanc es the
bureaus and your creditors have to mess up. And by now,
you know how it works: if they mess up , you benefit.
If you need to dispute different items, you can do it with 1
letter, as long as you d on t d ispute m ore than 1 mistake p er
item.
Mailing the Dispute
Mail your disputes through USPS (United States Postal
Services). Use the ir Priority Ma il service. And pay a ttention to
this: don t request a signa ture. The bureaus a re overloaded
with work and if they c an avoid get ting your let ter, they w ill.
Don t g ive them rea sons to rejec t it.
If you a re going to send ma il to your cred itors, I rec ommend
tha t you use First Class servic e.
Never eve r send orig ina l doc uments, a lways send c op ies.
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Merged Acc ounts
You first need to identify if your credit file has been mergedwith someone else s. The way to d o it is by ca lling the c red it
bureau and asking them if there are any other sources of
informa tion linked to your ac c ount. It c ould b e a spouse, ex-
spouse, relative or a complete stranger. If so, request the
files be sep ara ted . Their system c onta ins a fie ld c a lled
Ad d itiona l Sourc es of Information. Tha t field should be
blank. Once those additional sources of information areremoved, everything linked to that source should drop off
your report. If the credit bureau is not helpful, then have a
mortga ge lend er pull a tri-merge c red it rep ort. That w ill
usually list the additional source of information. You can
then d ispute it w ith the c red it burea us.
OK, let s sta rt listing the most c ommon m istakes you c an findon your credit report and how to dispute them. Remember
that you will find sample letters for all these situations, but
before filling in the tem pla te let ters you need to understand
what you are doing. In each case I mention what kind of
evidence you can submit to support your dispute, but you
also need to use your common sense and make sure you
are sending all the necessary documents to prove yourc ase. It he lps to ask yourself this: If I worked a t a c red it
bureau, what evidence would I need to verify what this
person is te lling me?
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Cred itors Name Missing
If your report shows a negative account but it doesnt say
who you owe money to, how in the world a re you supposed
to know if the item is right or not? If you report contains an
item tha t doesn t spec ify the c red itor s name, d ispute it.
I d ispute [name of a c c ount], ac c ount number [xxx]. This
listing does not show the c red itor s name. I dem and
Ac count Number Missing
Every creditor should assign you an account number.Without one, the item is inc om plete and you should d ispute
it.
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I d ispute [na me o f ac c ount], ac c ount number [xxx]. This
listing does not show the a c c ount number. I demand
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Blank Fields
No b lank fields a re a llow ed on your rep ort. If a c ertain fielddoesn t a pp ly, it should show N/A . If it s b lank, dispute the
item.
I d ispute [na me o f ac c ount], ac c ount number [xxx]. This
listing does not show ing the d a te o pened . I demand
Inconsistencies
You w ant to look a t ea c h derog a tory ac ross a ll the 3 c red itreports to find inconsistencies. If you find different dates,
balances, or any other inconsistencies on derogatory
accounts, consider contacting the original creditor for
documentation.
If the inconsistency was on the Experians report, for
example, submit a copy of your report from the other 2
credit bureaus showing the accurate information to prove
your d ispute.
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Lets say the first report is from Experian and the second onefrom TransUnion. You c an see the inc onsistenc y on the
Date Opened field. In this case, contact your creditor to
find out w hic h da te is ac c ura te, and req uest c orrec tion if it
will benefit you.
I d ispute [na me o f ac c ount], ac c ount numb er [xxx]. The
da te opened is 12/ 1993, not 12/ 1999, as shown in theevidence a ttac hed. I dema nd d eletion.
Incomplete Item
Som etimes, a deroga tory item doesn t show req uired
information, such as dates, balances, etc. In this case, youwa nt to d ispute the incomplete item.
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I d ispute [name of a c c ount], ac c ount number [xxx]. This
listing is inc omplete ; the High Ba lanc e is missing . I demand
Wrong DOLA (Day of Last Ac tivity)
The d ay of last ac tivity is a time stamp of when the ac c ount
was last permanently delinquent. We mentioned before
tha t items will sta y on your report fo r 7 yea rs. Some
companies play dirty and do what is called re-aging an
account. If you notice that they report a wrong DOLA, you
c an ge t the item deleted . These c ompanies re-ag e
accounts for 2 reasons: they want to hurt your credit asmuch as they can by keeping your delinquent account
foreve r on your rep ort, and the sec ond rea son is tha t new er
ac c ounts a re easier to resell to deb t c ollec to rs. Think ab out
it: if an ac c ount is 6 yea rs old, you know tha t if you d on t
pay for it, it will be gone from your report in 6 months
anyway. But if an account is just 1 year old, you have a
bigger motivation to pay, or otherwise that item will be on
your report for 6 yea rs.
Remember that the only ac c ounts that c an be re-aged a re
collections, since the date for these accounts resets every
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time your debt is transferred from one debt collection
c om pany to another. That is why collec tion delinquenc ies
a re the first thing you need to take c are o f.
Don t forget to submit p roo f of the ac tua l DOLA if you have
it.
Only Equifax revea ls the DOLA. For TransUnion a nd Experian,
the re is still a way you c an estima te them. On TransUnion
reports, take the Estimated date when this item will be
removed and count back 7 years. On Experian reports, if
you have an account listed as a Charge off as of Jun1997 , c ount b ac k 6 months.
If you have different DOLA for the same item from different
burea us (and the d ifferenc e is signific ant), c hanc es a re they
have re-aged the items. The oldest DOLA w ill be the c orrec t
one, since it is very common for creditors to re-age items,
but inverse re-ag ing a lmost never happens.Contact your creditor and ask them for a letter stating the
right DOLA a nd write a d ispute to the burea us send ing them
a c op y of the let ter your c red itor issued you.
I am d isputing the da te o f last ac tivity for ac c ount
number [xxx]. It ha s bee n re-ag ed . Plea se d elete this
Balanc e is Higher than High Balanc e
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The ba lanc e is what you c urrently owe. The high b a lanc e is
the most you ever owed. If we are talking about a credit
card, the high balance is the biggest balance that card
ever had .
Obviously, the current balance cant be higher than the
high ba lanc e. Dispute your item if you find this mista ke.
I am writing to d ispute a n ac c ount tha t s show ing a
ba lanc e tha t s higher tha n the high ba lanc e. Enc losed is a
c op y of the rep ort w ith the item c irc led . Plea se delete it
Incorrec t Credit Limit
If you have a $10,000 limit for one of your c a rds and the limit
shown on your report is different, send the bureaus a credit
card statement where it shows what your real limit is, along
with the proper letter, and ask for correction. Remember,
the b igger your high c red it limit is, the bette r your sc ore. So if
your report shows a limit of $20,000 instead of the actual
$10,000, don t do a nything; you w ill benefit from it.
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I d ispute [name o f ac c ount], ac c ount number [xxx]. This
listing shows a c red it limit o f $[xxx] a nd it should be $[xxx].
Enc losed is a c op y of my last c red it c a rd sta tement
show ing the c orrec t c red it limit. I dem and c orrec tion.
A Co llec tion Item Has a Credit Limit
This ha ppens very often and is a mista ke you will easily get
your item removed or c orrec ted over. A c ollec tion a c c ount
c an t ever have a c red it limit. It is not a c red it c ard . Dispute
it.
I d ispute [name of a c c ount], ac c ount number [xxx]. This
listing is showing a c red it limit o f $[xxx]. How c an a
c ollec tion item have a c red it limit? I dem and deletion.
Delinquenc ies After Closing Date
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An account cant show delinquent activity after its closing
date, or the day when it wa s c harged -off. If the da te when
the a c c ount was c losed or c harged off is not on your c red it
rep ort, you will have to w rite the c red ito r. Supportingevidence will make the difference between deletion and
correction. With or without evidence, factually dispute the
la te-pa ys a fter the c losed da te.
I d ispute [name of a c c ount], ac c ount number [xxx]. This
ac c ount was c losed on [da te], but is show ing delinquent
ac tivity after the c losed da te. Your p roc ed ures havea llow ed this since [d a te c losed or charged -off] a nd this
has been highly da mag ing to me. I want this ac c ount
Undated Late Paym ents
This is a very c ommon mistake. How c ould you know if a
payment was la te if it has no da te? Dispute it.
The fo llow ing listing is inc om plete: [name o f ac c ount] /
[ac c ount number]. I am d isputing this ac c ount due to the
fac t tha t it s listing an undated la te p ay. Plea se d elete it.
Incorrec t Ac c ount Types
If a charged-off account shows as open, it is clearly a
mistake. It should show Closed Account, Charged-Off,
or not show an ac c ount type a t a ll.
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I am w riting c onc erning the follow ing a c c ount: [ac c ount
name ] / ac c ount numb er [xxx]. I am d isputing the
ac c ount type . It s inac c ura te. A cha rged -off or c losed
ac c ount ca nnot be a n op en ac c ount . Plea se d elete it.
Date Verified Did Not Update
When you dispute an item and a bureau verifies it, the
Date Verified field should update. If it doesnt, it means
that they didnt really verify it, which is a violation and you
have to req uest immed ia te deletion.
On [da te] I d isputed [ac c ount name], [ac c ount numb er].
You verified the item as ac c ura te. The [whatever the DU is
nam ed for the b urea u in question] d id not c hang e. No
investiga tion wa s ac tua lly do ne. Delete the item.
On [da te] I d isputed [ac c ount name], [ac c ount numb er].
You verified the item as ac c ura te. The [whateve r the DU is
nam ed for the b urea u in question] d id not c hang e. No
investiga tion w as ac tua lly done . Delete the item.
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Ac count Inc luded in Bankruptc y Shows a Balanc e
If an account was included in a bankruptcy, its balance
should be zero or N/A . If not, d ispute it.
The b a lance for ac c ount number [xxx] is inac c ura te.
Please delete this item.
Ac count Inc luded in Bankruptcy Shows as Open
If there is a certain item that you included in your
bankrup tc y, it shouldn t show as op en a nymore.
The a c c ount type for ac c ount numb er [xxx] is inac c ura te.
An item inc luded in ba nkruptc y can t be open. Plea se
Item Not Yours
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Before disputing an item as not mine, first make sure that
you never had a business relationship with that company.
Even if the name of the company doesnt sound familiar,
call the phone number on the report and ask them toc hec k out w ho they a re. The rea son why, is tha t som e
companies have a commercial name that is different from
their leg a l name. Their c om mercia l name c an be The Shoe
Planet , and the lega l entity behind is Oklahom a Shoe
Distribution Inc . .
If you d id have a business relationship with tha t c om pany in
the p ast but you a re positive that you ha ve no o utstanding
deb t w ith them, c a ll them. They might have m essed up and
they now have to contact the bureaus and get the item
rem oved . Even if they p romise to do tha t, ask them to send
you a letter stating that it was a mistake and mail it to the
bureaus along with another letter explaining what
happened and req uesting deletion. If you do it yourself, youhave the pea c e of mind that has been done.
I am w riting c onc erning the follow ing a c c ount: [ac c ount
name] / ac c ount number [xxx]. I am d isputing item. It is not
mine. Enc losed is a let ter of the c red itor admitting the
Ac count Sold or Transferred With an Outstanding Balanc e
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If there is an account that was transferred from the
company XXX to the company YYY, then your outstanding
balance with XXX should be zero or N/A, that is if it shows
on your report at all. If you owe the first company $5,000,they transfer your debt to the second company, and it
shows that you owe $5,000 to each, request immediate
removal.
I d ispute [na me o f ac c ount], ac c ount number [xxx]. The
ba lanc e is inc orrec t. Plea se delete.
You might have noticed that I always use very
stra ightforward word ing . Tha t is the way to go. Short, simp le,
and c onc ise. Tell them what is wrong and what you want
them to do about it. Tha t s it. Also, don t try to explain the
whole situation. Write as little as possible. In the last case,
you could see how I just told them that the balance wasincorrect. I didnt explain that it could be because my
ac c ount was sold or transferred . You just let them know tha t
a certain item is not correct. Its their job to find out why. If
they do nt, they are b rea king the law.
Step4:
Following
Up
After you submit your dispute, the credit bureaus have 30
days to investigate it and take action (verification, deletion,
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or correction). It is the law. If they dont comply with this,
they will be violating the FCRA and now you have some
leverage. Send them a lette r letting them know that they
have violated the Fair Credit Reporting Act and requestimm ed ia te remova l.
It is important tha t you know the rules bec ause you w ill need
good information to fight these g uys.
If the item gets verified within 30 days, you can ask them
wha t verific a tion method d id they use and where d id they
get the information from .
On [d a te] you verified a public rec ord I had d isputed . It
wa s a [type o f pub lic rec ord ] rep orted / filed on [d a te]. I
am now req uesting the m ethod of verific a tion, inc lud ing
the name and address of the furnisher of informa tion.
Never threa ten the burea us. Do you know how many lette rs
a day they get from peop le saying that they w ill sue them?
Don t go there; it s a waste o f time.
Som ething e lse you don t want to do is writing the Atto rney
Genera l or the Federa l Trade Ad ministrat ion. You w ill just
wa ste your time and postage money. If you don t have the
time or just don t want to dea l with this yourself, you c an usea c red it rep a ir c ompany. I listed a c oup le of them in Part 5
of this book.
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Two more p iec es of advic e b efore w e g o to the next
chapter: the first one is to get always every statement in
writing. If a creditor tells you that your debt has been paid
off, you inform that to the bureaus, the bureaus contactyour creditor, and your creditor denies it, you have nothing
to prove that your creditor said what they said. Always,
a lways get eve rything in w riting .
The sec ond advic e is to a lways c ontac t c red itors if you
d idn t find any mistake with a ny g iven item. The c red itors,
especially if they are a small company, might have
reported your case to the bureaus and then got rid of the
documents and have no records of your debt. If this is the
case, contact the bureaus and ask for deletion, since its
against the law reporting an item without proof of the
delinquency.
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PART 5 ALL YOU NEED TO KNOW TO
BOOSTYOURFINANCIALIQBY1000%
All the Secrets to Negotiate With Creditors and Save
ThousandsofDollars
It is a good idea to c a ll your c red itors before you send them
mail. The truth is tha t they will welcome you if you w ant towork out some sort of pa yment sc hed ule. Chanc es are they
c onsidered your deb t a s a loss and thought they were never
go ing to see a penny from you ag a in.
You have a lot of leverage in these negotiations, since you
won t pay unless they ac c ep t your c ond itions. There is a rule
of thumb tha t works very well: offer to pay them 20 c ents on
the dolla r. If you owe them $100, offer them $20. They will
ask for more, but you can usually get them to report your
account as paid in full as agreed for 25% to 35% of the
orig ina l deb t amount. Also, set up a payment p lan of $200 a
month fo r every $10,000 you o we them. This approac h works
like a c harm.
Stay away from debt c onsolida tions c ompanies. They all saytha t they have spec ia l rela tionships in the c ollec tion industry
and c an ge t you ama zing d isc ounts on your deb t amount.
This is not true. All they ha ve is a c ompute r system with the
same sample letters I give you with this book. Debt
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c onsolida tions c om panies will neg ot ia te the interest on your
deb t, but not how the p rinc ip le, and tha t is the ma in rea son
why you dont w ant to work with them.
HOW TO PROTECT YOURSELF FROM ID THEFT (OR
FIGHTIT,IFITSTOOLATE)
The first a dvice I will g ive you is tha t it is better to be sa fe
tha n sorry. Be very c areful with who you g ive your SSN to,
and keep it a s sec ret as possib le.
If you use online banking and your name is John Smith,
dont pick up passwords like johnsmith, jsmith,
smithjohn , etc . Try to use a c om bina tion o f random lette rs
and numb er so nobod y can guess it.
When you receive those emails asking you to log in to your
PayPa l ac c ount (o r even worse, your bank ac c ount), ignorethem. They a re a lways sc ams.
If its already too late and your ID has been stolen, follow
these steps:
1. Plac e a fraud a lert on your c red it rep orts and review
your credit reports. Contact any one of the nationwide
consumer reporting companies to place a fraud alert onyour credit report. Fraud alerts can help prevent an identity
thief from op ening a ny mo re a c c ounts in your name. The
company you call is required to contact the other two,
whic h will p lac e a n a lert on the ir versions of your report, too .
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Equifa x: 1-800-525-6285; www.equifax.com
Experian: 1-888-EXPERIAN (397-3742); www.experian.com
TransUnion: 1-800-680-7289; www.transunion.com
In addition to placing the fraud alert on your file, the three
consumer reporting companies will send you free copies of
your c red it reports, and , if you a sk, they will disp lay only the
last four digits of your Soc ia l Sec urity num ber on them.
2. Close the ac c ounts tha t you know, or believe , have
been ta mp ered with or op ened fraudulently.
Contact the security or fraud department of each
c om pany where you know, or believe, ac c ounts have been
tampered with or opened fraudulently. Follow up in writing,
and include copies (not originals) of supporting documents.
It's important to notify credit card companies and banks in
writing. Send your lette rs by c ertified ma il, return rec eipt
requested, so you can document what the company
received and when. Keep a file of your correspondence
and enc losures.
When you open new accounts, use new Personal
Identification Numbers (PINs) and passwords. Avoid using
easily available information like your mother's maiden
name, your b irth d a te, the last four d ig its of your Soc ia l
Sec urity number, your phone number, or a series of
c onsec utive numbers.
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3. File a rep ort with your loc a l polic e or the po lic e in the
c ommunity where the identity theft took plac e.
Get a copy of the police report or, at the very least, the
number of the report. It can help you deal with creditors
who need proof of the crime. If the police are reluctant to
take your report, ask to file a "Miscellaneous Incidents"
report, or try another jurisdiction, like your state police. You
also can check with your state Attorney General's office to
find out if state law requires the police to take reports for
identity theft. Check the Blue Pages of your telephone
d irec tory for the p hone numb er or c hec k naag.org for a list
of sta te Atto rneys Genera l.
4. File a compla int with the Federal Trade Commission.
By sha ring your identity theft c omp la int w ith the FTC, you will
provide important information that can help law
enforcement officials across the nation track down identitythieves and stop them. The FTC a lso c an refer your
complaint to other government agencies and companies
for further action, as well as investigate companies for
violations of laws tha t the FTC enforc es.
You can file a complaint online at www.ftc.gov/idtheft. If
you don't ha ve Inte rnet a c c ess, ca ll the FTC's Identity Theft
Hotline, toll-free: 1-877-IDTHEFT (438-4338); TTY: 1-866-653-
4261; or write: Identity Theft Clea ringhouse, Federa l Trade
Commission, 600 Pennsylvania Avenue, NW, Washington,
DC 20580.
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I highly rec om mend you to c om p lete and file an ID Theft
Affidavit. You c an find it here:
http://www.ftc.gov/bcp/conline/pubs/credit/affidavit.pdf
HowtoGetRidOfAnnoyingCollectionAgencies
There is som ething tha t mo st peop le d on t know about
c ollec tion a genc ies and I am about to revea l it.
You ha ve no ob liga tion to dea l with them. So, when they
call you requesting payment, you can politely say thank
you, but I do n t want your business . It is tha t simp le. They
are a company, you are a customer. Nobody can force
you to do business with them. They c an invite you, but you
have no ob liga tion to a c c ep t their invita tion.
Let s say your c ell phone service p rovided by T-Mob ile. This
company has the right to collect money from you. If you
dont pa y, they c an c all you and dema nd p ayment. But if
Debt Collectors Inc. calls you to get money from you on
beha lf of T-Mob ile, you have the right to say I don t know
you, I don t want to do business with you, I ow e money to T-
Mob ile, not to you. Don t c a ll me a nymore.There is one excep tion to this rule, and tha t is when you
signed a c ontrac t sta ting tha t in case of de linquenc y, Debt
Collectors Inc. has the right to collect the payments on
beha lf of the c om pany you a re doing business with.
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If you a c c ep t the business of the c ollec tion c om pany, ma ke
sure they dont bully you. If they use aggressive techniques
to g et you to pay, you c an sue them. Some o f the non-
accepted practices could be: threatening to hand yourcase over to their legal department when they dont have
one , send ing m a il p retend ing to be a ttorneys, c a lling b efore
8 AM or a fter 9 PM, c a lling severa l times, etc .
If they do tha t let them know that they are b rea king the law
and sue them if nec essary.
How to Achieve a 700CreditScoreWithin 36Months of
FilingforBankruptcy
When you file for bankruptcy it will show on your credit
report for up to 10 years and will also become a matter ofpub lic rec ord . But it is not the end of the world . Fa r from it.
You can file for either Chapter 7 or Chapter 13. If your
income is above the median for your state and you can
make payments of at least $100 a month, you will have to
file fo r Chapter 13, sinc e you won t qua lify for Chapter 7. But
most attorneys will still recommend filing for Chapter 7 first. I
am not q ua lified to g ive leg a l advic e, so b y all mea ns go to
see an a ttorney before filing for bankrup tc y.
The g ood news is tha t you c an sta rt c rea ting a good c red it
profile even before applying for bankruptcy. Create new
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ac c ounts, pay them on time and d on t inc lude them in the
bankruptcy. You will notice that after filing, you will have a
c oup le o f ac c ounts with imp ec c ab le p ayment history.
In add ition, after bankruptc y you a re d eb t-free . That mea ns
that a lot of lenders and credit cards companies that
specialize in high-risk markets will approach you with credit
card offers, which is exactly what you need to start re-
building your credit history. However, be prepared to pay
high interest ra tes, so keep the ba lanc es of your new c red it
c a rds very low .
Follow the a dvic e in this book to sta rt c rea ting a good c red it
histo ry from sc ra tc h. If you do this, don t be surprised if within
3 years of filing for bankruptcy you have a credit score of
700 or higher. I ve seen it happen a ga in and aga in.
Howto
Get
aChecking
Account
If
You
Are
In
ChexSystems
ChexSystems is a c hec k verific a tion servic e and c onsumer
credit reporting agency like Experian, Equifax and
TransUnion. While most c red it reporting a genc ies b roker
data about how a consumer handles credit relationships,
ChexSystems provides da ta related to how a c onsumer hashand led dep osit ac c ounts a t banking institutions.
ChexSystems works und er the FCRA rules, just like the c red it
bureaus. And the process to dispute items on your report is
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pretty much the same. First, you need to request your
report. You can get 1 for free ever 12 months. Request it by
phone by c a lling 800-428-9623, by fax: 602-659-2197, or ma il:
ChexSystems Inc., 7805 Hudson Road, Suite 100, Woodbury,MN 55125.
Once you have the report, dispute the negative items
factually, just like you would do with Experian, Equifax, or
TransUnion. The most c ommon items on a ChexSystems
rep ort a re NSF (non-suffic ient fund s) and non-pa id overd ra ft
fees. With ChexSystems your negative items will stay 5 years
on your rep ort instead of 7, so tha t s goo d new s.
For a free list o f banks tha t don t c hec k the ChexSystems
database a nd w ill op en an ac c ount for you even if you a re
in ChexSystems, visit this website:
http://www.chexsystemsvictims.com/AboutmyList.html
You c an a lso c hec k http://www.passchecking.com
CreditRepairAgencies(ForBusyPeople)
In case you d on t have the time to rep a ir your ow n c red it or
just d on t want to, there a re som e rea lly good c red it rep a iragenc ies out there:
Onyx Leg a l Cred it Rep a irhttp://www.onyxcreditrepair.com/
888-322-3643
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Buena Vista Cred ithttp://www.buenavistacredit.com/
888-235-8056
Veracityhttp://www.veracitycredit.com/
866-383-1801
Lexing ton Lawhttp://www.lexingtonlaw.com/
800-458-5202
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PART6 BONUSES
You will find in this kit some bonuses I added as a way to saythank you for rea d ing this book.
Sample Letters
I have included over 30 sample letters to send to the
bureaus, creditors, and collection agencies. Just fill in the
b lanks, persona lize them a little b it a nd ma il them . It is rea lly
simple.
Som e of the templa te letters you w ill find in the CD inc luded
in this kit a re:
o Sample Templa te Lette r to Cred it Burea uso Sample Templa te Lette r to Cred itorso Free Cred it Report Requesto Cred it Report Purchaseo ID The ft Alerto ID Theft A lert Remova lo ID Theft Alert Extensiono Inc om p lete Rep ort of Item Disputeo Inc orrec t Cred it Limit Disputeo Inc orrec t Ba lanc es Dispute
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o Delinquency or Past-Due Amounts After AccountClosed or Charged -Off Dispute
o Und ated La te Pays Disputeo Inc orrec t Ac c ount Type Disputeo Wrong or Re-Aged Date of Last Ac tivity Disputeo Date Updated / Date Verified Disc rep ancy Disputeo Item Not Inc luded in Bankrup tc y Disputeo Incorrect Balance of an Item Included inBankruptcy Disputeo Re-Aged Date of Last Activity for an Item in
Bankruptcy Dispute
o Day of Last Ac tivity Follow Up to Verific a tiono Burden o f Proof on The Cred it Bureauo Req uest for Me thod of Verific a tiono Follow Up for Method of Verific a tiono No Response to Request for Method of Verific a tiono Judgment and Tax Lienso Co llec tion Agenc y Cred it Burea u Disputeo Investiga tion Results Disputeo Inac c ura te La te Payo I don t want your business to Debt Collec tors
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o Samp le Va lida tion Example if Cred ito r Has NoDocumentation
o Sta tute of Limita tions Expiredo ID Theft to Cred ito rso Req uest o f Doc umentation from Cred itoro Unautho rized Inquiry by Cred itoro Unauthorized Inquiry by Deb t Collec toro Unauthorized Inquiry by Deb t Collec tor After Idon t w ant your business Let tero Follow Up to Una uthorized Inq uiry Lettero ID Theft Letter to Cred it Bureaus Ab out Fraud ulent
Account
o ID Theft Lette r to Cred itors or Deb t Collec torsAbout Fraudulent Ac c ount
o ID Theft Affidavito Cease and Desist (Phone Ca lls Only)o Cease and Desist (Phone Calls and
Correspondence)
o Cease and Desist (A ll)
Interviews with Cred it Rep air Experts
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All the insider secrets from the most successful credit repair
a tto rneys in the industry. They have been fixing c red it
rep orts for yea rs, da y a fter day, and now they a re going to
reveal all the things you ever wanted to know about yourc red it sc ore.
Find the audio interviews in the CD included with this
program.
How to Ma ke $60,000 a Year Fixing Credit Reports Part-Time
Maybe you already thought about this while you were
reading the book. Four hours ago you were in the dark as
far as c red it sc ores c onc ern. You knew nothing about them.
Now you are almost an expert. You have the necessary
knowledge to help other pe