CREDIT REPAIR STRATEGIES

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Strategy, strategy, credit repair strategy!

Even after reading the previous chapter on how to repair your credit report, you may be unsure of how to proceed. This chapter will walk you through three different credit problems:

  1. Many past due accounts
  2. Foreclosure
  3. Bankruptcy

Each problem will be presented as a full scenario from start to finish with comments on alternate routes that might be explored by you. Past Due Accounts.

The first scenario deals with the most common source of bad credit in this country; late and occasionally missed payments. These can be payments on a credit card, car loan, house loan, etc. and may range from one to six months late. Let’s assume that a year ago you were laid off from your job for five months.

During this time, you fell behind by three months on two credit cards, one month on your car payment, and paid your home mortgage 15 days late every month. Since then, you have been recalled and have caught up on all your payments. Their negative entries will be identified in your credit profile as follows:

  • Credit cards – current account; was past due for 90 days.
  • Car payment – current account; was past due 30 days.
  • Home mortgage current account; was past due.

Anyone viewing your credit profile will see this information and use it in determining whether or not to grant you credit. Because you are current on all payments, you will sometimes be granted credit. And sometimes you will be rejected. It depends on the guidelines at any particular lender and also the type of credit you are requesting.

To handle this credit repair scenario, I would recommend following the credit repair process along these following guidelines:

First, after examining the damaging entries in your credit profile, decide how to break them up. You have two choices here; one letter covering all entries or four letters, one covering each entry. I would recommend taking the latter approach. This way each item gets handled individually and properly.

Sometimes, if you bunch many entries together, the credit reporting agency only verifies a few and takes it on faith that the rest are correct if those few check out properly. This is very likely to happen in this type of case where all the negative items occurred at around the same time. It sort of implies that they are all related. Or the credit reporting agency will assume that you have made a frivolous request and do nothing. By doing individual letters, this implication is not made and each individual entry is properly checked. Now, write the four letters to the credit reporting agency based on the template for letter number three in appendix III. An example of this letter is filled out below.

SAMPLE DISPUTE LETTER #3

FIRST CHALLENGE OF NEGATIVE ENTRY THAT BELONGS TO YOU.

YOUR NAME

ADDRESS

CITY, STATE ZIP

SOCIAL SECURITY NUMBER

CREDIT BUREAU NAME

ADDRESS

CITY, STATE ZIP

Date: 1/29/94

To Whom It May Concern,

Pursuant to my rights under the Fair Credit Reporting Act, I hereby challenge the credit report entry(ies) as noted below:

Credit Report Date: 1/17/94

Entry(ies) I dispute: issued by

Visa Card Acct # 1234123412341234 – states that the account was past due 90 days. This statement is not true.

Please return a summary of your investigation stating that you have or have not obtained verification as to the accuracy of the credit report entry in question.

Should verification not be provided you within 30 days I fully expect such entry(ies) to be permanently deleted from my credit report and no mention made of it henceforth.

Sincerely,

John Doe

 

=============

After all the letters are written, mail them all to the credit reporting agency in separate letters according to the guidelines discussed in the previous chapter, Repairing Your Credit Report.

After a period of time, usually about 30 days, the credit reporting agency will send you the results of each of the four investigations. Several different results may be reported:

  1. The credit reporting agency verified that the information on your credit report was accurate and that your credit profile remains unchanged.
  2. The credit reporting agency verified that the information in your credit report was inaccurate and corrected your credit profile to reflect this fact.
  3. The credit reporting agency could not verify the information in your credit report and had it removed.
  4. Mom than 30 days has transpired during the investigation and the credit reporting agency by law removed the damaging information from your credit profile.

Of these four scenarios, it is most likely that the first one will be true in all four cases. After all, the information in your credit report is accurate. But sometimes you get lucky and get one of the other three replies for some of the items you had the credit reporting agency investigate.

The next step is to again contact the credit reporting agency about all the items that were not resolved in your favor. This contact uses template letter number seven in appendix III.

An example of this letter is filled out below.

SAMPLE DISPUTE LETTER #7

SECOND CHALLENGE OF A NEGATIVE ENTRY THAT BELONGS TO YOU.

YOUR NAME

ADDRESS

CITY, STATE ZIP

SOCIAL SECURITY NUMBER

CREDIT BUREAU NAME

ADDRESS

City, STATE ZIP

Date To Whom It May Concern;

Even though you have conducted an investigation concerning the item(s) below that appeared on my credit report, I am still in disagreement with this entry. This entry is highly injurious to my credit rating and is not true. Please re-investigate. Please reference my letter submitted to you on 1129193. Furthermore, I would like the NAMES and business addresses of each individual with whom you verified the below information, so that I may follow up with this person(s).

Please forward to me an updated credit report after you have conducted your investigation.

Credit Report Date: 1/17/93

I am still in disagreement with the following report entry(ies): Entry(ies)

Visa Card Acct # 1234123412341234 – states that the account was past due 90 days. This statement is not true.

Should verification not be provided you within 30 days I fully expect such entry(ies) to be permanently deleted from my credit report and no mention made of it henceforth.

Sincerely,

John Doe

 

===============

In this stage, again send one letter for each item you are disputing. This particular letter serves you in two ways. First, it requires a re-nvestigation of each item by the credit reporting agency. This investigation could result in my one of the four resolutions mentioned above. If it is one of the resolutions that are in your favor (2-4), the negative credit entry will simply be removed from your credit report or modified to reflect the corrected response. If it is not resolved in your favor, the credit reporting agency must tell you who they contacted in the creditor’s organization. This is the second way this letter serves you. You will be using this information to contact the creditors directly so you can work with them to get your negative credit entries removed.

After these two contacts with the credit reporting agency, you will probably not get my farther with additional letters to them. Although you can keep writing to try to get them to miss the 30-day reply window and have your negative credit item removed by default, it is a very long shot.

Your time and energy would be much mom productively spent by moving on to the next set of people who can help you achieve your goal of a clean credit report; your creditors.

With the information just obtained from the credit reporting agency about each creditor, you will he able to contact that specific person to follow up your request to clean up your credit entry.

In this specific case, I would write a letter as follows, based on letter template number 10 in appendix III.

SAMPLE DISPUTE LETTER #10

REQUEST CREDITOR TO UPDATE YOUR CREDIT REPORT AFTER TIMELY PAYMENTS.

YOUR NAME

ADDRESS

CITY, STATE ZIP

SOCIAL SECURITY NUMBER

ACCOUNT NUMBER (1234123412341234)

CREDITOR NAME

ADDRESS

CITY, STATE ZIP

Attn.: Mr. Jones

Date:

Dear Sir: My credit rating was adversely affected by your statement to the credit bureau that showed a past due status of my account with you. Since I have paid the past due balance and have made regular payments on this account as agreed, I request that you submit a statement to TRW that reflects the fact that the account is now in good standing.

Thank you for your timely attention to this request.

Sincerely,

John Doe

 

==============

Address this letter to the same person in the creditors organization that the credit reporting agency contacted.

This person will review the information stated in the letter and if he or she feels the request is reasonable, the entry will be corrected to reflect the accounts current status rather than a previous status. These people are generally willing to work with you and help you once you explain the situation to them. For this sort of scenario, I would expect about a 75% success ratio.

Assuming the worst happens and you can’t get all your negative entries removed train your credit report, what is the next step?

At this point, it is now time to write a small statement of no mom than 100 words and mail it to your credit reporting agency. This statement will be inserted in your credit report. It will explain in your words why you have negative credit entries in your credit report. A sample statement for this scenario follows:

“I, John Doe, was laid off from my job of 6 years at XYZ Corp. for a period of five months before being recalled. This unexpected layoff caused some financial difficulties in my family’s life. This caused me to be late with some payments. I have since been recalled and have made all m – v accounts current and in good standing. It was only this catastrophic event and not any deliberate actions on my pan that cause these late payments. I have always been on time with my payments before this event and I immediately made good all my late payments after being re-employed.”

At this point, it is necessary to contact the other two credit reporting agencies and get copies of their reports about you. And, if necessary, repeat all these steps with these other two agencies to fix any negative entries in them. And after completing this entire process, if you have not been able to completely clean your credit report, I would recommend that you follow the steps outlined in the next chapter that will let you rebuild your credit in spite of the negative entries.

Foreclosure

The second scenario deals with a fairly common source of bad credit in this country; late and missed payments leading to foreclosure.

Let’s assume that a year ago you seem laid off from your job for eight months. During this time, you fell behind by five months on two credit cards, fell behind on your car payments enough to have the car repossessed, and missed so many house payments that it was foreclosed upon by the bank. Since then, you have been recalled and have caught up on all your payments. Their negative entries will be identified in your credit profile as follows:

  • Credit cards – current account; was past due for 150 days.
  • Car payment – merchandise was taken back by a credit grantor (repossession), there may be a balance due.
  • Home Mortgage – foreclosure – credit granter sold the collateral to settle defaulted mortgage.

Anyone viewing your credit profile will see this information and use it in determining whether or not to grant you credit. Because you are current on all payments, you will sometimes be granted credit. And sometimes you will be rejected. It depends on the guidelines at any particular tender and also the type of credit you are requesting.

To handle this credit repair scenario, I would recommend following the credit repair process along these following guidelines:

First, after examining the damaging entries in your credit profile, decide how to break them up. You have two choices here; one letter covering all entries or four letters, one covering each entry. I would recommend taking the latter approach. This way each item gets handled individually and properly.

Sometimes, if you bunch many entries together, the credit reporting agency only verifies a few and takes it on faith that the rest are correct if those few check out properly. This is very likely to happen in this type of case where all the negative items occurred at around the same time. It sort of implies that they are all related. Or the credit reporting agency will assume that you have made a frivolous request and do nothing. By doing individual letters, this implication is not made and each individual en” is properly checked.

Now, write the four letters to the credit reporting agency based on the template for letter number three in appendix III. An example of this letter is filled out below.

SAMPLE DISPUTE LETTER #3

FIRST CHALLENGE OF NEGATIVE ENTRY THAT BELONGS TO YOU.

YOUR NAME

ADDRESS

CITY, STATE ZIP

SOCIAL SECURITY NUMBER

CREDIT BUREAU NAME

ADDRESS

City, STATE ZIP

Date: 11/29/93

To Whom It May Concern,

Pursuant to my rights under the Fair Credit Reporting Act, I hereby challenge the credit report entry (ies) as noted below:

Credit Report Date: 1/17/94

Entry(ies) I dispute: issued by

Visa Card Acct # 1234123412341234 – states that the account was past due 150 days. This statement is not true.

Please return a summary of your investigation stating that you have or have not obtained verification as to the accuracy of the credit report entry in question,

Should verification not be provided you within 30 days I fully expect such entry(ies) to be permanently deleted from my credit repel and no mention made of it henceforth.

Sincerely,

John Doe

 

============

After all the letters are written, mail them all to the credit reporting agency in separate letters according to the guidelines discussed in the previous chapter, Repairing Your Credit Report.

After a period of time, usually about 30 days, the credit reporting agency will send you the results of each of the four investigations, Several different results may be reported:

  1. The credit reporting agency verified that the information on your credit report was accurate and that your credit profile remains unchanged.
  2. The credit reporting agency verified that the information in your credit report was inaccurate and corrected your credit profile to reflect this fact.
  3. The credit reporting agency could not verify the information in your credit report and had it removed.
  4. Mom than 30 days has transpired during the investigation and the credit reporting agency by law removed the damaging information from your credit profile.

Of these four scenarios, it is most likely that the first one will be fine in all four cases. After all, the information in your credit report is accurate. But sometimes you get lucky and get one of the other three replies for some of the items you had the credit reporting agency investigate.

The next step is to again contact the credit reporting agency about all the items that were not resolved in your favor. This contact uses template letter number seven in appendix III. An example of this letter is filled out below.

SAMPLE DISPUTE LETTER #7

SECOND CHALLENGE OF A NEGATIVE ENTRY THAT BELONGS TO YOU.

YOUR NAME

ADDRESS

CITY, STATE ZIP

SOCIAL SECURITY NUMBER

CREDIT BUREAU NAME

ADDRESS

City, STATE ZIP

Date: To Whom It May Concern,

Even though you have conducted an investigation concerning the item(s) below that appeared on my credit report, I am still in disagreement with this entry. This entry” is highly injurious to my credit rating and is not true. Please re-investigate. Please reference my letter submitted to you on 1129193. Furthermore, I would like the NAMES and business addresses of each individual with whom you verified the below information, so that I may follow up with this person(s). Please forward to me an updated credit report after you have conducted your investigation.

Credit Report Date 1/17/9-3

I am still in disagreement with the following report entry(ies): Entry(ies)

Visa Card Acct # 12341234121141234 states that the account was past due 150 days. This statement is not true.

Should verification not be provided van within 30 days I fully expect such entry(ies) to be permanently deleted from my credit report and no mention made of it henceforth.

Sincerely,

John Doe

 

============

In this stage, again send one letter for each item you are disputing. This particular letter serves you in two ways. First, it requires a re-investigation of each item by the credit reporting agency. This reinvestigation could result in any one of the four resolutions mentioned above. If it is one of the resolutions that are in your favor (2 4), the negative credit entry will simply be removed from your credit report or modified to reflect the corrected response. If it is not resolved in your favor, (the credit reporting agency must tell you who they contacted in the creditor’s organization. This is the second way this letter serves you. You will be using this information to contact the creditors directly so you can work with them to get your negative credit entries removed.

After these two contacts with the credit reporting agency, you will probably not get any farther with additional letters to them. Although you can keep writing to try to get them to miss the 30-day reply window and have your negative credit item removed by default, it is a very long shot.

Your time and energy would be much more productively spent by moving on to the next set of people who can help you achieve your goal of a clean credit report; your creditors.

With the information just obtained from the credit reporting agency about each creditor, you will be able to contact that specific person to follow up your request to clean up your credit entry.

In this specific case, I would write a letter as follows, based on letter template number 10 in appendix III.

SAMPLE DISPUTE LETTER # 10

REQUEST CREDITOR TO UPDATE YOUR CREDIT REPORT AFTER TIMELY PAYMENTS.

YOUR NAME

ADDRESS

CITY, STATE ZIP

SOCIAL SECURITY NUMBER

CREDIT BUREAU NAME

ADDRESS

City, STATE ZIP

Attn.: Mr. Jones Date:

Dear Sir.

My credit rating was adversely affected by your entry to the credit bureau that showed a past due status of my account with you. Since I have paid the past due balance and have made regular payments on this account as agreed, I request that you submit a statement to TRW that reflects the fact that the account is now in good standing.

Thank you for your timely attention to this request.

Sincerely,

John Doe

 

============

Address this letter to the same person in the creditors organization that the credit reporting agency contacted.

This person will review the information stated in the letter and if he or she feels the request is reasonable, the entry will be corrected to reflect the accounts current status rather than a previous status. These people we generally willing to work with you and help you once you explain the situation to them. For this sort of scenario, I would expect about a 75% success ratio for the credit cards. For the repossessed car and foreclosed house, creditors will be less forgiving than with credit cards that at one time had late payments.

To have any luck at removing these items at this point, it will be necessary to enter into negotiations with the creditor, offering to make up a percentage of their losses in return for writing a letter to your credit reporting agency granting you favorable credit, For example, if you owed $8000 on your car and they sold it for $4500, they lost $3500. If you offered them say $1000 in return for changing your credit report entry to positive, they may very well be willing to do that. It all depends on how flexible the creditor’s guidelines are in negotiating trouble accounts. At worst, they won’t negotiate and the bad credit stays on your credit report, At best, you negotiate a settlement you both can live with and have a cleaned up credit report. Just ask and you may find yourself pleasantly surprised by the results. Assuming the worst happens and you can’t get all your negative entries removed from your credit report, what is the next step?

At this point, it is now time to write a small statement of no more than 100 words and mail it to your credit reporting agency. This statement will be inserted in your credit report. It will explain in your words why you have negative credit entries in your credit report, A sample statement for this scenario follows:

“I, John Doe, was laid off from my job of 6 years at XYZ Corp. for a period of eight months before being recalled. This unexpected layoff caused some major financial difficulties in my family’s life. This caused me to be late with some payments and lose my house and car. I have since been recalled and have made restitution as best as I could It was only this catastrophic event and not any deliberate actions on my pan that caused these horrible events. I have always been on time with my payments before this event and I immediately made good all my late, payments to the best of my ability after being re-employed”

At this point, it is necessary to contact the other two credit reporting agencies and get copies of their reports about you. And, if necessary, repeat all these steps with these other two agencies to fix my negative entries in them. And after completing this entire process, if you have not been able to completely clean your credit report, I would recommend that you follow the steps outlined in the next chapter that will let you rebuild your credit in spite of the negative entries.

Bankruptcy

The third scenario deals with the most difficult to repair the source of bad credit in this country; bankruptcy. These can be late payments on a credit card, car loan, house loan, etc. and may range from one to many months late and then be followed by a bankruptcy, closing all accounts.

Let’s assume that a year ago you were hurt and out of work for two years. During this time, you fell way behind on your credit cards, on your car payment, and your home mortgage and to get some peace of mind from the collections actions, you declare bankruptcy.

These negative entries in your credit profile will all read the same; debt discharged through chapter 7 bankruptcy (or chapter I 1, 12, or 13 bankruptcy). Additionally, they will have supplemental information about how delinquent the account was before the bankruptcy was declared.

Anyone viewing your credit profile will see this information and use it in determining whether or not to grant you credit. Because of your status, you will almost always be denied credit. But you never know. Some creditors are very lenient and may grant you credit. It depends on the guidelines of any particular lender and also the type of credit you are requesting.

To handle this credit repair scenario, I would recommend following the credit repair process along these following guidelines:

First, after examining the damaging entries in your credit profile, decide how to break them up. You have a few choices here; one letter covering all entries or four letters, one covering each entry. I would recommend taking the latter approach. This way each item gets handled individually and properly.

Sometimes, if you bunch many entries together, the credit reporting agency only verifies a few and takes it on faith that the rest are correct if those few check out properly. This is very likely to happen in this type of case where all the negative items occurred at around the same time and are all listed as bankruptcy. It sort of implies that they are all related. Or the credit reporting agency will assume that you have made a frivolous request and do nothing. By doing individual letters, this implication is not made and each individual entry is properly checked.

Now, write the four letters to the credit reporting agency based on the template for letter number three in appendix III. An example of this letter is filled out below.

SAMPLE DISPUTE LETTER #3

FIRST CHALLENGE OF NEGATIVE ENTRY THAT BELONGS TO YOU.

YOUR NAME

ADDRESS

CITY, STATE ZIP

SOCIAL SECURITY NUMBER

CREDIT BUREAU NAME

ADDRESS

City, STATE ZIP

Date: 1129193

To Whom It May Concern,

Pursuant to my rights under the Fair Credit Reporting Act, I hereby challenge the credit report entry(ies) as noted below:

Credit Report Date: 1/17/94

Entry(ies) I dispute: issued by

Visa Card Acci # 1234123412341234 – states that the account was past due 180 days before a bankruptcy was declared. This statement is not true.

Please return a summary of your investigation stating that you have or have not obtained verification as to the accuracy of the credit report entry in question.

Should verification not be provided you within 30 days fully expect such entry(ies) to be permanently deleted from my credit report and no mention made of it henceforth.

Sincerely,

John Doe

 

===========

After all the letters are written, mail them all to the credit reporting agency in separate letters according to the guidelines discussed in the previous chapter, Repairing Your Credit Report. After a period of time, usually about 30 days, the credit reporting agency will send you the results of each of the four investigations. Several different results may be reported: 1) The credit reporting agency verified that the information on your credit report was accurate and that your credit profile remains unchanged. 2) The credit reporting agency verified that the information in your credit report was inaccurate and corrected your credit profile to reflect this fact. 3) The credit reporting agency could not verify the information in your credit report and had it removed. 4) More than 30 days has transpired during the investigation and the credit reporting agency by law removed the damaging information from your credit profile. Of these four scenarios, it is most likely that the first one will be true in all four cases. After all, the information in your credit report is accurate. But sometimes you get lucky and get one of the other three replies for some of the items you had the credit reporting agency investigate. The next step is to again contact the credit reporting agency about all the items that were not resolved in your favor. This contact uses template letter number seven in appendix III. An example of this letter is filled out below.

SAMPLE DISPUTE LETTER #7

SECOND CHALLENGE OF A NEGATIVE ENTRY THAT BELONGS TO YOU.

YOUR NAME

ADDRESS

CITY, STATE ZIP

SOCIAL SECURITY NUMBER

CREDIT BUREAU NAME

ADDRESS

City, STATE ZIP

Date To Whom It May Concern,

Even though you have conducted an investigation concerning the item(s) below that appeared on my credit report, I am still in disagreement with this entry. This entry is highly injurious to my credit rating and is not true. Please re-investigate. Please reference my letter submitted to you on 1/29/93. Furthermore, I would like the NAMES and business addresses of each individual with whom you verified the below information, so that I may follow up with this person(s).

Please forward to me an updated credit report after you have conducted your investigation.

Credit Report Date: 1/17/93

I am still in disagreement with the following report entry(ies):

Entry(ies) Visa Card Acct # 12341234123412.34 – states that the account was past due 180 days before bankruptcy was declared. This statement is not true.

Should verification not be provided you within 30 days I fully expect such entry(ies) to be permanently deleted from my credit report and no mention made of it henceforth.

Sincerely,

John Doe

 

============

In this stage, again send one letter for each item you are disputing, This particular letter serves you in two ways. First, it requires a m-investigation of each item by the credit reporting agency. This investigation could result in any one of the four resolutions mentioned above. If it is one of the resolutions that are in your favor (2-4), the negative credit entry will simply be removed from your credit report or modified to reflect the corrected response. If it is not resolved in your favor, the credit reporting agency must tell you who they contacted in the creditor’s organization. This is the second way this letter serves you. You will be using this information to contact the creditors directly so you can work with them to get your negative credit entries removed.

After these two contacts with the credit reporting agency, you will probably not get any farther with additional letters to them. Although you can keep writing to try to get them to miss the 30-day reply window and have your negative credit item removed by default, it is a very long shot.

Your time and energy would be much mom productively spent by moving on to the next set of people who can help you achieve your goal of a clean credit report; your creditors.

With the information just obtained from the credit reporting agency about each creditor, you will be able to contact that specific person to follow up your request to clean up your credit entry with a request to negotiate with each creditor for a settlement.

In this specific case, I would write a letter as follows, roughly based on letter template number 10 in appendix III.

SAMPLE DISPUTE LETTER #1

A REQUEST CREDITOR TO NEGOTIATE YOUR BANKRUPTCY AND REMOVE IT FROM YOUR CREDIT REPORT.

YOUR NAME

ADDRESS CITY, STATE ZIP

SOCIAL SECURITY NUMBER

ACCOUNT NUMBER (1234123412341234)

CREDITOR NAME

ADDRESS

CITY, STATE ZIP

Attn.: Mr. Jones

Date:

Dear Sir,

My credit rating was adversely affected by your entry to the credit bureau that showed a bankruptcy of my account with you. I wish to negotiate a settlement of the account and discuss having this bankruptcy status removed from my credit report at TRW.

Thank you for your timely attention to this request.

Sincerely,

John Doe

 

===========

Address this letter to the same person in the creditors organization that the credit reporting agency contacted.

This person will review the information stated in the letter and if he or she feels the request( is reasonable, will enter into a negotiation with you. These people are generally willing to work with you and help you once you explain the situation to them. But they will be willing to work with you only if some son of cash settlement can be arranged. Often, they will settle your account favorably for anywhere from $0.30 to $0.70 on the dollar for each credit card account and an equivalent amount of the loss on the car and house.

Assuming the worst happens and you can’t get all your negative entries removed from your credit report, what is the next step? At this point, it is now time to write a small statement of no more than 100 words and mail it to your credit reporting agency. ‘This statement will be inserted in your credit report. It will explain in your words why you have negative credit entries in your credit report. A sample statement for this scenario follows:

“I, John Doe, was out of work from m ‘ v job of 6 years at XYZ Corp. for a period of two years due to injuries. This unexpected trauma caused some major financial difficulties in my family’s life. This caused me to declare bankruptcy. It was only this catastrophic event and not any deliberate actions on my part that caused this bankruptcy. I have always been on time with my payments before this event and are now re-employed and capable of making timely payments on my credit obligations again..”

At this point, it is necessary to contact the other two credit reporting agencies and get copies of their reports about you. And, if necessary, repeat all these steps with these other two agencies to fix any negative entries in them. And after completing this entire process, if you have not been able to completely clean your credit report, I would recommend that you follow the steps outlined in the next chapter that will let you rebuild your credit in spite of the negative entries.

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