Paul Yamilkoski

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A Road Map To Better Credit

credit repair

Stop – Don’t Just Pay Collections!

Have you ever encountered someone that has credit scores that are a little too low to be able to get them a loan? Have you ever told them to go out and pay off the collections on their report, to improve their scores? Have you ever heard someone say that they were going to pay their collections off, to improve their credit scores?

If you have ever given someone those instructions, or have heard them say it, or any similar scenario, then please stop them right away. As crazy as it may sound, they may be on their way to a disaster, in the worst case, or spending a lot of money and not helping themselves at all with score improvement, in the better scenario.

I know, it sounds crazy that doing the right thing, taking responsibility for your debts and paying them off could be damaging to your credit. But the fact remains, because so many companies, either intentionally or unintentionally, improperly report activity on an account, the general result of paying on or paying off a collection is destructive to a person’s credit.

The cause behind this problem is a little thing on our credit reports called DLA or date of last activity. This misunderstood term, in reference to collections, refers to how old an injury that collection is. This is important because, in credit, just like when our body gets injured, a injury hurts the most when it initially happens. Then as time goes by the injury heals and hurts less.

So, when an account becomes a collection, that account is hurting the most it ever will from that time on. Going forward the injury is supposed to heal, just like our body would.

Now lets say you tear the scab off that wound. You are right back where you started and it has to heal again. That is what most commonly happens when people pay on or pay off a collection. The scab gets pulled off and the injury is affecting your credit as if it just happened again.

That is not supposed to happen. In fact it is illegal. But it happens ridiculously often and little is done to enforce proper reporting.

The fact is, technically speaking, a collection can not actually have the scab removed. The date of last activity for a collection is the date it first went delinquent and never went back to good standing. Once that clock started and it became a collection, there was no going back, ever, no matter how many times you talk about the debt with the company, no matter how many payment arrangements you have made for that account, and no matter how many times the debt was sold.

A great analogy is an automobile. Once that 2003 Chrysler Town and Country went into production and became a 2003 Chrysler Town and Country, it was always a 2003 Chrysler Town and Country, no matter how many times it was repaired, crashed, modified, maintained, or sold.

Like I sad before, it is illegal to effectively “tear of the scab” of a collection, but it happens and it hurts.

So, if you are telling people to go out an pay collections to help their scores, or you hear people talking about paying collections to help their credit scores, stop them. Have them get help with making sure things get done right. In fact a reputable credit restoration company, such as Heartland Credit Restoration, will do even better than that, and in many cases can potentially help you get the account completely removed from your credit as part of the deal in settling it.

Don’t suffer for trying to do the right thing. Get some help.

If you, or someone you know,  has run into credit problems and could use a little credit help, a reputable credit restoration company like Heartland Credit Restoration is a great place to start. You will reach your credit goals much faster and safer with the help of a professional, and you will have loan ready credit.

Call me for a free consultation to see how we might be able to help. 319-533-5236.

If you are a lender or realtor that has a client you might have to turn away due to credit problems, then let me see if Heartland Credit Restoration can help change that client into a approved client with loan ready credit.

You should never have to say “NO” to a client. We can help change those into a “YES”.

Call me for a free consultation. 319-533-5236.

Don’t forget to let me know what you think. I always welcome comments. And please do me a favor and share this with your contacts on social media.

I’m looking forward to helping you.

Until then, I hope you have a wonderfully blessed day!

Which One Affects Your Credit Score More? $500 worth of collections? Or $10,000 worth of collections?

Many people get hung up on thinking the dollar amount of their collections makes a difference in their credit score and how challenging it will be to clean up their credit – this is a trick question – there are multiple elements that would affect the answer.

First, let’s consider the most direct path. If I have only one collection on my credit for $10,000, from 14 months ago, and another person has only one collection, from 14 months ago, for $500 on their credit and all other elements of our credit are virtually identical, who’s credit score is higher?       canstock5722113.jpg

The answer is that our credit scores should be essentially the same. The amount of the debt for each collection has absolutely no affect on our credit scores. 

Now this might stop a number of people in their tracks to question that. I have heard many people talk about how their lender told them that the amount owed on a collection mattered. It does matter in the process of qualifying for a loan. The lender will only be able to accept a certain amount of collection debt for a given loan product. It also affects your debt to income ratios for determining how much you can borrow etc.

But when we are talking about your credit score, the dollar amount of the account has no affect on determining your credit score.

What if we changed things slightly? What if, in the example above, the $500 collection was from 5 months ago and the $10,000 collection was from 14 months ago? Who would have the better credit scores?       images.jpeg

It may surprise you to know that the person with the $10,000 collection will have the better credit scores. Again, the balance does not affect the score. But, the age of a collection has a big affect on scores. The newer the collection is, the more it affects the score. A great way to look at this is to think that credit is like our body. When we get injured, we experience the most pain and debilitation when it happens. Then, as time goes by, the injury starts to heal and have less affect on our ability to function. Credit reacts much the same way. When an account first becomes a collection it hurts the most and then as time goes by, the affect decreases and the injury to your credit "heals". 

Let’s change it up even more. Using the original example, let’s say that I have ten collections, all from fourteen months ago, totaling $10,000, and the other person has only one collection from fourteen months ago totaling $500. Who has the higher credit score?

In this case the higher score belongs to the other person with one collection. This is because the number of negative accounts matters. I effectively have ten injuries to my credit and the other person only has one. 

But what if the other person, who only has one collection, got that collection last month and I got my ten collections 36 months ago? Who has the higher scores now?

Well now things are starting to get muddier. I have sustained ten injuries and the other person only one, but mine have been healing for three years and the other person’s just happened. It is likely that my scores are the better scores.

How about if I got my ten collections scattered over the last three years, with the most recent being five months ago? Would my scores still be the better ones?    images.jpeg

Probably not. You see, the scoring algorithm considers patterns of behavior in scoring. Think about it. We all know life happens to all of us. Even the most prepared person can suffer from an event they were not totally prepared for.  We would look at things like that as out of your control and generally not a reflection of any risky behavior or choices. On the other hand, if I made several poor choices or did nothing to prepare for possible circumstances, and had multiple failures, we would look at that very differently. We would see that as a result of risky behavior. In fact many of you might say failing to plan is planning to fail and I got what I deserved and I am a risk to lend to.

The scoring algorithm takes this into account. So the age of the account, the number of accounts and the frequency of occurrences all affect the score and all have to be weighed to determine our scores.

This is when it is common for people to bring up another common occurrence.        images.jpeg       What if, in the original example, The account says it is 14 months old, but it was really much older and had been sold to a different collection company and then another and another, to arrive at the most recent company fourteen months ago?

This is a little bit of an aside from the subject here, but it comes up almost every time I have this discussion, so I will touch on it briefly.

The age of an account is determined by when the original creditor last got a payment in good standing. Once the account went delinquent and was never brought current, the clock started ticking on the age of the account. It is a collection before a collection company ever gets it and no matter how many times it is sold, it is the same age.

I like to use a car analogy to easily illustrate this. If you buy a 2003 Chrysler Town and Country brand new off the lot and then trade it in to get a new car three years later, and it is then sold again and again, no matter how many times the vehicle was sold, it will always be a 2003 Chrysler Town and Country.

The same goes for collections. Although it is illegal for a collection company, or any company for that matter, to update the age of the collection (commonly known as the DLA or Date of Last Activity), it happens all the time and as a result can have a huge negative affect on your credit score.

That’s it for today. I hope you maybe learned something new from this and can see how quickly things can get complicated on your credit. 

I welcome your comments and ask that you share this information with all your contacts on social media. 

If you are finding you have some problems with your credit scores, a reputable credit restoration company like Heartland Credit Restoration is a great place to turn for help. We at Heartland Credit Restoration are all about helping people get positive control over their credit, and the more people that know this kind of information, the better.

If you are facing credit challenges, or you have a client that you are going to have to turn away due to credit challenges, then I encourage you to give me a call. We can look at how Heartland Credit Restoration might be able to help you turn things around and get that credit loan ready. There isn’t a better company you can go to for help.

 I will look forward to talking to you and I hope you have a wonderfully blessed day!

Do Prepaid Cards Help My Credit?

“I have a prepaid credit card. Will that help my credit score?”

That is a question that I get asked quite often, as I am working with clients to help them build their credit scores.

The cards that they are referring to, are like those that you can find in the Wal Mart check-out line. These cards are then loaded with a balance in exchange for cash you give the cashier. They can then be used much like any other credit card.

Clients ask me this question when encouraged to start a credit card, to help build credit.

The important thing to know here is that NO, they do not help your credit score.

The reason is twofold.

One, a prepaid card is not a credit line. It is just like a checking account, where you are spending the money you have there. You don’t have minimum payments to make or a credit limit.

Credit scoring is based upon you being extended a line of credit, making payments on-time, keeping the account active for a long time and keeping your balances low compared to the limit. A prepaid card does not do this.

Two, prepaid cards do not get reported to the credit bureaus. In order for anything to help or hurt your scores, the information has to be reported to the three major credit bureaus.
Having a active credit card reporting on your credit is an important part of helping build your credit scores. But a prepaid card will not help.

Prepaid cards often get confused with “secured” credit cards, because secured credit cards require a deposit to open them.

However, the difference is that you are not spending the money deposited to open the card. You are being extended a credit line, commonly of the same value as the deposit. The credit line is “secured” by the deposit, much like a auto loan is secured by the vehicle itself.

A secured credit card can be a very good tool to building your credit, when you are not able to qualify for an unsecured card.

If you or anyone you know is facing credit challenges and would like so help, Heartland Credit Restoration is a great place to start. Call or email me for a free consultation. The same goes for those of you who have clients with credit challenges. Forward their contact info to me and I will be happy to give them a free consultation and see what we can do to get them back to you with loan ready credit.

Please share this with your friends and contacts on social media. I also welcome comments and encourage you to feel free to let me know if you have any questions. In the mean time, I hope you have a wonderfully blessed day!

Obi Wan’s Lost Planet


“Lost a planet Master Obi Wan has. How Embarrassing.”

A scene from Star Wars points the way to moving up to the top of the loan origination rankings.

Two loans per month? Two loans per month? Wow. That is a number that really surprises me. What does this have to do with Star wars? I’ll get to that. This is short. Be patient.
Two loans per month. That is the number of loans per month that separates the top third on average and the bottom third on average, when looking at the top 150 individual mortgage originators in the nation. That is according to the 2014 Stockman Guide rankings.
I have to admit that I thought it would be a little more than that. Maybe I am a little out of touch since my mortgage origination days, but I thought the number would be more significant. I know a lot has changed over the last 15 years in lending, but I would be really frustrated with myself if I missed out on being in the top 50 originators in the country by an average of only 2 loans per month.

That got me to thinking about what the difference would be. I know that we only have so much business that comes our way, and that bringing in more business can sometimes mean a much greater advertising expense.
But that would also mean that if I want to improve the number of people I can help get a mortgage, then I would have to make sure fewer of those opportunities failed to close.
I would rather not spend more money, if given the choice, to try to get more loans to close. So, if I were to use that as my primary limiter, I would be able to narrow down my options to consider.
One obvious thing to consider is if I am providing a great service, such that people want to come to me for their loan. Or, are my clients acting as advocates for me? Am I getting their repeat business and referrals from them? If not, I will want to see hat I can do to change that.

But, if I’m doing those things well, what can I do with the supply I have, to improve my closings?

This will sound funny, but the question reminds me of a scene in Star Wars Attack if the Clones, when Yoda asked a group of Jedi younglings what the answer is if there is evidence of gravity on the star map but the star and it’s planets are missing. One of the younglings states the obvious and says that someone erased it from the archive memory.
So the answer to my question about improving my numbers is obvious too. I need to make more of the opportunities, that come my way, turn into successful closings. I need to look at the clients that came to me that I turned away for credit issues.
I may or may not have time to help them correct heir situation, but I can get them to someone who can. If I can help 2 clients like that per month, I move from the bottom third to the top. Even better, I can do it at no cost of time or money for me, and my clients will appreciate it.

Yoda - there is no try.jpg

This would be a great time to call a reputable credit repair company, that is well known for bringing clients back to those that referred them, loan ready, like Heartland Credit Restoration.

If you are one of those realtors or lenders that could use a few more deals closing each month, give me a call so we can see if Heartland Credit Restoration can help your clients get back to you for a loan or sale/purchase of a home.

Feel free share this socially and to let me know if you have questions or comments. If you have any topics you would like me to touch on, please let me know and I hope you have a wonderfully blessed day!

Threats Are Not OK

woman yelling into phone.jpeg

“Pay Now, Or Else…..!”

“We are going to have the police come and arrest you!”

“But I don’t have the money right now to be able to pay it.” she said.
“It doesn’t matter!” demanded the voice on the other end of the phone. “You have to pay today or we will have you arrested and the seize your bank account and your home!”
“What do I do?” cried the young woman when she called me for credit help. “I don’t have that kind of money.”
She was practically in tears with fear over the threats that were issued but the collection agent on the phone just a few minutes earlier. I have seen this scenario many times, when working with clients to repair their credit. Though it still angers me a little that companies will treat people that way, I also laugh to myself, as now that company is right where I want them for my client.
I told her not to worry, that everything will be alright.
“You see,” I said calmly, “It is completely illegal for the collection agent to issue such threats. Not only are the threats illegal, but the collection company has absolutely no power or authority to seize bank accounts or your home, and you have not broken any laws to warrant the police arresting you.”
“Are you sure?” she asked.
“Absolutely!” I assured her. “Let me tell you about a little thing called consumer rights.”

It’s never acceptable for collectors to threaten people!
The first thing I encourage all people to remember when dealing with collection agents, is that it is illegal to threaten clients. It is part of the set of laws that have been established to protect consumers from such abusive collection tactics. It is a good idea to be aware of your rights so that you can avoid the tremendous and unnecessary additional stress related to addressing collections. You can find information about the Fair Debt Collection Practices Act here.

Feel free to share this socially to let me know if you have questions or comments. If you have any topics you would like me to address, feel free to let me know and I hope you have a wonderfully blessed day!

I Always Pay My Bills!


“I Always Pay My Bills!”

I could almost feel her finger poking me in the chest through the phone.

This happened as I was talking on the phone with a potential client that was referred to me.
I was asking her questions about what she thought her credit was like and what might be there to cause her scores to be low.
The irony here was that I was looking at a copy of her credit report. She knew this. I was going through the report line by line with her to get her side of the story for anything that was potentially negative.
I had just started to ask her about collections and if she had any accounts that were behind right now. It is important that I know the financial position, if they are keeping current and so on, of a client when considering taking them on as a client. Our job and desire is to help, not make things worse.
So I was just starting to ask about this and she shouted through the phone that she ALWAYS pays her bills.
I told that was good to hear, and I began asking if she was familiar with each account, as she then might be a victim of identity theft.
She then proceeded to tell me she was aware of each account, as I read them. Most of them were medical collections and for co-pays, not large bills. Somehow, she thought that she should not have to pay them.
The credit card collections were for charges that she didn’t feel she should have to pay. The same was true for the repossession of an automobile. ( That in itself is sufficient for a future story).
23 collections and charge-offs,
that is the number of of accounts reporting with balances on her credit. She could give me a background on each and every one.
She still insisted she always pays her bills. No matter, she needed credit help and I was willing to help her, provided she was willing to commit to working with me and making some changes.
She got qualified for a mortgage and is thrilled to have her new home.
Think you pay your bills?
This is a somewhat fantastic story. I get asked all the time how someone can think they “always” pay their bills, when they can list in detail 23 accounts that are not paid and have gone to collection. The answer is that I don’t know. What I do know here is that people have a unique way of seeing things. I also know that if we had not taken the time to help her see what needed to change and guide her in a plan to accomplish that goal, she would not now be a happy home owner. Just some food for thought.

Feel free to share this on your social networks and to let me know if you have questions or comments and I hope you have a wonderfully blessed day!

There Is No Such Thing As Not Very Late

“I Wasn’t Very Late!”

If you’ve ever played Jenga and watched a tall tower crash to the table, I’m sure you can picture my face.

This particular client had been referred to me by a loan officer friend of mine.

Things had started out as a pretty straight forward program. The gentleman was about 30 points shy of being able to qualify for his mortgage, and we discovered a small group of collections reporting on his report that were not his.

This should be a pretty cut and dry endeavor, I remember thinking to myself.

That is always a dangerous thing to let yourself think. And I have been in the business of credit restoration long enough to know better. But we had 4 collections showing on his report that were not his. We had documentation to prove that they weren’t his.

To top it off, they were each less than about a year old, and therefore were creating a significant impact on the scores, in the grand scheme of things. It was very reasonable to think we could be looking at 40-50 points improvement, once they were removed.

Then I heard my client utter those words that you never want to hear, “I wasn’t very late”. There was that Jenga tower suddenly making it’s painfully slow and unstoppable crash to the table.

You see he had let a payment on a credit card slip his mind and he didn’t pay it when he normally did. In fact it was 31 days late. He had gotten really busy with some other activities in his life. Who of us has never experienced a lapse of memory during hectic time? It wasn’t that big a deal was it?

“Crash!” go the blocks as they scatter across the table.

Not that late, is like not that pregnant, if you will pardon my change in analogy from the Jenga game. In credit you don’t want to allow your self the luxury of thinking that a little late is acceptable. That is a dangerous an slippery slope, because it is just a matter of time before you hit day 31.

Once you hit day 31, you will get reported late on your credit. Sure, the company may forgive the late fees, but you can pretty much count on the late history being reported.

In this case, the lapse in memory just cost my client nearly 100 points on his credit and a year before he could get a mortgage, the time being due to a lender requirement to have 12 months clean payment history, but that is for another writing.

Suffice to say, he now clearly understands that, in credit, there is no such thing as not very late.


Feel free to let me know if you have questions or comments and I hope you have a wonderfully blessed day!

But I Gave The Car Back Voluntarily

“But I Gave The Car back Voluntarily!”

“I don’t even have the car any more!”

This was the line of reasoning I was receiving from a client that I was working with.

She had an auto and she had gotten behind on payments. When the bank was threatening to repossess the vehicle if she did not start getting caught up on the payments, she voluntarily gave the car to them.

I was discussing with her some ideas and options to trying to get the account settled and maybe deleted.

The challenge here though, was that she didn’t think she should have to pay the debt, since she gave the car back to the bank.

“I understand you feel that way.” I said. “But lets look at it another way. Suppose I borrow $1000 from you, to buy a really cool plaque with a rubber talking fish on it that sings when activated. After buying it, I use it in my “Man Cave” and all my friends love it.”                            images.jpeg


“Now a few months have gone by and I have not paid you back yet. So you get a little frustrated and threaten to take the plaque if I don’t start making payments as agreed. Do you really want the plaque? Or do you want your money?”


“The money.” She responded. “ I wouldn’t want the silly fish thing!”


“Okay.” I said. “So lets say I give it to you voluntarily. Does that change anything?”


“No.” She said.


“Now lets say you have it sitting on your garage and someone sees it and offers to buy it from you cheap. If you sell it, for say $100, would you call it even and I would not owe you any more money?” I asked.


“Not a chance!” she demanded. “You borrowed $1000, you still owe me $900!”


“Exactly,” I replied “that is why the bank says you still owe them. They sold the car at auction and got some back, added the fees they had to pay on top and now, even though you don’t have the car, you still owe them the money.”


I went on to tell her that the remaining balance is not the only thing to consider either. A repossession, voluntary or not, is a huge negative on your credit. It will commonly get in the way of you getting a mortgage for 2-3 years, as well as drop your score as much as 100 points.


If there is any way of avoiding a repossession (short of breaking the law), you want to try it.

Feel free to let me know if you have questions or comments and I hope you have a wonderfully blessed day!



Divorce Decree and Your Credit – He Held Me Hostage!

“He Held Me Hostage!”

$30,000 in renovations to her house. Were they all about to be lost?

That was the question going through her head now.. She was in a state of despair. She had been working for months to fix up her house, including a total kitchen remodel.

Now she was being referred to me because her financial situation had changed and she needed to refinance her mortgage after her divorce, or she was going to loose it.

Her situation was unique to say the least, at least with resect to the seriousness and urgency of the situation. You see she had been divorced about six months ago and had been awarded the house, among other things. Her Ex had been ordered in the divorce decree to pay off the cards, which he had done, and remove her from those cards so they were only in his name.

The divorce was completed and as far as my client was concerned, she was well on her way into the next chapter of her life. She had some money in her pocket, her own home, and was giving it a face lift to celebrate the new direction of her life. She was finally happy, after a long time of challenge, or so she thought.

The problem was, that she was also supposed to get the house refinanced into just her name and had not yet.

Now she was facing a financial need to do so and for some unknown reason her credit had suddenly dropped and she needed help understanding why, and she she needed help fixing it and fast.

It didn’t take long to figure out what happened. Her Ex was supposed to pay of the credit cards and take her name off the accounts. He had paid them off but never took her name off them. Now, he had run up the balances to max and stopped paying on them. They were now 60 days past due.

At first she didn’t understand what that had to do with her. Then I explained to her that she was jointly on the cards and the high balances and new late history was crushing her credit and the only way to stop it would be to pay off the cards ASAP!

A divorce decree does not rule over your credit.

This story highlights an all too common problem that can arise after a divorce. A divorce decree that says your Ex is responsible for something, does not remove you from the original obligation. If you do not make sure the decree stipulations are completed before it is final, your credit could end up being held hostage.


Feel free to let me know if you have questions our comments and I hope you have a wonderfully blessed day!