Paul Yamilkoski

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A Road Map To Better Credit


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Avoiding A Trap In Credit Scores

“ How the heck could my credit scores be off by that much, in just one month, when nothing has changed?“

That is the question that I was being asked by a gentleman who had just had a lender pull his credit for a mortgage. It only took few questions to realize that the difference was caused by the difference in the sources of the scores he was comparing.

I have touched on this subject before, but it is worth touching on again.

There are a bunch of credit scores out there that tell a story about each of us to potential lenders and others. There are scores used for renting an apartment, scores for buying an automobile, and,  of course, we know about the scores for getting a mortgage, just to name a few.

Keep in mind that credit scores are intended to determine, mathematically, the level of risk involved in lending money to a person, based upon current and past behavior, and the chance of of that defaulting on the loan. High scores indicate lower risk and low scores not so much.

All of these scores, that professionals pull, have an applied purpose. These scores are tools for making a specific business decision. Outside of the arena they are designed for, they are essentially useless. There are some that might want to argue that a bit, but put into context, there is little to debate. A score is not useful if it can not be used for an intended purpose. So, though the score we get when our credit is pulled for an auto loan is very useful for qualifying for the auto loan, it can be relatively meaningless for trying to qualify for a mortgage.

This happens because the scoring algorithms used for each purpose are different. For example, the scoring for an auto loan will weigh more heavily your past history with an auto loan. That same credit information is looked at differently when applying to rent an apartment, which looks at history relating to rental history more heavily. The same is true when you are applying for a mortgage.

There are also some scoring models designed to include individuals with less conventional credit history, who would otherwise not have a score. These will take into account reported rental history etc that are not reported to the standard system. There are a few such scoring models being used right now in the mortgage environment.

The trap in credit scoring is the “consumer” scores, sometimes referred to as “Fako” scores (as in fake scores), that are offered to the public, are not useful for any of those purposes.

Unbeknownst to the common man or woman looking at these scores, you are paying for a score that compares you to other people, but can be and often is vastly different than the scores used to qualify you for a mortgage or auto loan, for example. It is not uncommon for these “consumer” scores to be as much as 100 points different than the FICO scores that their loan officer might pull for a mortgage.

Now you are probably asking your self why anyone would pay for those scores. I ask myself that same question all the time. The only time I have ever known anyone to be even a little bit interested in their credit scores, is in the context of lend being able to get a loan or credit card etc.

There are a few rare people that watch scores closely because scores affect insurance rates and so on, but most people are not nearly that attentive. Heck, I’m a credit expert and help people with their credit for a living, and I don’t focus on my own credit that intently. I take care of following a basic plan and, other than a periodic check to make sure nothing has gone wrong, my credit is pretty much on auto pilot.

So why do those other scores exist, if they can’t be used for any real purpose such as lending? And why do people pay for something that has so little relevance and hence lacks any real value?

Well, I can tell you why they exist. There is an obvious need for people to know their scores, so they can get qualified for a loan. The challenge is that the algorithm that is used for mortgages, FICO, is very closely guarded and expensive for companies to obtain and use. So, if you don’t want to pay for the real thing, you make up your own and sell it.

It is all about making a buck.

Consumers, however, rarely understand that the scores are not relevant when considering lending. You have to really look and pay attention on those various sites to get any idea that they are not going to be helpful for lending.

I have worked with thousands of clients, and a high percentage of them were confused and frustrated by consumer scores, when they went to their loan officer to get a mortgage.

I have not taken the time to  evaluate all the services out there, and do not plan to do so. But I can tell you a few that we encounter on a regular basis that do not give you FICO scores for your money.

Credit Karma is one we hear of often. I have not had a single client that used that service that received FICO scores. If you use them to monitor your credit, and are focussing on your scores, check to see what scores they provide and remember that the scores may be light years from where your FICO score your lender will pull are.

Another example lies with the credit bureaus. Most people would think that getting their credit scores directly from each bureau would be accurate for lending. But most of the time, the scores being offered by them are not FICO scores. What is interesting, is that you can get FICO scores from them in some cases. You just have to dig for the right product. I know that Experian offers one particular product called Credit Check Total that provides FICO scores.

What I hope to make clear here, is that all scores are not the same, even when being pulled for legitimate lending purposes. Don’t be surprised if the scores you got when buying a car are different from the ones pulled for a mortgage. More importantly, I want you to remember that the majority of scores you will get from monitoring services will not be worth anything, if you are looking because you are planning to get lending. Don’t waste your money.

I hope you found this helpful and I welcome comments and questions. Please also share the information with your friends and contacts. Odds are they will learn something and be thankful for it.

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. A reputable company like Heartland Credit Restoration can help you turn things around and get that credit loan ready.

There isn’t a better company you can go to for help, and the consultation is always free.

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

Getting Threatened? Threats Are Not Okay!

“Pay us today or we will have the sheriff at your door to arrest you this afternoon!”

“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 seize your bank account and your home!”

“What do I do?” cried the young woman when she called me for help. “I don’t have that kind of money.”

She was practically in tears with fear over the threats that were issued buy the collection agent on the phone just a few minutes earlier.

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 is never acceptable for collectors to threaten people.

I have talked about and shared this information before, but with tax season upon us, I have noticed even more of this happening, as collectors prey upon people getting their tax returns back as easy targets.

The first thing I encourage all people to remember when dealing with collection agents, is that it is illegal to threaten anyone. They can not get you arrested. And, unless they have already taken you to court and gotten a court order, they are not going to seize your bank account or home. 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: https://www.ftc.gov/enforcement/ rules/rulemaking-regulatory-reform-proceedings/ fair-debt-collection-practices-act-text

In most cases, there is more to the situation than just abusive tactics. Commonly there are other issues as well on the credit report that need addressed.

If you have found yourself in a situation where you are getting those nasty calls, or just are at a point where you are realizing your credit is in rough shape and need help, a reputable credit restoration company like Heartland Credit Restoration is a great place to start. They are professionals that will treat you with understanding and compassion and help you get things turned around and eliminate those nasty calls. In fact, in just a matter of months you could be loan worthy again.

 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!

Aim Small, Miss Small – Your Results Depend Upon It

Have you ever heard the phrase “Aim small, miss small” and wondered what it meant? Or why it should matter to you in the business environment?

The phrase, commonly used in shooting sports, speaks to accuracy. If you want to hit the bulls eye of the target, you have to be aiming at the bulls eye.

That probably sounds painfully obvious, but as an archer and competitive pistol shooter in the past, I can tell you there is important truth to it.

You see there is much more to hitting the ten ring, or bulls eye, than simply pointing the weapon toward the target. You have to have a clean well functioning weapon, your hand steady, your breathing calm, your sights aligned, and you have to pull the trigger just right. If any of these things is less than perfect, the shot will be off the mark and not score as well. The more of these elements that are not perfect, the higher the chance of not hitting the target at all.

I remember early on getting frustrated with my coach about some of the little things that didn’t seem very important. I quickly learned that the little things can matter the most.

I particularly remember him showing me how he could move the weapon, when extended out and aimed, in a circular pattern about an inch in diameter and still score well, as long as his trigger pull was perfect. This meant that I didn’t have to get too worked up about being a little shaky, but instead focus on my trigger pull and aim.

The trigger pull matters because if I pulled the trigger anything but straight back, I would be either pulling the muzzle or end of the weapon to one side or pushing it toward the other, the result being a barrel that is not 90 degrees to the target but at an angle. When the barrel is at an angle to the target, the error gets magnified by the distance to the target, and it is easy to miss the target completely.

This brings me to the aim small miss small concept. If you have ever watched kids shooting bow and arrow, you probably have noticed that they can end up with arrows all over the place. They don’t really know how to aim the bow to get the arrow exactly where they want it, so just point it in the direction of the target, with the goal being to just hit the target and with the little fantasy to maybe hit close to the bulls eye. As a result, many arrows miss the target completely.

Watch those same kids shoot after being shown how to aim the arrow so it goes where they want it to go, and you will see much better groupings of arrows, meaning consistent performance, and almost all arrows at least in the target.

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So why does this matter to you?

Well, outside of participating in some type of shooting sport, it can apply to the instructions you give your team or clients. If you don’t give them a goal that is exactly what you want to achieve, the you will likely see results similar to the kids shooting in the general direction of the target and not only missing the bulls eye, so to speak, but often missing the target completely, a total fail.

I’ll give you an example. Most lenders and realtors, and many others for that matter, understand that balance to limit ratios on credit cards affect credit scores. Many will tell a client to keep their balances under 50% to help their credit.

Now, when a balance to limit ratio hits 50% it starts to hurt your credit scores. The higher the ratio goes, the more it hurts your scores, so it makes sense to not want balances to be in that area.

If they hit the target you gave them, great, they are not being hurt. But they are not being helped either. And what happens if the client is off the mark even a little bit? They are in the range doing damage to scores. We effectively told the client to shoot in the general direction of the target, trying to avoid the miss but did not tell them where to actually aim.

If you want the client to get the best benefit, you tell them to aim for a 4% balance to limit ratio. That will give them the best score. If they hit it fantastic. If they miss what they are aiming for, say by 20%, they are still well within the good range. If they miss by 40% they are at least avoiding any damage.

You see the difference? Aim small, miss small. This can apply to all kinds of situations, but I help people fix their credit, so think of things in that context.

How about telling people to pay their credit cards off at the end of the month? Do you think you are helping them? What if they pay their bill on the 30th and the cards reported on the 25th? Their ratios look terrible and their scores get creamed.

What if you then told them to pay the cards by the 25th? Fail. If they pay on the 25th, the payment won’t clear before they report the balances and your client is in the same boat as paying at the end of the month.

Now, tell them to call their card companies to find out when they report to the bureaus and then schedule their payments to clear the account 2-3 business days prior to reporting date, and you have a recipe for success. Aim small, miss small.

There are a multitude of things like this that can affect a person’s credit. The cool thing is that you don’t really have to worry about most of it yourself. Let a reputable credit restoration partner like Heartland Credit Restoration do it for you. Then you can focus on what you do best.

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 when you are done.

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!

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!

The Absolute Best Tool To Build Your Credit Scores

Want to know the absolute best tool to build your credit scores?

I would be surprised if you said no to that question. Almost everyone cares about their credit, to some degree. And I don’t know anyone that doesn’t want the secret to making their scores improve.

Heck, people throughout the world spend billions of dollars every year on self help books, seminars, programs, DVD’s, and so on, in their constant search for the miracle pill, trick or idea that will magically transform their lives for the better.

Can there really be a solution that is that simple?

The answer is yes. It can really be that simple.

Are you ready for the answer? Okay, here it is. The absolute best tool you can have to build your credit score is a credit card.

Are you blown away right now? Are you filled with excitement at knowing the answer?

I suspect right now you are anything but excited, and are feeling a little annoyed with me. I imagine there are a few of you who feel a little let down by that answer. I suspect some of you are thinking that a credit card is exactly what got you into trouble to begin with. Still others are probably disappointed because you have no desire or intention of ever getting a credit card and may even be insulted that I would tell you to get one.

Well, regardless, the fact remains that a credit card has more than twice the power to affect your credit score positively than any other single thing on your credit.

I can hear some of you sighing now as you lament over how credit cards got you into credit trouble and are the scourge of your credit report and scores.

I can understand that. Any tool that has tremendous capability to do good will also have tremendous capability to do damage. The only thing that determines the positive or negative result is how the tool is used. And that is up to you.

I want you to be able to get the best possible results, so I am going to tell you exactly how to use a credit card as the amazing tool to drive your credit scores up.

Here is what you need to do, in three simple steps:       images (3)

1.)  Get at least one credit card, if you don’t already have one. Ideally, if possible, get two cards.  You don’t need more.

Any card will do, as long as it is an actual credit card. Debit cards and preloaded cards that have the VISA or MasterCard symbol on them do not count. It has to be an actual credit line you have been extended. A secured card can work great if needed.

Get the absolute smallest credit line you possibly can. Don’t worry about the interest rate, but avoid annual fees, if at all possible. Interest rates only matter for those who carry over balances. That is not you.

If you already have two or more credit cards, then don’t get more. It won’t be helpful.

2.)   Now that you have a couple of cards, it is time to talk about the use of those cards.

I’m talking to those of you who just got new cards first. This includes those of you who got into trouble with credit cards in the past and are starting over.

For those of you who just got cards, DO NOT CARRY THEM IN YOUR WALLET. They are a tool to build your credit, remember? They are not supposed to be readily available for you to spend money.

The first thing to do is, and I realize this is a slight contradiction to my last instruction, take them with you the next time you go to the store for groceries. Use each card to buy a single small item, from your cart, of about $5 value. Pay for the rest with your regular form of payment.

You will now have a small $5 balance on each new card. Take the cards home and lock them up and don’t touch them. When the bill is due, pay it. Do not pay it early, but pay it in full. Paying early does not help your scores and paying the bill in full limits any additional costs. Repeat this exercise about every three to four months. Simply put a reminder on your calendar.

Another easy option is, if you have a very small reoccurring bill, to pay that bill automatically with the new card and then pay the card from your regular account. This option results in you never actually having to touch the card after locking it up. You just have to check the statement every month to make sure the payments went through properly.

For those of you who already have two or more cards, here is what you need to do.

If you use your cards very sparingly, mimic the cycle noted for beginners. This will have you getting ideal results with minimal effort and cost.

For those who use their cards heavily, call your card companies and find out when they report to the credit bureaus. Make note of those dates. Now plan on making your payments on those cards every month, at such a time so as they clear the account 2-3 business days prior to the reporting date. This will result in the credit bureaus only seeing your account with little or no balance and help your scores the most.

3.) NEVER, EVER, EVER, PAY YOUR BILL LATE

This might seem obvious, but you would be surprised at how many people rationalize late payments. I can’t even count the number of times I have heard the comment “ I wasn’t very late”. That my friends is like saying your not very pregnant. Late should never be seen as okay. Don’t give in the the slippery slope. Aim small, miss small, as the adage goes.

That’s it folks. It is as simple as that, simple but not always easy, especially for those you have multiple cards and use them heavily. For those individuals, I would encourage a new budget that gradually had you setting money aside for expenses, until you were able to pay cash for all those things you are charging to the cards. You still can use the cards, but now you have the ability to make the payments in a timely fashion, instead of waiting for the expense reimbursement to come in. If you are not using your cards heavily due to work related expenses that you get reimbursed for, that you just need to be patient enough to save the money before spending it.

Now I suspect some of you are wondering why it is such a big deal to have the balances paid down before they report.

Here is the short answer: High balances represent risky behavior and the higher you balances are, the more they hurt your credit. Low balances reflect more responsible behavior and help your credit scores grow. The lower the balances are, the more positively they affect your scores. The ideal balance to limit ratio appears from research to be at about 4%. That’s right, the best balance to have reporting to the credit bureaus, to most benefit your scores, is $4 on every $100 of credit limit.

I’ll give you a real life example. I had a client that we had cleaned up his credit report so that there was little or no negative remaining. His scores were in the 620 range. His credit cards all were at about 90% of limit. We had him pay them down the ideal range of about 4% and he saw a 120 point swing in his scores to a 740. That is why it matters.

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!

What a Hurricane can teach us about our credit

Hurricane Matthew is steaming it’s way along the east coast of Florida, tearing up the shoreline and coastal developments as it goes. Because of the unique track of the storm, those of us in central Florida were anticipating one of the worst hurricanes to hit the are in more than a hundred years. We were told to brace ourselves for the possibility of winds in excess of 100 miles per hour, heavy rains, flooding, extensive power outages and everything else that comes with such a storm. People were urged to evacuate low lying areas, especially those near rivers, and moble homes, as the storm approached.

Floridians have seen their share of tropical storms and hurricanes. The majority of those who live in central Florida have seen these storms come and go never experienced the major impact that was forecast. As a result, there were many here in central Florida that once again did not really worry about the warnings and preparing too much and instead held hurricane parties.       ABC_10616_MatthewForecast.jpg

Matthew was expected to make landfall near West Palm Beach and scrape the coast as it moved north, allowing the storm to continue to build from a category 4 hurricane to possibly a category 5, instead of losing energy as it hit land. I watched the progress outside periodically through the night, waiting for the winds to start howling. They never did. It turned out the storm track had moved east, about 20-30 miles further off the coast than initially thought, and we were spared the fury of the storm.

This had me thinking about credit. Credit is always jumping into my mind. I already have some people telling me "I told you nothing would happen". They were right. But this storm was different than any they had experienced before, due to the strength and track it was following. Had it not moved east and instead either stayed on the projected track, or worse, moved inland 10-15 miles further than planned, they could have been facing catastrophic loss instead of saying "I told you so". A mere matter of miles could have made a huge difference.

Our credit life is very similar. Every decision and choice we make can have a significant affect on our credit, depending upon how the circumstances play out. 

Many clients, that I have worked with, never had an emergency fund. They didn’t see the need to prepare in that way, since nothing had ever really happened to them and they thought the odds were it never would. I especially see this in young clients. Young people think they are bullet proof and nothing will happen to them. Then there is a portion of those unprepared clients that strangely had the idea that it was not their responsibility to prepare, the government was responsible to take care of them if something big happened.

Then there were clients that were constantly leveraging their buying decisions, buying things on credit when they didn’t have the money to pay it off, with the constant thought that they would be able to pay for it later. They never seriously considered that something as simple as a car breaking down, or being sick for a few days to a week , or going to the doctor would create a huge swing in their income and cause major credit problems. I have also often been amazed at how easy is seems to be for people to to make a purchase, thinking they can repay it, and then make more purchases the same way, without considering all of them together, and so way out spend their ability to pay it off.

One of the most common items to appear on credit reports are medical collections. Some people don’t get medical insurance because they don’t think they will need it or that someone else will pay for it. Others think that because they have insurance, that they don’t have to pay any attention to if the insurance actually gets billed properly, as if it is the medical facility’s problem to deal with, when in reality it is the patient’s responsibility to make sure the bill is paid one way or another.

The thing I want to get across is that, much like when a hurricane is approaching, preparation, planning, and paying attention to how things are actually progressing can go a long way to preventing or limiting how circumstances will affect your life and your credit. You may get the feeling that you prepared for nothing at times, but the reality is that a little effort on a regular basis can save you from a significant amount of distress and cost later.

I welcome your comments and and questions and ask that you share this information with 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!

In Credit, What Is An “Authorized User”?

Our credit is an assessment of our financial behavior over time and the scores we get are an assessment of how much of a risk we are to lend to. There are a multitude of ways we can build or destroy our credit. Much like anything else in life, it is much easier to destroy our credit than to build it. We can destroy things in a matter of seconds. Building tends to take time, especially in credit, where time is the key to everything. 

When we want to build our credit scores, we need to take actions that will result in positive information about our financial behavior being reported to the credit bureaus. One of the most common ways to do this is to get a credit card. Let’s quickly look at why credit cards are  great tool for building our credit scores. 

credit-score-breakdown.jpgOur credit scores are like a pie cut into five segments of varying size. Each segment or piece of the pie is a different size to reflect the degree of power it has in the over all score. Credit cards are powerful because they affect more pieces of the pie than anything else. First is payment history – which includes nearly every account of any kind reporting on your credit, including credit cards, making up 35% of your score. Next is balance to limit ratios or utilization – which make up 30% of your score. This segment is basically only affected by credit cards. If you don’t have any cards, then you miss out on a big opportunity to affect your scores. Next is the length of history piece of the scoring pie – which makes up 15% of your score. This is also primarily affected by credit cards, but can be affected by a long term loan such as a mortgage. Short term loans generally have little or no impact here because they have a limited life. Remember, time rules all in credit. The longer you do something the more opportunity there is for it to say something about you. Then there is the mix of credit piece of the pie – which is 10% of your score and then new credit – which makes up 10% of your score.

But it does not stop there. Credit cards also tend to start reporting on our credit much faster than loans. It typically takes about three to four months for a new credit card to develop enough history to start reporting on your credit report. A loan typically takes closer to five to six month to start to help scores. That is one of the reasons you will hear people say that if you are going to get a loan to help build credit that it needs to be at least a one year term or more, or it will be closed and gone before it can start to help you.

Credit cards also tend to cost much less than loans because you are not committing to or tying up a large asset, such as a car, over a long period of time.

It should be pretty easy to see why credit cards are such an important tool for building our credit scores.

But there are many people that can’t get a credit card or need to see an impact sooner than three to four months. That is where an "authorized user" credit card can come to the rescue.

Basically, an authorized user credit card is just a card that was opened by someone else, that the owner of that card then added you to, as an authorized user. This technically gives you permission to use the card just like the owner of the card. You are an "authorized user" of the card. The significance of this is that, if the card is reported to the credit bureaus, the card essentially looks just like it is yours. 

You might wonder why we wouldn’t just get our own card or a joint card with someone. Well, if you do not already have a credit score, getting your own can be very difficult. Getting added as an authorized user can be a great help in establishing your first score and making it possible to obtain your own cards or loans to build your own credit going forward.

The other thing to understand is, if you open a card jointly or by yourself, it is brand new and needs time to develop some history before it can start to help. If you get added an an authorized user, the card already exists. That means that when it starts reporting on your credit, that it will look like you have owned the cards since it’s birth and thereby get credit for all the history that is already on the account. Remember how I mentioned that our credit scores are an assessment of behavior over time? Well imagine getting added to a card that has been open for fifteen or twenty years, and suddenly having twenty years of positive history show up on your report. That could have a big positive affect on you scores. 

But that is not all. You do not have to ever touch the card, use the card or even look at the card to get the benefit, and you are not obligated to the debt on the card either. You just need to be added as an authorized user on the account  and it has to report to the credit bureaus.   images.jpeg

Another nice thing is there is very little risk to the owner of the card. Nothing about your credit gets reported on the owner’s credit. About the only risk to the owner of          the card would be if they were to give you a copy of the card and tell you to go play with it. That would be a disaster. But if they never give it to you to use, then there is very little concern for them.                                                                                                  

Some of you might be thinking that this is unethical. It is not unethical. It is allowed for because in many cases, even if they don’t have a copy of the card, the authorized user may be acting no different than a joint user, in the way they use and take responsibility for the account. The only difference is that they are not an obligor on the account. An example of this might be a wife adding her husband to her cards that have been open for years before they got married. If they wanted to have joint cards, they would have to open all new cards in addition to the cards she already has, or close her cards and open new ones jointly, thereby ending all the positive she has developed over the years on her credit.

There is something to remember though. Not all credit card companies report authorized users to the credit bureaus. If you want to the card to help your scores, you will want to call and make sure the company reports authorized users to the bureaus. Another thing to remember is that just as positive history on the card can help your credit scores, if the credit card gets paid late or is reporting high balance to limit ratios, then the card will hurt your credit scores. Be sure to only add or get added to a card if you fully trust each other.

I hope this shed a little light on what an authorized user credit card is, and that you found the information helpful.

I welcome your comments and and questions and ask that you share this information with 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!

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!

Can Credit Be Repaired?

I get asked questions about credit all the time. One of the most common is from lenders. They say " Paul, can credit really be fixed?"

The short answer is, yes it can.

Let me start by giving you some stats about your credit reports.

In Feb 10, 2013 CBS News reported about A study indicating as many as 40 million consumers have a mistake on their credit report. Since then there have been a few follow up studies. In the latest update in 2015 the FTC  noted that, in the case where an item was disputed as inaccurate with the CRA’s, "…of these consumers (nearly 70 percent) continue to believe that at least some of the disputed information is inaccurate."

Around the same time as the initial reports were released, the U.S. Government reported that,

One in four consumers identified errors on their credit reports that might affect their credit scores – that’s 25% of consumers

One in five consumers had an error that was corrected by a credit reporting agency (CRA) after it was disputed, on at least one of their three credit reports – that’s 20%

Four out of five consumers who filed disputes experienced some modification to their credit report – that’s 80% saw their reports modified

Slightly more than one in 10 consumers saw a change in their credit score after the CRAs modified errors on their credit report

and Approximately one in 20 consumers had a maximum score change of more than 25 points.

That’s what the stats say, and those numbers include both consumers that got professional help with their credit and those that did it on their own.

Now, Heartland Credit Restoration has a combined professional experience of over 50 years in the industry.

So our numbers are even better, 

  TRU Results 1.jpg   TRU Results 2.jpg   TRU Results 3.jpg

as you can see from these reports that some of our clients received directly from the credit bureaus, after making changes to their credit reports. How you go about the process of addressing negative and inaccurate information on your credit report really does make a difference. Our experience really pays off for our clients.

Now, credit restoration is not a magic wand. Things do not just get removed from your report, especially if they are in fact accurate.

And it does not generally happen over night. I’m not saying that things never get corrected quickly. But  remember that we are dealing with large corporations where one hand commonly doesn’t know what the other is doing, where departments are significantly understaffed to handle the work load, and where there is little or no financial incentive to even worry about doing it right, and so it can be a challenge to get them on the same page.  

Credit restoration is a process that takes time. For many people that means six months or more.

Remember, you didn’t get into credit trouble over night. So the problem is not going away over night.

So, once a person has their credit " repaired ", what does their credit look like?

Well we could spend a lot of time on that one, but I won’t.

It really depends upon your goals.

Generally, as far as we at Heartland Credit Restoration are concerned, it means your credit is loan ready – your score is high enough and your credit report is clean enough to to meet the requirements of your lender to qualify you for a mortgage.

That is where we at Heartland Credit Restoration would say "repaired" credit starts.

Well, that’s today’s credit tidbit.

I welcome your comments and ask that you share this information with all your contacts on social media. 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, and put the power of our experience to work for you. 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!

Why Should I Check My Credit Report?



"Why Should I Check My Credit Report?"

I get asked this question a lot.

On one hand, it seems obvious to nearly everyone that knowing what is reporting on your credit report is important.

But, on the other hand, that is kind of like saying it is important to eat healthy. We all know it. But that is not necessarily enough to get us to do it.

So lets give checking our credit report a little meaning and value.

I’ll give you five reasons it is important to check your credit report:

1. Identity Theft –             identity-theft-368x208.jpg               You would be amazed (or maybe not) by how many people have their identity stolen on a daily basis. According to an article published by the

Insurance Information Institute, it is estimated that 12.7 million people got their identity stolen in 2014 totaling $16 billion, slightly down from 13.1 million cases in 2013. You don’t want to be one of those. Keeping a close eye on your credit can help catch a thief quickly, and save you a lot of work trying to repair the damage.

2. Wrong Information – This is a little like identity theft, in that you have things reporting on your credit that have nothing to do with you. Those things can be very damaging to your credit. It is very easy for things to get onto your report that are not yours. Think about it. All it takes is a simple typing error at any point of a customer’s journey making a purchase, and you could have that info reporting on your credit. This is especially true when you have a common name, are a junior or 1st 2nd or 3rd. I see this most significantly with Hispanic names, as it is not uncommon for them to have multiple name elements that match for a father and all the sons. This gets compounded when the entire family gets their social security numbers at nearly the same time, because the numbers also end up being very similar. When you think about it, it is easy to see why it can be very important to know what is reporting on your credit.

3. Inaccurate Information – This information is yours, but not reporting correctly. This may not seem like a big deal in many cases. But you would be surprised how big an affect wrong balances on credit cards or wrong dates for late history can have on your scores. You might even have late history showing that was never actually 30 days or more late. This is all very important to keep an eye on. I often see errors like this that, when repaired, cause a significant change in a person’s credit scores.

4. Planning for Financing –        images.jpeg       Your credit report, and the score that is generated from the information reporting on it, have a direct affect on your ability to qualify for lending and the interest rate you will pay. You will want to be aware of how things are reporting, so you can act to maximize your opportunity and benefit when getting lending of any kind. A 1% difference in the interest rate for a $150,000 home on a 30 year mortgage will result in more than a $30,000 difference in the amount of money you will pay over the life of the loan. On a $250,000 loan it can mean a difference of more than $50,000 over the life of the loan. A little investment in improving your credit can pay huge dividends.

5. Credit Affects Everything – Your credit score can affect your ability to get a mortgage or auto loan and the interest rate you pay. This can be huge. I have seen a person’s monthly auto payment double from what someone else was paying for the same loan value, simply because of the difference in their credit score. Your credit score can affect your ability to open a credit card and the interest rates they charge. Does your credit card charge 0%-5% interest or do you get changed 29%? Your score (and your history on that card) will be the difference. Your credit score can affect your ability to rent an apartment, to open a checking account, or to get a personal loan. Potential employers will often check your credit when making a hiring decision, or when considering you for a security clearance. Your credit score can even affect the rates you pay on health, life and auto insurance. I have a friend who sells insurance that said more companies are using credit in setting the premiums customers pay. In fact, he mentioned he got several new customers that came to him because the particular company they were with was almost doubling their premiums at renewal, all because they were using credit scores in determining premiums now. 

I hope is is not only obvious to you that your credit is important to watch, but that it is important enough to act upon. Sadly, most people don’t worry about their credit until they need to use it.

Checking your report is free – You are allowed to get a free copy of your credit report from each of the three major credit bureaus one time every twelve months from

www.annualcreditreport.com

If you check your credit and discover that there are some problems, a reputable credit restoration company like Heartland Credit Restoration can make the process radically easier and timely, and they will make sure your credit is loan ready as well as life ready. The investment in your credit will pay fantastic dividends in all areas of your financial life over the years to come.

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

What Kind of Person Are You?

It is time to ask some questions.

What kind of a person openly lies to you or cheats and steals from others? What kind of person considers themselves above the law, but thinks others should be held to it? What kind of person would take an oath and then openly defy that oath? What kind of person holds others to a different standard than they hold themselves? What kind of person says they believe something and then does not reflect that belief in the way they live their life and conduct themselves professionally and socially? What kind of person cheats on a spouse or physically abuses a child, spouse or significant other? What kind of person would use anger over something that happened to someone else as an excuse to loot and burn businesses? What kind of person says that it is my right to choose to kill another human being and not be accountable for the choice that resulted in that person’s existence? What kind of person thinks that because another person was killed by a cop, that is is acceptable to target and murder cops? What kind of person thinks that death threats are acceptable because a business suggests vegans not apply for a job, when the job entails tasting foods not in line with that diet choice? What kind of person would choose to be represented, before the entire world, by someone who has contempt for the law, violates public trust, uses public service for personal gain, perjures themselves before congress, mishandles secret information that ends up in the hands of the enemy, leaves those in need high and dry and is a part of efforts to rig an election? (Don’t worry, this is not a political piece). 

What kind of person stands by and just does nothing in the face of such degradation and defilement, or worse, supports it?

I doubt many people would argue that one answer could be used to answer all of these questions. THE ANSWER WOUD BE "A BAD PERSON".

Sadly, this is just a small smattering of what is going on in our country today. Even more sad, is the fact that this can and probably should be seen as an indictment of most if not all of the people of this country, myself included.       finger pointing smaller.jpg

Now, I am not here to indict anyone. That would place me in a position to judge people and label them as bad. That would make me part of the problem. I love people, but I hate the things that people do sometimes. And I am here to say there is a horrific problem in this country that is getting worse by the day. That problem stems from a level of complacency that has grown to monumental proportions and combined with a twisted sense of what "love" is. The result is that we are a people that are desensitized by constant exposure to and have become accepting and tolerant of evil and sinful behavior, and it has become the norm to allow it to happen. It almost seems like there is nothing we can do about it and that it is all hopeless.

But I am here to say it is not all hopeless! It is written that "The path of the virtuous leads away from evil; whoever follows that path is safe" (Prov 16:17) It is also written that "The prudent understand where they are going, but fools deceive themselves" (Prov 14:8). We are not fools! We can make a change.

We can look at the world around us and be shocked and dismayed by the way others act, but we can not control the horrible choices that others make. We can not expect to be able to change their minds through logic or facts. Solomon, one of the wisest people to ever live, wrote "Fools have no interest in understanding; they only want to air their own opinions (Prov 18:2). 

We can not sit around and do nothing either. "Work brings profit, but mere talk leads to poverty!" (Prov 14:23) "A lazy person is as bad as someone who destroys things (Prov 18:9). 

The fact is that any change has to start with us, instead of pointing fingers at others. We need to "Turn away from evil and do good; seek peace and pursue it" (Psalm 34:14). We need to not be overcome with evil, but overcome evil with good (Rom 12:21). We need to remember, "Keep the commandments and keep your life; despising them leads to death" (Proverbs 19:16). "Godliness makes a nation great, but sin is a disgrace to any people" (Prov 14:34). 

Our lives, choices and decisions need to be in that framework of right and good. Starting with ourselves, we need to live striving for the higher standard and being intolerant of defiling behavior. "Those who follow the right path fear the Lord; those who take the wrong path despise him (Prov 14:2).                images.jpeg

When we make choices in our lives, we need to seek the higher standard. When we make decisions about who we will choose to lead or represent us, we need to expect and demand an even higher standard. A leader, at any level, plays the roll and carries the responsibility of representing who and what we are, the face, beliefs and convictions of us, to a greater audience. We defile ourselves when we choose a leader who demonstrates defiling behavior. We are, in part, telling the world around us that what can be seen in the leader we choose, is what we want the world to see about us.

These words are especially pointed at the Judeo-Christian part of the world, as many of these words come directly from the bible and are supposed to be foundational to our beliefs. But, though many non-believers will jump to that point as not applying to them because it is from the bible, the fact is these words are wise for all people, especially a nation that is formed as One Nation Under God, indivisible, with liberty and justice for all.

Now, in that light, I have a confession to make. There was a time when I hated some people, not many, but there were some. Those that are closest to me have seen it. There was a time, for example, when the very existence of Bill and Hillary Clinton was offensive to me and made me recoil in disgust and hate. Their behavior and words were the antithesis of what I believed was right and acceptable from anyone, especially a leader. I literally had a physical response of revulsion. I present this example because Hillary and her performance and defiling behavior is so prominent in the news of today.

But I was wrong, so very wrong to allow myself that feeling of hate toward another person and to allow that feeling to direct my actions. That was and is not the standard that God, through Jesus Christ, set for us. We are called to love the sinner, which is all people, for none on earth are without sin, but to hate the sin. The Holy Spirit convicted my heart for that, and helped me see how I needed to change. It as been a long hard road, one that has only been possible by God’s grace, that has allowed me to separate the sin from the sinner, love all people as God’s creation, yet hate the sinful things we people do and, in as loving a way as possible, stand against that sin. 

It is extremely challenging, and I can not claim to even be good at it, but with God’s help I strive for God’s standard. In doing so I can make a change in me and the immediate world around me. It is my prayer that we would all seek to do the same, and in turn, that our nation would get off the path to destruction we find ourselves on. We can all change. There is hope. All is not too far gone and lost.

I love people. I love to help people. I love making a difference in their lives. I love that I have been blessed to be able to do so in my life as well as, in some small way,my career in credit restoration. It is so very gratifying to get the opportunity and be able to speak hope into another person’s life, especially when things seem out of control. So I am going to say it again. There is hope. We can change things. We do no have to tear everything apart or start over. We just need to change our direction in our personal lives and the choices and decisions we make, by making sure those choices and decisions do not defile us or those around us. If we all strive for that change, our nation will change with us. 

God Bless America!       images.jpeg

If you or anyone you know is facing credit challenges and would like some help, Heartland Credit Restoration is a great place to start. Give yourself the opportunity to change your situation. Call or email me for a free consultation today. 

The same goes for those of you who are realtors or lenders and have clients with credit challenges. Tell them you know a company that is fantastic at helping people find hope and get their credit loan ready, so they can realize their dreams a new home. Ask them if they would offended if you forward their contact info to me. 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.  

I welcome your comments and encourage you to share this on your social networks, and as always, I hope you have a wonderfully blessed day!

There Is Always Hope!

“There is nothing that can be done” she said. “We already disputed the debt and it turns out we do really owe it. Besides, I know how to read a credit report and there is nothing that can be done.”

Have you ever heard this kind of comment from someone? I have, many times. Commonly it stems from a feeling or sense of pointlessness or futility when things are just not going according to plan and things start to feel hopeless and we feel defeated.       images.jpeg

I think most of us have been there, to some degree, at one point or another. It is always a challenge, as we are faced with giving up or persevering.

In this case, the young woman I was talking to and her husband were facing a situation where their credit scores were preventing them from getting a home loan. Their scores were about 40 points from where their lender wanted them to be to get a loan for them. That is not too far off and very reasonable to overcome, in most cases.

She had several issues on her credit, that made it very clear that she needed repair help, and that she could get qualified. But they needed both incomes and therefore both credit scores to qualify for a loan. The challenge was her husband’s credit. There were only two or three collections on her husband’s credit report, and as far as she was concerned, only one of them was having any real affect on his scores (remember how she said she knew how to read a credit report?).

The collection she was referring to was for about $1000 and, when they did not recognize the debt, they had disputed the account with the creditor. In that process, they discovered what the debt was, and that they indeed owed the money. To this young woman, that meant that there was nothing that could be done about her husband’s credit, since in her opinion the other collections didn’t matter.

It quickly became clear to me that this woman and her husband really felt defeated after being declined for a mortgage and then disputing the collection, thinking that might solve the problem, just to find out it was a legitimate debt.

I could understand feeling that way. There are many emotions that start to come into play at that point. They probably felt a bit embarrassed about getting declined, a little angered or offended that there was a debt reporting that they didn’t think was theirs, a little excited at the idea that they would just dispute it and it would go away and they would suddenly be qualified, disappointed when they found out it was theirs and wasn’t going away, embarrassed at thinking that way and being wrong, and so on. It can be a roller coaster of emotions. I’ve experienced that roller coaster and I’ve seen it many times.

images.jpeg                           I tried to speak some hope into the situation and pointed out that there were several other opportunities to improve things on their reports. I also pointed out that the debt amount was not what was hurting his scores and that there were clearly issues with it reporting incorrectly that were more significant. There was no doubt in my mind we could get the errors corrected and help the two of them get qualified for a loan.

She then changed gears on me, as if she had not heard what I was saying. She became fixated on the fact that their scores were distinctly different on the latest credit report than they were when they had credit pulled for a possible auto loan just a month before, and that there was nothing different on the report and that something was clearly wrong. There are many ways this can happen and I explained some of them to try to get her past that issue. I told her, if anything, it made it that much more clear that there were issues that we could get corrected.

Again, she seemed to not even hear me. She was so fixated on the fact that she knew how to read a credit report and therefore that there was nothing that could be done, that she could now only focus on the conspiracy theory that must be behind the inexplicable drop in their scores.

Here was a strong, intelligent woman that was so blinded by the emotion of their situation and her pride about what she thinks she knows, that she was unable and/or unwilling to recognize that she had an expert telling her it could be fixed and if they didn’t do something, their scores would not improve and they would lose their chance at the home they want.

I would love to say that I got her turned around and she and her husband now have great credit scores and got their home, but I can’t. I blame myself, to some degree, for not being able to help her overcome her emotion and see the hope that really was there. But I won’t give up on them. It means a great deal to me to be able to help people out of those defeated places. That is why I do what I do.

What I really want to point out with this story, is how we all exhibit this kind of behavior, to some degree, at some point in our lives. If we allow ourselves to stay thinking and feeling that way, then we are going to get a known result, and it won’t be a good one. We may not like the situation, but focusing on not liking it or someone, will not change anything. We have everything to lose and nothing to gain if we stay in that place. We have everything to gain and nothing to lose, if we take it one step at a time and push through and persevere.
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I want to encourage everyone to persevere and strive for the possibility of better things. We know if we stay on the same course, we will just get more of the same or worse. Don’t settle for more of a bad thing. Remember that there is always a chance to make things better, if we are willing to keep moving forward. 

If you or anyone you know is facing credit challenges and would like somehow and some 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 are realtors or lenders and have clients with credit challenges. Tell them you know a company that is fantastic at helping people find hope and get their credit loan ready, so they can realize their dreams a new home. Ask them if they would offended if you forward their contact info to me. 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.   images.jpg

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!

Please Don’t Co-sign

I have worked with thousands of clients who have come to me with all kinds of credit issues. In every case we have been able to help them get those issues corrected and help those clients get their credit loan ready.

There are some things that people do that can have epic impact on their credit. Bankruptcy and divorce are two of the biggies. It should come as no surprise to you there. We all have heard the horror stories about one spouse holding the credit of another hostage, or creditors failing to properly report the accounts that were included in a bankruptcy, and as a result trashing a person’s credit.

One very big action, that does not immediately come to mind for people, is co-signing on a loan.

I understand why people do it. But, from a credit perspective, I have to strongly advise you never do it. When you co-sign a loan, you are opening yourself up to a pandora’s box of potential problems and credit pain.

images.jpeg            Most of the clients I have dealt with, that have co-signed a loan, are parents that signed with one of their children. Usually they have signed on a note to purchase an automobile. Now, I’m a parent, and I get it. You want to help your child out. You want them to have the best opportunities. You want them to have it better than you did.

But the bottom line is that they are never really going to have it good until they can be responsible for themselves. That would mean that if a car is important, they make a plan and work that plan and buy the car themselves. It will take a lot longer, but it will empower them and save you from disaster.

If you want to help them, teach them to follow a budget, how to save money and how to develop their own credit profile. Give them the tools and teach them how to use them. Don’t just give them the result. They will never appreciate it and you will be creating an entitlement monster.

But more importantly, you will avoid the epic disaster should they start missing payments or default on the loan. Now, you would be amazed by how many clients that have told me that they didn’t think they should be affected by the actions of their children, in these cases. It is almost shocking at times.

If you co-sign a loan, you have to remember that you are really getting your own loan, in your name, that you are responsible for. Only you are having the bills for the loan sent to someone else and you will never know it is not getting paid on time or at all. Also, the collateral that is securing the loan, the car, someone else has total control over.

If they start making late payments, your credit is damaged as if you were the one missing the payments. If the car gets repossessed, it is physically taken away from the child, but financially taken away from you. Now, because of someone else, you don’t have the car, and you are now on the hook for the remaining amount owed on the car, minus the money the bank gets for selling it at auction after subtracting the cost of selling it, which is next to nothing. (I have seen a forty-five thousand dollar truck sell for a few thousand dollars at auction, and after selling fees, the original owner still owed thirty three thousand dollars on a vehicle they will never see again.)       images.jpeg

That’s not all. All late payments are going to directly reflect in your credit. A single 30 day late on a loan can cost you 50-100 points or more, depending upon how good your score is to begin with. It will take you 6-8 months to recover most of the damage caused by that single 30 day late pay.

If the loan defaulted and there was a repossession, voluntary or otherwise, there will be multiple late pays and even more damage. Plus a repossession of a vehicle is just as damaging to your credit as a foreclosure on a house. It will not only cost you even more points on your credit, but it will, in many cases, prevent you from getting a mortgage for 2-3 years.

The same things will happen to your child’s credit, but if they were having you co-sign, they were not likely to be thinking about a mortgage for a while. It is far more significant for you.

What’s more, the bank is not going to go after your child alone. They are going to come after you. If you give them trouble about paying, they can take you to court and get a judgment against you, which opens the door to aggressive collection actions and another big negative on your credit.        

Now, I know not all kids are going to put you in that position, and that not every person you might co-sign with is one of your kids. I also know that many people co-sign on a loan and never have a problem. But let’s face it. Kids are generally not very responsible. They are kids, not adults. That is why they need you to co-sign in the first place. The same generally goes for anyone else that would want you to co-sign for them.        images.jpeg

So do yourself a favor. Stand strong and don’t co-sign. You will avoid the possibility of great pain later.

But if you have been bitten by co-signing a loan with someone, a reputable credit restoration company like Heartland Credit Restoration can really be a big help in getting things back on track and your credit loan ready. Give me a call for a free consultation.

Creating Credit Scores

Credit scores are an important part of our daily lives.
They affect our ability to get a mortgage, get an auto loan, a personal loan or a credit card. They can even affect getting a job or our insurance rates. If, our score is bad, or worse yet, we don’t have a score, things can get difficult.

So, it is not surprising to me that people wonder what it takes to get a credit score. What is surprising, is how the perception is presented that, for many people,  it is really hard to have or get a credit score. Just a heads up, I may travel down a rabbit trail at some point. It is important to me that people get the help they need. In that zeal I can get a little worked up, so please show me a little grace the it happens.

There is not really a complex formula to creating a score. Basically, you have to have something positive about your financial activities being reported to your credit report.

According to FICO’s website, as long as your credit report contains the following minimum requirements, you should have a FICO credit score being developed:
    – At least one account that has been open for six months or more
    – At least one undisputed account that has been reported to the credit bureau within the past six months.
    – No indication of decease on the credit report (Please note: if you share an account with another person this may affect you if the other account holder is reported deceased).
That’s it. That is all it takes to have a FICO score get generated for your credit.

Now, there are many important elements to having a “good” credit score, and I will cover many of those in future posts, but it is generally fairly simple. 
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First you need to have an account that you get graded on. This is basically a credit card, a personal loan, auto loan or a mortgage. As noted above, you only need to have one to be able to generate a score.

Second, you need to get a good grade on that account, if you want a good score. You accomplish this by always paying your bill on-time. In the case of a credit card, you also keep your balances low compared to your limit, when it gets reported to the bureaus each month. You don’t need to spend lots of money and you don’t even have to spend any money each month. In fact, ideally you will spend very little each month (of course credit card companies would cringe at me saying that).

Now, you are probably wondering what is third. Well, you don’t have to have a step three in order to get decent credit scores. If you add a couple more accounts, so that you have what would be referred to as an ideal mix of credit, you will see your scores grow more quickly and reach into the top tier scores more readily. The ideal mix is basically 2-3 credit cards, an auto loan and a mortgage. Anything more is basically overkill and not going to get you any appreciable additional benefit.

The key from there is time, time always paying those accounts on-time, and in the case of the credit cards, keeping them open forever with balances low when they report to the credit bureaus. The older they get the more power they have on your credit. 

That’s it. Good credit is the result of discipline and consistent good fiscal behavior over time. That is basically all there is to achieving good credit scores.

I hope you can see that credit, in general, is indeed simple. However, that does not mean it is easy. Life happens, and I get that. The Lord knows that I am indeed aware of that.

That is where the complexity of the scoring equation comes from.       

The job of credit scoring basically is to create an indication of how likely it is that a person will default on a debt. The algorithm for credit scores is very complex and considers everything relating to credit transactions that is reported on your credit report, and from many different angles.

This happens because statistics show, for example, that there is a clear difference in the likelihood of defaulting on a debt, between one person who was late on five accounts all at the same time, indicating an isolated circumstance, and and another person who was late five times over a period of time, demonstrating a pattern of failing fiscal behavior.

Some people are really bothered by this and think it is unfair to be judged by past behavior. images.jpeg    Those people somehow have been duped into believing that accountability does not apply to them. But like it or not, the real world cares about your history. Those that ignore or forget history, are doomed to repeat it. (That is something I learned in late elementary or early junior high school, and it has stuck with me ever since.)

I have still had people try to disagree with me, in spite of what I just noted, but a simple analogy almost always stops them in their tracks… most of them anyway.

That analogy is to look at things this way: Suppose I had a dog that  was really nice. It was fantastic with children and adults alike, and seemed to have the best disposition you ever saw in a dog. Would you let you children play with it?

Almost always I get an affirmation that yes it would be fine for their kids to play with the dog.

Now, how about if I told you that the dog had bitten children, without any warning or provocation, on five occasions over the last year. Would you still let your children play with that dog? Or, how about if it had only bit a child once, but had really injured the child seriously?

The answer is always an emphatic "NO". 

So, though those people, just a short time ago, had told me it is wrong or unfair to judge them by their history, they were in fact completely willing to do the very same thing. 

This brings me to another element that finds its way into the conversation, and though it may be a bit of a rabbit trail, here it is.

There is a lot of talk about some sectors of society, millennials for example, and how credit eludes them, disenfranchises them, or that it is unfair to require them to get credit, when they don’t want to get it.           people-standing-in-line-up-1762501.jpg

Well, it’s not really true that they can’t get credit. For the most part, the notion that the scoring system disenfranchises them or is unfair to them is nothing more than political misspeak politicians use for the purpose of political gain, in my opinion. 

The reason I say that, is there are many avenues to establish credit, that are relatively easy to get, if you are willing to front a small amount of money to secure the line of credit. There are also some other less traditional things, such as getting your rent payment history reported to the credit bureaus, to show consistent good fiscal behavior.

But more than that, it strikes me as a bit silly to think you should be able to get major credit, such as a mortgage, when you have never done anything to show you can responsibly pay it back.

You have to pay to play folks. If you don’t want to use credit, or use it properly, then don’t complain about not having it or it costing you a lot. If you want to pay cash for everything, that is fantastic. That will prevent you from getting yourself into trouble. That is your choice.

But with all choices come consequences, either good or bad. In the case of paying cash and not having any credit, you will have to pay cash for your automobile or house too. You may also pay a little more on your insurance etc. You know that when you make the choice. If you don’t want it that way, then you will have to accept the fact that you need to establish credit, even if it is just to use as a tool for your future plans. The point here is that credit is available, and whether you choose to have credit or not, you know what you will get as a result of that choice.

Maybe some people are not ready for credit. And for those that are not ready for it, maybe that means they are not ready for the things that require a good credit score to obtain. Maybe they just need to work their way up to that point. Let’s face it, obtaining financing for something is not a right. It is a privilege that is earned by demonstrating fiscal responsibility over time.

That is what it takes to create good credit scores.             approved4.jpg

If you or anyone you know is facing credit challenges and would like some 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 are realtors or lenders and have clients with credit challenges. Tell them you know a company that is fantastic at helping people get their credit loan ready, so they can realize their dreams a new home. Ask them if they would offended if you forward their contact info to me. 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!

Can I repair My Own Credit?



I get asked all the time about credit. One of the most common is " Can I repair my own credit?"

The simple answer is yes. Yes you can. 

Now, why would a professional, with one of the best credit restoration companies in the country, say such a thing?

Well, the reality is that there is nothing that you pay other people to do, that you can’t do your self.

You can fix your own car, drill your own teeth, give yourself shots, do your own taxes, represent yourself in court, grow your own food make your own clothes. Heck you could even conduct your own brain surgery, if you really wanted, though I doubt even the greatest brain surgeon would operate on themselves instead of have a colleague do it.     brain surgery on self.jpg

The list is endless. The real question though, is if you have the time and knowledge to do it at all, and if is sensible for you to go it alone. 

When it comes to credit, the perception that "all it takes is a few letters", leads many people to believe they don’t need a professional or that they should not have to pay for their help. The perception is made worse by credit repair companies that promise unrealistic  results overnight, making it sound too easy.

Heartland Credit Restoration has conducted free consultations with thousands of potential clients. Some just needed pointed in the right direction. Some were not ready for repair and we declined to take them on as clients. Many have engaged in repair and I personally have helped over 3,000 people to achieve "loan ready" credit. But there have been many times when clients, that clearly needed repair, decided to go it alone.

I don’t know of a single one, that went it alone, that was more than marginally satisfied with the results, and most come back to us frustrated and asking for help.       images.jpeg

Credit just takes a ton of time and focus to get things changed and make sure they stay corrected. 

I remember reading a news report about a man who spent three years and seventeen attempts disputing a single inaccurate item on his credit with a single credit bureau, and the entire time, he was providing them with documented proof of the inaccuracy. What should have been a slam dunk, in anyone’s book, took seventeen months!

Now that is an extraordinary expample, but it makes the point well. Just because something seems simple, does not mean it will be easy or work out the way it obviously looks like it should. 

If you want something difficult or complex done well, and in a timely manner, have a professional help you.

When it comes to restoring your credit, that is where a reputable credit repair company like Heartland Credit Restoration comes in.

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 are realtors or lenders and have clients with credit challenges. Tell them you know a company that is fantastic at helping people get their credit loan ready, so they can realize their dreams a new home.  Ask them if they would offended if you forward their contact info to me. 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!

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.
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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!

What Is DLA? This Is Huge On Your Credit




Have you ever heard someone talk about the DLA or date of last activity of an account, having an affect on your credit?

Some of you may have heard about it and some of you maybe not.

Date of Last Activity has a big impact on your credit because it is basically all about payment history, and payment history affects 35% of your credit score.

The challenge with Date of Last Activity, is the term has changed meaning over time and creates a lot of confusion.

Date of Last Activity used to basically mean the last time anything happened with the account, some kind of “activity”.

A problem arose though.

Companies, especially collection companies, would essentially constantly update the date of last activity of the account. This would make it look brand new on the credit report, which caused two problems for the consumer.

First, because the account looks brand new, it has the most negative impact on the credit score possible.

Second, the time clock that determines how long the negative item can be on your credit report, resets.


You see, the law says that a potentially negative item can only remain on your credit report for seven years. This is so that we as consumers are not forced to carry the burden of a past accident or mistake forever, and allow us to recover and move forward again.

If the clock keeps resetting, the negative will never go away.

The federal government, when they became aware of this abusive tactic, changed the law in 2009.

At that point the DLA was changed to mean the last time a payment was made in good standing to the original creditor.

So, to illustrate:

If you have an account with ABC credit cards, and you go 30 days late this month, the Date of Last Activity clock starts ticking. If you pay it current, then you are back in good standing and the clock resets.

But if you continue to be late and the account  goes 60, 90, 120 days late, and becomes a collection, the clock keeps ticking.

Now here is where it becomes important.                               images.jpeg

Once the account moves into a collection status, it can never go back to good standing.


Why is that important?

It is important because now the DLA can not legally change. And this is where the big credit challenges and confusion come into play.

Many companies are using the old concept of Date of Last Activity and these companies report it wrong on your credit, and it hurts your credit scores.

images.jpeg          If you find this a little confusing, don’t feel bad, even many who work on credit get confused, and I can’t even count the number of companies that report the the credit bureaus, that don’t get it right.


So where does that leave us as consumers? Well, hopefully it means you now know that there is a good chance there are errors on your credit report, and that it might be a good idea to check your report. You might be getting hurt on your credit when you should not be.


You are probably also now thinking, it might cause problems if you are paying off collections, and you want to know more. You would be right. Going out and paying off collections on your credit can crush your credit score, if you are not very careful.

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!

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!