1. finance
2. personal finance
3. lending
4. credit cards

CREDIT FOR SUCCESS
“Plan of Action”
How to Repair Your Credit
Repairing your credit has different meanings to different people. In the past I have talked with
customers who thought that they had bad credit and that they were in need of credit repair. After
a more detailed conversation, I learned that the customer really did not have a credit repair issue.
Rather, they had a need for credit education.
In order to repair your credit you must have items on your credit report that are erroneous,
inconsistent or inaccurate; these items would need to be corrected. When items on your credit
report are being reported accurate and complete, and your scores are lower than you desire, you
do not need credit repair. You need to increase your knowledge about how the credit wizard
works. For example: John has a credit card payment on his credit report showing he has been 30
days late. If John was not 30 days late on this credit card then he would need to correct or repair
this listing on his report. But what if John’s credit report showed him 30 days late and John was
actually 30 days late on the credit card? This late payment might bring John’s credit score down
by 30 points. Does John need credit repair? No. John needs to know that he must make his credit
card payments on time every month in order to avoid his credit scores falling and to maintain his
current score.
I have also met people who believed that they had good credit when their credit was very poor.
They knew that they always paid their bills on time and that they should be viewed as a good pay
master…and they are. But being a good pay master does not determine how high your credit
score will go! Paying your bills on time only affects 35% of your total score make up. If you
happen to pay all your bills on time, but maxed out your credit limits it could cause your credit
score to be very low.
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The credit wizard can be a complex system if you do not understand how the System works.
Once you become educated about the System it is as easy as 1 + 1 = 2. Learn and follow the
formula and you will get the desired results every time.
The process to repairing your credit is relatively simple, but you must be patient and persistent in
order to succeed. Don’t give up! You must spend time learning what to do and what not to do as
it relates to the credit wizard. Know the triggers that increase or decrease your scores. Never take
an action based on what you hear from a friends and relatives who are not credit experts.
Remember, you do not need a credit repair company, an attorney or a credit professional to
repair your credit. These services can be quite costly over time and chances are you will need
them more than once. You SHOULD seek the advice or counsel of credit professionals and
attorneys but only to learn the intricate details on how to repair your own credit. I highly
recommend that you give ample time and studying to the Credit Repair System before you begin
the credit repair process on your own, especially if you do not have a personal credit coach.
How to read a Credit Report
The first step in getting started is to get a current copy of your credit report from all three credit
bureaus. This is a fairly simple and easy process. But what good does it do for you to order a
credit report if you cannot read it? If reading your credit report is like speaking a foreign
language, then you are going to need help.
Credit reports come in a number of different fashions and designs. The templates used for one
bureau could have a totally different look from the templates of another bureau. However, they
all basically contain the same information. You can get copies of your credit report by several
means. You can get a free copy required by federal law, or you can pay for a copy from one or
all of the credit bureaus. In my experience, copies that are purchased are more reader friendly.
Credit bureaus make money on these copies therefore they take extra effort to make their
templates appealing and easier to be read by the customer.
2
Whatever style of report you choose to work with, make sure you are very comfortable with
reading the information. Below is a list of information, terms and phases you will see on a
standard credit report:
General Information:
This section includes borrower name, co-borrower name, current addresses, previous addresses,
marital status, social security number, date of birth, employers, AKA, etc.
Credit History:
Creditor name and account number: you will see the name of the creditor and the account
number. The account number may not match the original account number, especially if the
creditor listed is a collection company.
Type of Account:
O = Open
M = Mortgage
R = Revolving or opened ended
I = Fixed number of payments
Different Dates:
a) Date Reported – date creditor last reported account status information to a credit bureau
b) Date Opened – date that the account was opened
c) DEL Dates – date(s) that the account was delinquent
d) DLA – date of last activity reporting from the credit reporting company
e) PP Start DT – the date that pay payment starts on
High Credit:
This is the highest credit limit extended by the creditor
High Balance:
The highest balance that the account has ever had
3
Balance/Terms:
This is the balance owing as of the last date reported. Term shows the repayment arrangement or
payment amount
PDA (Past Due Amount)
This is the amount due that has not yet been paid
Historical Status:
The number of times an individual has been past due in paying an account and how long it was
past due. Example: A one (1) in the 30-day column indicates an account was 30 days past due
one time. A three (3) in the 90-day column indicates an account was 90 days past due three
times.
a) Times past due columns are as follows: 30+ days, 60+ days, 90+ days or 120+ days
b) Months Reviewed (MOS/REV) indicates the number of months a creditor has been
reporting the account to a credit reporting company
Manner of Payment Codes:
These codes may also be located under Present Status or Current Rating
0 = Too new to rate
1 = Pays within 30 days of due date
2 = Pays between 30-60 days or is 2 payments past due
3 = Pays between 60-90 days or is 3 payments past due
4 = Pays between 90-120 days or is 4 payments past due
5 = Pays over than 120 days or more than 4 payments past due
7 = Makes regular payments under debtor’s plan
8 = Repossession (voluntary or involuntary return of merchandise)
9 = Bad Debt
ECOA – Account User Designation (Equal Credit Opportunity Act)
A = Authorized user (Account is shard by an authorized user)
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B = On behalf of another person (Individual has signed an application for the purpose of
securing credit for another individual other than spouse)
C = Co-Maker/Joint contractual liability (applicant has co-signed and will be responsible
if Co-borrower should default)
I = Individual Account (solely responsible for payment)
J = Joint Account (applicant and one other person are responsible)
M = Maker (applicant is primarily liable for the account, but a co-maker is involved to
assure the loan is paid
P = Participant Account (applicant participates in a shared account which cannot be
distinguished as a co-maker or an authorized user)
S = Shared Account (creditor shows that applicant and at least one other person shares
account, but not enough information is given to designate as a point or authorized user
account)
T = Terminated Account (applicant’s relationship with account has ended, although other
parties who once shared the account with applicant may continue to maintain the
account)
U = Undesignated Account (creditor does not indicate who is responsible)
Comments:
This section adds creditor comments regarding the account. It will state if the account has
been placed for collection, charged off, medical account, etc.
If the creditor is a collection company they will typically use the comment section to show
the original creditor.
Public Records:
Lists of public records which have been filed in a county, state, or federal court within the
last seven years, such as bankruptcies, foreclosures, judgments, and tax liens.
5
Inquiries:
Lists creditors who have requested a copy of the applicant’s or spouse’s credit report through
one of the national credit reporting companies with the past number of days.
Knowing
what information is included in a credit report and how to read it is essential to
repairing your credit file. Once you have established a minimal level of knowledge you can
begin a genuine review of what needs to be corrected, and plan the necessary steps to complete
the process.
The first step is to make sure all information on your credit file is accurate and complete. Having
inaccurate and incomplete information on your credit report is a sign that there could be fraud,
identity theft or other forms of erroneous and misleading information contained therein. Make
these corrections first and then begin the repair process.
The Plan of Action
The plan of action is not as complicated as you would think. Regardless of what you have heard
about credit repair in the past, when a negative item appears on your credit you only have five
options to take. You can pay the item in full, settle it, dispute it, wait it out or take legal action.
There is no particular rule as to which option to choose; the decision is entirely up to the depth of
your financial knowledge.
Let’s take a look at these options in details.
PAY I8 FULL – You may choose to pay the full balance of the credit item without protest.
SETTLE THE DEBT – You may contact the creditor to request they take a lesser amount than
owed. This action should always accompany a written arrangement.
DISPUTE THE DEBT – You may protest the debt in writing to the creditor or the credit
bureaus, requesting that the items be deleted.
6
WAIT IT OUT – You may wait for the items to drop off of your credit after the FCRA
Statutory time frame. Usually 7-10 Years.
TAKE LEGAL ACTIO8 – You may choose to seek legal recourse against your creditor or the
credit bureaus for illegal actions performed.
Whatever actions you choose, you want to make sure you have all the facts and clearly
understand the procedure for getting your desired results. Evaluate each credit line closely to
determine which action should be taken. You may find that you need to take more than one
action for a single credit line.
Take a moment to study the sample Credit Report below for exercise and to build your
confidence before you begin working on your own credit file. Locate all the specific dates in the
report and study to determine if the dates make sense or seem to be inaccurate or inconsistent.
Pay close attention to date of last activity as this is the most erroneous date listed on credit
reports. Look for inconsistencies in months reviewed and present status.
Try to find the creditor’s name and the account number. Also note that this section of the credit
report will usually have comments by the creditors added to it. Identify the section that covers
the payment history, and take extra caution to verify the past due dates, if any, and the number of
delinquencies. Make sure ALL items being reported to your credit file are accurate. If any
inaccurate items are discovered work on correcting these items before begin your action plan.
As previously stated, reading a credit report is fairly simple, and repairing your credit is even
easier once you have a basic knowledge and adequate understanding of the process.
So let’s get started!
7
Sample Credit Report
GENERAL INFORMATION
Borrower Name
Co-Borrower Name
Current Address
Social Security No
Social Security No
Previous Address
Age
Age
Marital Status
Co-Borrower
Borrower
Employer
Position
Since
Employer
Position
Since
CREDIT HISTORY
E
C
O
A
Creditor Name
Account Number
I
Argent Mortgage
Date
Reported
Date Last
Activity
05/1996
114568879
12/1997
Date
Opened
01/1993
High
Credit
$119,663
Balance
Terms
Past Due
Amount
30+
60+
90+
120+
Present
Status
$$122,321
MOS
REV
39
13
11
9
9
M-09
$7150
48
19
9
4
4
I-08
$3444
39
29
16
9
9
R-09
$940
Pay As
12
0
0
0
0
R-01
$35
Agreed
$790
0
53
01
0
0
0
R-01
0
59
03
0
0
0
I-02
$122,321
$896
INV Foreclosure
I
FORD MOTOR CR
10/2005
20989095546
08/2007
10/2001
$14,513
$6,050
$540
Repossession
I
TRADE SIX
01/2008
12358845
08/2008
07/1999
$3150
$3444
$56
Unsecured
I
J
I
I
CAPIT ONE CARD
10/2008
8898215356287741
10/2008
SEARS
01/2005
1125445
09/2008
GMAC
10/1996
22156432
10/1996
BOA Card
10/2007
445893265781
12/2007
10/2007
09/2001
$1000
$880
$30
10/1991
$10500
0
$645
06/2007
$10,000
$10998
$10998
5
3
3
3
12
R-09
01/2008
$500
$465
0
9
0
0
0
0
R-01
08/1991
$16525
$11333
0
122
0
0
0
0
R-01
Unsecured
C
I
BOA Card
01/2008
557698112354
09/2008
STUDENT LOAN
06/2001
000532446
$129
DEF
8
I
Sterling Mortgage
12/1992
659812354
09/2003
09/1986
$96,500
$0
$0
69
03
1
0
0
M-03
$766
Closed
PUBLIC RECORDS
--------------------------------------------------------------------------
I
CASE/DOC # 5541651658
COURT # 998516
DATE FILED: 03/2002
Status: Unsatisfied
Ref # : 11247
Plant: Bank of America
Comments: Unsecured Loan
INQUIRIES
10/16/07
Capital One
01/02/08
Bank of America
09/16/08
Beneficial Finance
10/01/08
CITIFINANCIAL
TRADE & DEROGOTORY
SUMMARY
CREDIT SCORE
554
9
In Chapter One of CREDIT FOR SUCCESS we discussed a young man named John Doe. John
was a college student just entering the work force and was establishing credit for the first time.
We witnessed John’s first credit account with Sam’s Hardware Store where he purchased a
barbecue grille for his fraternity house. John also applied for a credit card loan at the local bank
and his borrowing power increased as he made his payments on time and established other lines
of credit.
After graduation John took a job at the town pharmacy and one day, while at work, John
contracted an illness which led to his hospitalization. John accumulated numerous medical bills
and unpaid loans as a result of his hospital stay. The chapter concluded with John being denied
for a mortgage loan, and the question was asked: “How can John get qualified for the loan?” The
credit report below is a reflection of John’s credit report.
Let’s take a look and determine how to repair John’s credit.
Remember to always ask which action plan he should take:
Pay in full
Settle the debt
Dispute the debt
Wait it out
Take legal action
Take a look at each credit line and the intricate details of each item. Be sure to examine the
dates, balances and the pay history of the file. After your review, take a look at the Author’s
suggested actions for correcting John’s credit file.
10
John Doe Credit Report
GENERAL INFORMATION
Borrower Name
Co-Borrower Name
Current Address
28
Social Security No
Social Security No
Previous Address
Age:
Age
Marital Status
Co-Borrower
Borrower
John Doe
Employer
Position
Since
Employer
Position
Since
CREDIT HISTORY
E
C
O
A
Creditor Name
Account Number
I
Dagwood GMC
Date
Reported
Date Last
Activity
10/2008
20989095546
10/2008
FMC Bank
08/2008
12358845
06/2008
I
Date
Open
02/2006
High
Credit
$14,513
Balance
Terms
Past Due
Amount
Present
Status
0
120
+
0
7
5
0
R-04
0
0
0
0
R-01
96
03
0
0
0
R-01
30+
60+
90+
$0
MOS
REV
32
6
4
$113
87
8
$940
Pay As
12
$35
Agreed
$790
0
$12,945
I-03
$440
07/2001
$1500
$1575
$56
Unsecured
I
J
I
CAPIT ONE CARD
10/2008
8898215356741
10/2008
Sam’s Hardware
09/2008
112544
08/2008
AMC Collection
12/2003
22156432
06/2007
10/2007
08/1999
$1000
$880
$30
02/2004
$1951
$2369
$2369
1
0
0
0
0
09
02/2004
$4949
$4949
$4949
1
0
0
0
0
09
01/2008
01/2004
$511
$511
$511
1
0
0
0
0
09
STUDENT LOAN
05/1996
05/1996
$12549
$15444
0
64
0
0
0
0
PAYS AS
000532446
07/2001
Med
I
Char Med
01/2005
Center
04/2005
44589326
C
Cone Radiology
5576
Med
I
$229
AGREED
DEF
11
COLLECTION ACCOUNTS
I
MEDICAL DATA
01/2005
12258455
01/2005
02/2004
$361
$361
$361
1
0
0
0
0
10/1996
$1160
$1160
$1160
7
-
-
-
-
$4949
1
0
0
0
0
09
PRESBY Med
I
I
US DEPT ED
04/1997
32000053244655
10/1996
$48
PLACED FOR COLL
Absolute COLL
01/2005
CMC Med
04/2005
02/2004
$4949
$4949
09
44589326
PUBLIC RECORDS
I
-------------------------------------------------------------------------Federal Tax Lien ------------------------------------------------------------------------------CASE/DOC # 92389451658
COURT # 123568
Amount: $15,099
DATE FILED: 08/1999
Status: Unsatisfied
Ref #: 200030239
Plaintiff: IRS
Comments: Federal Tax Lien
INQUIRIES
10/16/07
Capital One
02/02/06
Dagwood GMC
10/16/08
Option One Mortgage
10/16/08
CITI Bank Mortgage
TRADE & DEROGOTORY SUMMARY
Credit Score
557
12
Suggested Plan of Action
Dagwood GMC
Based on the balance of the account this is an open account. It is difficult to negotiate an open
and current account. Check the pay history for accurate reporting on late payments and leave the
account as is. Keep the payments current and it will restore itself in time.
* PAY IN FULL
FMC Bank
Based on the balance of the account this is an open account. It is difficult to negotiate an open
account. The payments are past due and should be made current as soon as possible. Also, since
the account is a revolving loan it can affect John’s debt-to-credit ratio. He should get the
balance of the account below 50% of the high limit of the loan. This will increase his credit
scores. Check the pay history for accurate reporting on late payments and leave as is. Please note
John should not close this account because it is a revolving account. Keep this account current
and it will restore itself over time.
*PAY IN FULL
Capital One Card
This is an open revolving charge card account. It reflects positively on his record. The payments
are current and he pays as agreed. Since the account is a revolving account it can affect John’s
debt-to-credit ratio which could reduce his credit scores. He should get the balance of the
account below 50% of the high limit of the loan. This will increase his credit scores. Keep this
account current and it will maintain good scores.
*PAY IN FULL
Sam’s Hardware
This account is a retail charge card. John has been late several times on this account. He should
work on getting the account current and keeping his payments on time. The balance on this
account should be paid in full to eliminate debt, and to reduce the debt-to-credit ratio which
could increase his credit scores. He should get the balance of the account below 50% of the high
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limit of the loan. He should keep the payments current on the account and his scores will
increase over time.
*PAY IN FULL
AMC Collection
This is a medical account. It was reported in 2004 and shows a date of last activity as 2007. The
DLA is more than likely incorrect. There is an inconsistency in the date of service and the date
reporting; the reporting date precedes the date of service by two months. John should dispute the
item based on inconsistency of dates.
*DISPUTE THE DEBT
Charlotte Medical
This is a medical account. The DLA is more than likely incorrect. There is an inconsistency in
the date reporting and the date of last activity. If there were no payments made to the account
then John should dispute the date of last activity. In addition, since the account is 3 years old and
has a large balance, John should wait this one out. Even if John made small minimal payments
on this debt, it could take him another 3-4 years just to pay the balance in full. He would
basically get the same results at the end of 7 years once the item is dissolved.
*WAIT IT OUT
Cone Radiology
There is a huge date difference between the service date and the reporting date. John could
challenge this one if he wanted. However, it would be more prudent to settle the debt because the
balance of the debt is small. He could offer 25% of the balance owed on the debt as well as
demand the item be deleted from his credit report once the settlement is paid in full. This is an
item with which John has several options; it is up to his discretion which method he will choose.
He could dispute the debt at first to see if it comes back verified. If it can be proven by the
creditor then John should offer to settle the debt. He should be careful to make sure his
settlement agreement is in writing and delivered to him via mail or fax before he sends payment.
No verbal telephone agreements.
*SETTLE THE DEBT
14
Student Loan
This is a private loan not guaranteed by the government. Although this is a student loan the debt
should be treated as any other loan. John should pay the student loan as agreed. As he is now in a
deferred payment status, this is a great time to make payments to the loan. There is no risk of
wage garnishment or tax levies on private student loans.
*PAY IN FULL
Medical Data
This account should be settled at 50% of its balance owed. However, John should only pay the
debt if he has his creditor’s agreement that the item will be deleted from his credit report. If
needed, he could agree to pay 70 or 75% of the balance owed since the debt is so small. He must
be careful to pick his battles on some credit lines. After all, having just one small collection
removed from his credit file could significantly increase his score.
*SETTLE THE DEBT
U S Dept of Ed
This item is more than 7 years old. It should be immediately disputed based on FCRA statutory
time frame. However, if the debt is removed from his credit file he may still be liable for the
debt. Government Student Loans are subject to wage garnishment and tax withholdings if not
paid on time.
*DISPUTE THE DEBT
Absolute Collection
This is a duplicate item. It should be disputed on the basis of duplication.
*DISPUTE THE ITEM
Federal Tax Lien
This item is significantly past the 7 year reporting period. However it is a Federal Tax Lien and
can be very difficult to have removed. Even if he managed to have the reporting removed from
his credit file, he could still be liable for the debt. Tax liens can also be attached to his new home
15
and/or levied on his bank account or tax withholdings. John should arrange to make payments
until paid in full.
* PAY IN FULL
8ow take a look at what John’s credit report could possibly look like once he has repaired his
credit file below:
16
Restoration of
John Doe Credit Report
GENERAL INFORMATION
Borrower Name
Co-Borrower Name
Current Address
28
Social Security No
Social Security No
Previous Address
Age:
Age
Marital Status
Co-Borrower
Borrower
John Doe
Employer
Position
Since
Employer
Position
Since
CREDIT HISTORY
E
C
O
A
Creditor Name
Account Number
I
Dagwood GMC
Date
Reported
Date Last
Activity
10/2010
20989095546
10/2010
FMC Bank
01/2010
12358845
12/2010
I
Date
Open
02/2006
High
Credit
$14,513
Balance
Terms
Past Due
Amount
Present
Status
0
120
+
0
7
5
0
R-04
0
0
0
0
R-01
132
03
0
0
0
R-01
171
0
0
0
0
PAYS AS
30+
60+
90+
$0
MOS
REV
56
6
4
$0
111
8
$140
Pay As
87
$35
Agreed
$0
0
0
$0
I-03
$440
07/2001
$1500
$0
$56
Unsecured
I
J
I
CAPIT ONE CARD
03/2010
8898215356741
10/2012
Sam’s Hardware
09/2008
112544
08/2011
STUDENT LOAN
02/2011
000532446
03/2011
10/2007
08/1999
$1000
$880
$30
05/1996
$12549
$0
AGREED
$229
DEF
COLLECTION ACCOUNTS
PUBLIC RECORDS
I
-------------------------------------------------------------------------Federal Tax Lien ------------------------------------------------------------------------------CASE/DOC # 92389451658
COURT # 123568
DATE FILED: 08/1999
Status: satisfied
Amount: $0
Ref #: 200030239
Plaintiff: IRS
Comments: Federal Tax Lien
17
INQUIRIES
10/16/07
Capital One
02/02/06
Dagwood GMC
10/16/08
Option One Mortgage
10/16/08
CITI Bank Mortgage
TRADE & DEROGOTORY SUMMARY
Credit Score
724
Did you notice John’s new credit score after he followed the suggested
Plan of Action?
With a score of 724 on all 3 credit bureaus can John qualify for a
mortgage loan now?
Obviously the answer is yes!
18
Repairing your credit involves the following steps:
1. Order your credit reports from all 3 major credit bureaus.
2. Review your credit reports thoroughly.
3. Create a Plan of Action. Determine specifically what you are going to pay in full, settle,
dispute, wait it out or take legal action.
4. Write your dispute letters addressed to each individual credit bureau.
5. Mail your dispute letters to the credit bureaus…not the creditor.
6. Await response from the credit bureaus.
7. Repeat steps 4, 5 and 6 until you get the desired results.
Step 1 – Order Your Credit Reports
The first step in getting started is to get current copies of your credit reports from the three major
bureaus. According to the FCRA, you are entitled to obtain a copy of your credit report from any
credit bureau for a reasonable charge (from $5.00 to $10.00 per report depending on the state).
The FCRA also states that you are entitled to receive a disclosure directly from the credit bureaus
free of charge based on the guidelines below:
You certify in writing that you are unemployed and intend to apply for employment within 60
days, or you are receiving public welfare assistance, or you have reason to believe your
consumer file contains inaccurate information due to fraud, or you have been denied credit,
insurance, or employment within the past 60 days.
New legislation requires the credit bureaus to allow consumers to get at least one free credit
report per year. When requesting a free copy of your report from the credit bureaus you should
include the following information:
Full 8ame
Date of Birth
19
Social Security 8umber
Current Address
Previous Addresses for the past 5 years
Photocopy of Drivers License showing Current Address
Use the sample letter to request your free report or disclosure. The credit bureau may request
additional information from you. To avoid this, be sure to initially include all of the above
information and get any additional requested information to them as quickly as possible. This
method may take 30-45 days to receive your credit reports.
Even though you may be entitled to a free credit report, the recommended and quickest way to
get your credit report is to purchase your report directly from the credit bureaus. These reports
give you more accurate and current information and are less expensive than ordering from a
reseller. You can order by mail, by phone or online on the internet. See the credit bureau contact
information below:
Equifax Information Services, LLC
P. O. Box 105851
Atlanta, GA 30348
1-800-685-1111
www.equifax.com
Experian
P. O. Box 2104
Allen, TX 75013
1-888-397-3742
www.experian.com
TransUnion, LLC
Consumer Disclosure Center
P. O. Box 1000
Chester, PA 19022
1-800-888-4213
www.transunion.com
20
8ote: These addresses are current as of the date of printing. Be sure to verify the address by
visiting the bureaus’ websites. Also, note that the address used to order credit reports is generally
different than the address for mailing disputes.
Another option is to order your reports from a reseller. Most resellers will charge $30.00 -$50.00
for a combined report from all three credit bureaus. Here are just two of the many credit report
resellers found on the internet:
www.truecredit.com
www.consumerinfo.com
Note: These are merely two of the many credit report resellers that exists in the market. They are
not necessarily our recommendation, and you should use them at your own discretion.
Step 2 – Review Your Credit Reports Thoroughly
Once you receive your credit reports carefully review them. Since you are ordering reports from
three different bureaus you may not receive them at the same time. Do not let that delay you
from beginning your review process. Begin as soon as you receive your first report.
Now that you have some experience with reading credits reports, the reports you receive of your
credit file should not be that difficult to interpret. Of course the reports are all going to have their
own unique look and feel. Don’t be intimidated by this; each bureau should send you a key or
legend to help you decode their report. It is recommended that you take your time and study your
credit reports using the key or legend until you are comfortable reading and understanding your
report.
Once you are confident that you understand your report, you will now begin your Action Plan.
Make copies of each report and use the copies to mark up and make notes on. Use multi-colored
highlighters to mark or note each discrepancy.
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Below are possible inaccuracies and inconsistencies to look for:
Inaccuracies
• Account not yours
• Incorrect account number
• Date of account incorrect
• Incorrect status
• Incorrect balance
• Incorrect late pay history
• Incorrect account type
Inconsistencies
• Duplicate accounts
• Incorrect personal information
• Incorrect past addresses
• Never lived in area of court record
• More late pays than months reviewed
• Item in bankruptcy but no bankruptcy listed
• Account shows older than possible
The first items you should review are the personal identifying information items such as:
Name and Aliases, Addresses, Social Security Number, Date of Birth, Spouse Information, and
Employers.
Note whether any of this information is in any way inaccurate, incorrect, erroneous, misleading
or outdated. You should dispute these items first because this data is used to help verify the
credit items on your report. Frequently when an item, which is not yours, appears on your credit
report, it gets there and stays there because it somehow matches up with some incorrect personal
identifying information. By disputing these first, other erroneous items will no longer match your
file. For each report, carefully note any records which you believe to be inaccurate, incorrect,
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erroneous, misleading or outdated. It does not matter whether you think the information is
negative, neutral or even positive, if it is erroneous, in any way, it should be removed.
Step 3 – Create your Plan of Action Strategy
Rank the credit file in order from the most damaging/negative information to the least
damaging/negative information. Determine specifically what steps you are going to take and who
you plan to contact: the creditor, a collection company or one of the major credit bureaus.
You should have a “ranking” list for each report because they may not have the same
information on them. The list below gives you an idea of the most damaging items in order:
• Incorrect personal data
• Bankruptcies
• Foreclosures
• Consumer Credit Counseling
• Loan defaults
• Repossessions
• Court Judgments
• Collections
• Past due payments
• Late payments
• Credit rejection
• Inquiries
• Positive accounts not being reported or not reported to all three credit bureaus
Use the Dispute Letter Form below to determine the order of your letters. Be sure to list your
decision as to which items you plan to pay in full, which items you plan to dispute, which items
you will settle, which items you will wait out and which items you take legal action on in the
Plan of Action column.
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If the account is an open account you should choose to pay the debt. All that is required is that
you continue to make your payments (try to pay on time) until the account has been paid in full.
This action requires no contact with either your creditor or a credit bureau.
If you choose to settle the debt you should contact the creditor directly by telephone, if at all
possible. Ask to speak to the manager or someone in charge who can make a decision about a
change to your credit report. You should let the creditor know that you are calling because you
want to try to settle a debt if an acceptable agreement can be met. Be careful not to reveal to the
creditor any information that can be used against you in the event you are sued. Such as, were
you are employed, how much you earn on your job or what assets you have accumulated. If you
had a hardship condition in the past that prevented your payment to them, you could share this
information if you like. Remember, you are talking to a person who makes decisions for a
company and if you can appeal to their compassion they will likely give you favor, and a
favorable settlement option.
The ball is now in your court. You have something they want and they have something you want.
They want the debt paid and you want the item deleted from your credit report. The creditor is
already aware that you have the gut to walk away from the debt. Use this to your advantage
when determining a settlement agreement. Once the agreement to settle has been finalized make
sure the agreement is put in writing and a copy has been provided to you. 8ever pay a
settlement without a written agreement that has been signed first by the creditor, and then
by you!
If you choose to dispute the debt, dispute each item individually for each credit report. The
dispute form provided below will help you keep your plan in an orderly flow. You may also
choose to wait for the debt to serve its 7-year FCRA statutory time frame. This choice is often
made when a debt is at least 3 years old and a large balance is owed. If in your process you
discover that you have encountered illegal practices from a creditor or a credit bureau, you may
want to consider suing them. You should seek the advice of a credit defense Attorney for this
process.
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Step – 4 Write your dispute letters addressed to each individual
credit bureau.
Credit Bureau 8ame ________________________________________
Use this strategy worksheet to rank the order of the most damaging negative information,
followed by the next most damaging item and so on. Use a separate sheet for each credit bureau.
Creditors Name
Plan of Action
Item Disputing
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Write Your Dispute Letters
When filing a dispute with a credit bureau you have several options as to how you want to
contact the credit bureaus. Remember, your dispute letters are going to be sent to the credit
bureaus and not the creditor. You should only contact your creditor when you are ready to pay in
full or to settle a debt.
The options for disputing a debt includes a written letter mailed to the bureau in question, or an
on-line dispute ticket sent directly through a credit bureau’s dispute system. The latter option is
provided by the credit bureaus to their paying customers. You may also call the bureau and
submit your dispute by phone. However, if you choose this method you may be asked to follow
up with some form of writing or to fax your evidence to them. The most common method is to
write your dispute and mail it to the bureaus by certified mail. With this method you will have
proof that you submitted the dispute and the bureaus is required by law to respond to your
dispute within a timely manner…usually within 30 days. Any challenge directed to a credit
bureau to make changes to your credit file is by law considered a dispute.
FCRA - Section 611- Procedure in case of disputed accuracy
a) If the completeness or accuracy of any item of information contained in his file is
disputed by a consumer, and such dispute is directly conveyed to the consumer
reporting agency by the consumer, the consumer reporting agency shall within a
reasonable period of time reinvestigate and record the current status of that information
unless it has reasonable grounds to believe the dispute by the consumer is frivolous or
irrelevant. If after such investigation, such information is found to be inaccurate or can
no longer be verified, the consumer reporting agency shall promptly delete such
information. The presence of contradictory information in the consumer’s file does not in
and of itself constitute reasonable grounds for believing the dispute is frivolous or
irrelevant.
In short it means that every item on your credit report must be proven or be removed
or deleted.
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Your dispute letters are the most critical step in repairing your credit. You will have to “sell” the
credit bureaus on your desire to reinvestigate your dispute. To avoid the credit bureaus from
claiming your request is “frivolous or irrelevant” it is strongly suggested that each questionable
item is disputed individually. The only exception to this rule is when disputing incorrect personal
data, where it is highly acceptable to list multiple items in one dispute (blanket dispute.) In all
other occasions blanket disputes have the potential of being considered frivolous. According to
the FCRA the bureaus do not have to investigate a dispute if it has grounds to believe it is
“frivolous or irrelevant”.
When writing a dispute letter always be specific as to why you believe the item is incorrect,
erroneous, outdated, misleading or unverifiable. An explanation as to why a debt was not paid or
not paid in a timely fashion (such as divorce, lay off, illness) does not constitute a dispute and the
credit bureaus are not required to reinvestigate. In fact, give your explanations to creditors
when attempting to settle your debts, not to the credit bureaus as the explanation would only
help prove that the debt is valid. Once the bureau has investigated an item they will send you an
updated credit report and a form to be used for any additional disputes. It is recommended that
you do not use the form as the credit bureaus do not take them as seriously as a handwritten
letter.
We have compiled several sample dispute letters for you to use. When drafting your letters
remember to have your personal information (full name, date of birth, social security number,
and current address) on all dispute letters.
When writing your dispute letters, use words like erroneous, outdated, misleading and
unverifiable in your explanation. Always provide your reason for disputing the item and
specifically what you want the credit bureau to do with the listing. For example, are you
disputing “the existence of the item” or just “the information contained within the item”? If you
are challenging a late payment, do not say, “I have never been late before” unless you are
absolutely sure you were never late. Instead you might say, “I’m sure I was not late many times
as you say.” Also, be specific as to what you want them to do with the listing. You might say
either, “Please delete the entire listing” or “Please remove the late pay notations within the
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listing.” Always remember that you initially do not want to sound like an expert. You want to
sound like a concerned consumer that is simply trying to correct something on their credit report.
Your initial letter should be polite and cordial, but this tone should begin to change as it becomes
necessary to send additional letters for the same dispute. Your tone should then become more
frustrated and threatening, strongly reminding the credit bureau of their obligations under the
law. Remember your objective is to get the bureaus to reinvestigate your claim. The techniques
described in this manual are simply guidelines. We have provided you sample letters for this
purpose below. Please view the sample letters and customize them to your specific requests. As
there is no one way to achieve your desired results, I encourage you to get creative in your
dispute letters being sure you follow the stated guidelines.
Taking responsibility to challenge and make corrections to your own credit file requires a lot of
courage and discipline. Anyone can find a credit repair company near their city or on the internet
that will promise to repair their credit and increase their scores overnight. Always be mindful
that your credit file did not get in its current condition over night, and it will not be restored
overnight either. The best thing you can do for yourself is to acknowledge that it will take some
time for it to be restored and restored correctly.
Now that you have mailed your initial dispute letters you must patiently await response back
from the credit bureaus. In a perfect world, within 15-30 days you should receive a letter from
the credit bureaus stating that they are investigating your dispute. In another 15-30 days, you
should receive a new credit report from the bureau showing the disputed item has been corrected
or deleted. Your next step would be to send a dispute letter for the next most damaging item. In
30-60 days, when that item is corrected or deleted, continue on with the next most damaging
item. Continue this process until all questionable items have been addressed and corrected or
deleted.
Unfortunately, we do not live in a perfect world. Some of your disputes may go as smoothly as
described above and some may not. There may be any number of reasons for it to take longer.
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You could encounter issues such as:
receiving no response from the credit bureau
receiving a letter from the credit bureau asking for more information
receiving a letter from the credit bureau stating that they are rejecting your dispute for
any number of reason
receive a rejection based on “the timing of the dispute”
receive a rejection on the basis that “you are trying to manipulate the system”
receive a letter from the credit bureau stating that they have verified the disputed item
with the creditor and it will remain on your credit report.
Whatever the results, you will have to be persistent with your demand for correction. Always
send your letters certified mail so you can trace the mail and resend it, or prove that it was sent
and delivered to the receiver. Remember, once it has been received the bureaus are on a time
clock to respond to your dispute (usually within 30 days). Always make your requests detailed
and precise to avoid the claim of “frivolous or irrelevant”. If the items come back as verified and
are still not removed, challenge them to present detailed information to prove the debt by using
the Sample Creditor Dispute Letter below.
It is now time to repair your life with CREDIT FOR SUCCESS! Remember, victory does not
necessarily come to the swift and the strong, but it comes to those who are sure and steadfast to
endure to the end!
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Sample Credit Report
Request
Credit Bureau’s Name
123 Their St
Their City, Their State 12345
December 01, 2008
Dear Sirs & Madams,
Please send me a copy of my credit report. I have enclosed a photocopy of
my driver’s license, showing my correct address and a photocopy of my
Social Security card.
My name is:
Your Full Name
My Date of Birth:
12/11/1969
My SS Number:
123-44-5678
My Current Address:
1234 Your Address
Your City, Your State, 12345
My Former Address:
Your Old Address
Old City, Old ST 98765
Please send me a current copy of my credit report as soon as possible.
Sincerely,
Your Signature
Your Full Printed Name
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Initial Dispute Letter
Sample # 1
(Brief and Simple)
Credit Bureau’s Name
123 Their St
Their City, Their State 12345
February 20, 2007
Dear Sirs and/or Madams,
I have never applied for credit with this company. This is not my debt
Please delete the debt below from my account:
LMN Creditor Acct# 987654321
Once this correction is made, please send me an updated copy of my credit
report. Thank you in advance for your prompt attention to this matter.
Sincerely,
Your Signature
Your Full Name
1234 Your Street (Current address)
Your City, Your State, 12345
Your Social Security Number
Your Date of Birth
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Initial Dispute Letter
Sample # 2
Credit Bureau’s Name
123 Their St
Their City, Their State 12345
February 20, 2007
Dear Sirs & Madams,
This letter is a formal complaint that you are reporting inaccurate and
incomplete information on my credit report. I recently purchased a credit
report from you that appears to have some serious errors on it. I am upset
that you are showing late payments that are wrong. The report shows that I
was 30 days late for the month of September and October 2006 and based
on my recollection, I was not late for the months you are reporting.
Please correct and delete the late pay notations from the account below:
XYZ Creditor Acct# 123456789
Once this correction is made, please send me an updated copy of my credit
report. Thank you in advance for your prompt attention to this matter.
Sincerely,
Your Signature
Your Full Name
1234 Your Street (Current address)
Your City, Your State, 12345
Your Social Security Number
Your Date of Birth
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Initial Dispute Letter
Sample # 3
Credit Bureau’s Name
123 Their St
Their City, Their State 12345
April 30, 2008
Dear Sirs & Madams,
I am writing you to inform you that I recently purchased a credit report from
you that contained errors on it. The report stated that I had several late
payments on my XYZ Creditor, Acct# 123456789. I am sure that it is
incorrectly reported. I was not late on this account for the months of
September and October 2006. I request an immediate review of this
account.
Please correct and delete the late payment notations on my credit report.
Once corrected please send me an updated copy of my credit report
I appreciate your attention to this matter.
Sincerely,
Your Signature
Your Full Name
1234 Your Street (Current address)
Your City, Your State, 12345
Your Social Security Number
Your Date of Birth
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Sample Dispute Letter # 1
(SEND 60 DAYS AFTER 1ST LETTER, IF NEEDED)
Credit Bureau’s Name
123 Their St
Their City, Their State 12345
June 30, 2008
Dear Sirs & Madams,
This letter is formal notice that you have failed to respond in a timely
manner to my dispute letter dated April 30, 2008, sent certified mail with the
US Post Office.
I am very concerned that you are reporting late payments for XYZ Creditor
on my credit report. As I stated in my previous letter, I was not late for the
months you are reporting. I know I am not perfect but I just want my credit
report to be correct.
Please remove the late payment notations for the months of September
and October, 2007 from the following listing:
XYZ Creditor Acct# 123456789
Once this correction is made, please send me an updated copy of my credit
report. It has already been over 60 days from my initial letter, so I am
requesting a prompt review and correction of my report.
Sincerely,
Your Signature
Your Full Name
1234 Your Street (Current address)
Your City, Your State, 12345
Your Social Security Number
Your Date of Birth
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Sample Dispute Letter # 2
(SEND 60 DAYS AFTER 1ST LETTER, IF NEEDED)
Credit Bureau’s Name
123 Their St
Their City, Their State 12345
June 30, 2008
Dear Sirs & Madams,
I am writing to inform you that it has been over 60 days (Initial letter sent
April 30, 2008) since I initially wrote to you about this matter. I think I have
been very patient in awaiting your response. I am becoming more
distressed over this because I have incorrect information on my credit
report. You are reporting multiple late payments on XYZ Creditor, Account#
123456789. I request an immediate review of this account.
After review, I would like you to correct and remove the incorrect late pay
notations. Once this correction is made, please send me an updated copy
of my credit report. I understand, according to the Fair Credit Reporting Act,
that it is my consumer right to have an accurately reported credit file.
Thank you for your prompt attention to this matter.
Sincerely,
Your Signature
Your Full Name
1234 Your Street (Current address)
Your City, Your State, 12345
Your Social Security Number
Your Date of Birth
35
Sample Creditor Direct
Dispute Letter
(Use when sending directly to creditor)
QRS Credit Card Company
ATTN: Credit Department
123 Their St
Their City, Their State 12345
June 12, 2004
RE: Account # 987654321
Dear Sirs & Madams,
Your company is currently reporting a negative listing to the three major
credit bureaus (Experian, Trans Union, and Equifax) regarding the above
referenced account. Based on my recollection and my records, I can find
no reason for you reporting such a history. If you’ll review your records I
think that you will find your reported notations are inaccurate.
The erroneous status of your credit reporting agency records is
unacceptable and is preventing me from obtaining necessary financing.
Pursuant to Title 15, Section 1666 of the United States Code, I formally
request the following documentary evidence pertaining to my account:
1. A copy of the original credit application showing the terms of the
agreement.
2. A summary of all account activities, including all payments made, late
charges, interest, date of payments received, date of payments posted,
charges made, and date of charges posted.
3. Copies of all documents and financial instruments used to pay the
disputed late payments.
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4. Copies of all charge slips, invoices, promissory notes, and all other
documents proving indebtedness.
5. Copies of all documents sent to me regarding my account.
This information and documentation is critical and time is of the essence.
Within less than thirty (30) days, I will be damaged partially because of the
discrepancy with your reported records. The above noted code requires
your response within thirty (30) days. Your prompt attention will be greatly
appreciated. I hereby request that your response be mailed to the address
listed below.
If you find that your information and documentation does not support the
negative history reported to the three credit bureaus, I invite you to submit
a completed Universal Data Form to said bureaus in order to remove the
negative notations. Upon removal of the negative notations, I agree to hold
your company harmless from any and all inconvenience and/or damage
related thereto.
I appreciate your prompt response and cooperation.
Sincerely,
Your Signature
Your Full Name
1234 Your Street (Current address)
Your City, Your State, 12345
Your Social Security Number
Your Date of Birth
37
Sample Debt Settlement
Proposal
July 30, 2008
(Use to offer settlement directly with creditor)
XYZ Credit Company
Their Street
Their City, Their State, Their ZIP
Subject: Debt Settlement offer for account#12345678
Dear Collections Department (or Name of person you have spoken to)
This letter is written to inform you that due to some financial hardships
beyond my control I am unable to pay the above stated loan according to
its original terms. I would like to try to come to a mutually acceptable
agreement so I can avoid having to file for bankruptcy. My goal is to
arrange a term acceptable to both us.
I will pay your company the amount of $250 as payment in full for the full
satisfaction of this account which, by my records, is owed $1000. Upon
receipt of the above payment, your company has agreed to change the
entry on my credit reports to "PAID AS AGREED". You further agree to
remove all previous notations of collections and/or delinquencies.
If you concur with these terms please acknowledge with your signature and
return it to me. You agree the terms herein are confidential and you have
the authority to make such decisions. No payment will be made without
written confirmation. Upon receipt of this signed acknowledgment, I will
immediately mail you funds priority mail. This is not a renewed promise to
pay but rather a restricted offer only. If no terms can be met, no new
arrangements will be made and the offer will be void.
Sincerely,
DO NOT SIGN YOUR NAME
PRINT YOUR NAME, ADDRESS, SOCIAL SECURITY NUMBER
Note: Signing your name may obligate you to the terms of this offer.
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July 30, 2008
HIJ Credit Company
Their Street
Their City, Their State, Their ZIP
Sample
Agreement to Debt
Settlement
(Use when settling debt directly with creditor)
Subject: AGREEMENT TO COMPROMISE DEBT
HIJ Credit Company, referred to as CREDITOR and YOUR NAME, referred to as
DEBTOR, agree to compromise the indebtedness as between them. CREDITOR,
hereby agrees to compromise the indebtedness due the CREDITOR on the following
terms and conditions:
The CREDITOR and the DEBTOR agree that the present debt due is $5000.00 (five
thousand dollars & 00/100 dollars). The parties agree that the CREDITOR shall accept
the sum of $2200.00 (two thousand two hundred & no/100 dollars) as full payment on
the debt. The acceptance of the payment will serve as a complete discharge of all
monies due. The payment shall be made in garneted funds.
In addition, upon accepting of the $2200, the CREDITOR will notify all three major
Credit Reporting Agencies that the account is “PAID AS AGREED”, and delete any
entries showing this account as ever being late.
This compromise is expressly conditioned upon the payment being received by August
30, 2008. If the DEBTOR fails to pay the compromised amount by August 30, 2008, the
original amount owed by the DEBTOR will be reinstated in full, and immediately due.
This Agreement shall be binding upon and inure to the benefit of the parties, their
successors and assigns.
Dated: _______________
Signature: ____________
HIJ Credit Company
CREDITOR
Signature: ____________
YOUR NAME
Debtor
Account Number 9876542
Your Address
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Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
(202)-326-2222
Toll Free (877) 382-4357
Web Site http://www.ftc.gov
FTC Web Links
Nation’s Big Three Consumer Reporting Agencies Agree To Pay $2.5
Million to Settle FTC Charges of Violating Fair Credit Reporting Act
http://www.ftc.gov/opa/2000/01/busysignal.htm
Cases and consents ruled by FTC
Equifax
Case http://www.ftc.gov/os/2000/01/equifaxcmp.htm
Consent http://www.ftc.gov/os/2000/01/equifaxconsent.htm
Experian
Case http://www.ftc.gov/os/2000/01/experiancmp.htm
Consent http://www.ftc.gov/os/2000/01/experianconsent.htm
Trans Union
Case http://www.ftc.gov/os/2000/01/transunioncmp.htm
Consent http://www.ftc.gov/os/2000/01/transunionconsent.htm
For a complete copy of the Fair Credit Reporting Act
http://www.ftc.gov/os/statutes/031224fcra.pdf
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