Credit Repair & Restoration
Credit restoration or repair consists of challenging inaccurate, unverifiable or obsolete trade lines. Those items that creditors or debt collectors put on your report.
Any item must be accurate. If you have had a bankruptcy, each trade line on the credit report must be zeroed out. If you have had a short sale, they cannot list it as a foreclosure. If you have been late 2 times and they list 3 times, they must change it. If a bill was due on June 1 and you paid it June 30, it is not late according to credit bureau standards. It must be one month and one day late.
It cannot be obsolete – that is, beyond the legal timeline. Most items can only stay on a report for a maximum of 7 years. (Bankruptcies can stay on for 10 years). There is another item that is a factor: the Statute Of Limitations. Each state has their own Statute Of Limitations that governs how long a creditor or a debt collector can legally come after the debt. It might be six years, it might be three years, or could be somewhere in between or a little longer.
Technically, when you challenge an item with the bureaus, the credit bureaus correspond with the creditors and determine if the trade line is correct. They are to receive documentation from the creditors proving the item and how it is reporting as correct. We KNOW they do not do it that way. In fact, Trans-union settled a lawsuit (they lost!) in which the Court stated that Trans-union did not appropriately investigate challenges.
Whether or not the item on your report may be “correct”, it still must be verifiable and this is where a lot of items come off: the creditor or debt collector cannot prove the item and thus it must come off the report.
The 1st building block to building credit is examining your credit accounts – trade lines. It will either be an installment loan (home loan, car loan) or a revolving charge (like a credit card). You should have a good balance between the two – in other words, you should not have a lot more revolving loans than installment loans. The best option is that for every Installment loan, you may have a revolving charge. However, that ends at 5: If you have 5 Installment loans, you can have 5 Revolving loans. You should not have more than 5 revolving debts however. More than 5 revolving and your score takes a hit.
The report lists the type of account, how long ago you opened it, the balances, and details of your payment history. The amount of your credit limit for revolving loans is not paramount: what matters is the ratio between your balance and credit limit.
The 2nd building block is “inquiries” – When you apply for credit it is known as a Hard Inquiry and it is noted on your report. If you have too many in a short period of time, that will diminish your score. As an example, if you use a mortgage person, or a loan officer, to pull your credit report every day to see what has come off, that will diminish your score.
A hard inquiry is one that you authorize – when you apply for credit. It does affect credit scoring, about 3-5 points every time it is pulled. Can you imagine what happens to the poor unsuspecting person who applies for 20 credit cards at Christmas to get the 10% discount? I have known people whose scores have dropped 70 points and more at Christmas!
A soft inquiry is one that you do not individually authorize and does not affect your score. This is when the bureaus sell your information to a marketer. For example, a marketer may look for people specifically in a particular zip code with scores between 600 and 650. Your name and contact information pops up and the marketers send you advertising.
It may also be someone that you are already indebted to and they will keep on checking your score and trade lines to see if you still meet their criteria. This is used a lot for insurance companies and credit card companies. The authorization to continually pull your credit is usually found in the small print, the boiler plate language, in your contract.
The 3rd building block are Public Records and collections – Bankruptcies, foreclosures, judgments, liens or any collection items, paid or unpaid. Public records are culled from state and county courthouses. Lenders or collection agencies report most of the other information in your report. This data is collected, stored and updated by major credit bureaus. The bureaus have their minions that search the county court houses to get this information.
We believe that you should know your rights when it comes to your credit, credit score and dealing with debt collectors. This is our passion, this is our mission, this is what we do and we look forward to helping you increase your credit knowledge.
Here is a list of the courses we offer.
- Private Education
- How to Add Positive Trade Lines
- Debt Collectors: Lies and Deceit
- How to Deal With Debt Collectors
- What to Say To Debt Collectors
- The Training of Debt Collectors
- The Laws Pertaining To the Bureaus and Debt Collectors
- Basic Credit Education
- How to Destroy Your Credit
- Cease and Desist Letters
- How Credit Scoring Works
- The Cost of Bad Credit