Guide To RepairingCredit Scores and Re - Establishing Credit Lines

Credit Restoration A Guide to Repairing Credit Scores
and Re Establishing Credit Lines

Daniel Dobbs.Sr. Loan Officer American Commerce Mortgage (949) 250-3981 Dandobbs6@gmail.com
12/24/2010
Dan Dobbs (949) 250-3981 ..Copyright Apr.15,08
Introduction

Daniel Dobbs: 28 yrs. as a loan consultant NMLS#: 307631 DRE#: 00986886 Professional public speaker. Available for speaking engagements at office meetings and trade assoc. Closed over 1,000 personal transactions Brokers & Notary License B.A in Communications from CSUF Published writer, photographer
Dan Dobbs. (949) 250-3981 ..Copyright Apr.15,08 2
12/24/2010
Additional Webinars
203K Financing A Guide to Re Hab Lending Credit Restoration A 90 Day Guide to Higher Credit Scores Attracting Buyers to your Website A Guide to Google Website Promotion The Specifics of Reverse Mortgages
12/24/2010
Dan Dobbs. (949) 250-3981 . .Copyright Apr.15,08
Today's Objectives
Start thinking about credit as a process vs. an event Show the inside workings of a rogue industry Develop some strategies for limiting damage Teach you to play the game& lower the frustration credit is an emotional issue Provide you with a hard ,applicable information that you can use RIGHT NOW!
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Experian.com
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Dan Dobbs.. (949) 250-3981 ..Copyright Apr.15,08
Equifax.com
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Dan Dobbs..HighTechLending.com. (949) 250-3981 ..Copyright Apr.15,08
TransUnion.com
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The Cost of Bad Credit (1)

Lack of available of credit HELOC .. is cut off Universal Default .HOW STUPID IS THIS? Cost of Credit.. skyrockets If you are late with MC ALL unsecured creditors will jack up your rate 31 % Embarrassment.. Harassment Inability to work
Dan Dobbs. 949) 250-3981 ..Copyright Apr.15,08
12/24/2010
The Cost of Bad Credit (2)

Loss of Security Clearance (Aerospace Engineers, Military, Police) Lifestyles are lost Marriages Fail ..Kids are uprooted... Higher car insurance rates (not in Calif. yet) Higher Homeowner rates (not in Calif. -yet)
Free Credit Reports

California law entitles consumers to one CREDIT REPORT per year per bureau Log on.. and youll be steered away from the free to every service the bureau is selling Each bureau uses a unique reporting format Typically bureaus only supply minimal data on reported accounts, (i.e. no addresses or contact phone #s for current & past creditors).
Risked Based (FICO) Credit Scoring?

Its a Scoring Model to objectively evaluate all the of information in your credit file. Most creditors report to only 2 bureaus (cost) Experian (90%) TransUnion (70%) Equifax (30%) Each scoring model analyzes & balances pieces of credit info to assess the risk for repayment of future debt. Its a Snapshot of your credit file; at a given point in time. It is your Financial DNA
What Credit Data Is Analyzed by the Credit Scoring Model?

Past Payment History - approx. 35% of weight
Includes information from public records on bankruptcies, foreclosures, tax liens district attorney , etc.
Debt Capacity vs. Debt Utilization 30% weight If balances are maxed your score is lower Length of Credit History 15% Type (Install vs secured) 10% Applications for New Credit: Inquiries 1-10%
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Chase Bank Credit Score Simulator
12/24/2010
Dan Dobbs. ((949) 250-3981 ..Copyright Apr.15,08
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Score vs Odds of Mortgage Default

Below 600 620 - 659 660 679 680 699 8 to 1 26 to 1 38 to 1 55 to 1
700 719
720 759 760 799 Above 800
123 to 1
323 to 1 597 to 1 1292 to 1
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Dan Dobbs. (949) 250-3981 ..Copyright Apr.15,08
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Credit Score Killers

Divorce proceedings MD Bills / Insurance Corps/Collection agencies IRS & State Taxes..DMV//Prop Taxes (time share) Student Loans (beware of account transfers) Identity Theft / Identity Confusion Renters utilities bills (electric gas etc) Small Unpaid balances that clients blow off Credit Card annual (auto) renewal fees Cancelling a credit card auto pay
12/24/2010
Length of Reporting (1)

Bankruptcies: Impossible to remove from CR Chapter 7: 10 years from date of DISCHARGE Chap.13: 7 yrs from date of DISCHARGE +5yrs it takes to pay off all creditors. Judgments: valid for 10 years; 7 yrs. May be renewed for another 10 yrs. and at 12 % APR Consult the rule of 72 for compounding interest (the initial judgment doubles every 6 years) Unattached Abstact Judgements 7 yrs.
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Cost of BK
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Length of Reporting (2)

30-90 day lates, & Charge offs 7 yrs. Rolling Collection Accounts 7 yrs. from last update Unpaid tax liens Indefinitely Don Sieveke BK Attorney714 5438419.. A typical BK: $2500 If you have secured assets -dont use a paralegal
Cost of a 30-90 Day late
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Legitimate Causes for Deletion Letters

Wrong billing address by creditor Spouses debt resulting from the divorce Documented ID Theft/ ID confusion Account closed before item is reported Creditor originates deletion letter Dont waste time on lates over 4 yrs. Begin disputes with the easiest creditor 1st I.e. Depart.stores (they want you future biz)
12/24/2010
Examples of a Deletion letter

ABC credit card has been paid as agreed and any derogatory info showing for acct # 123 in John Does name is to be removed from his credit files. Acct # 3333 in John Does name was discharged in a bankruptcy on 9/94 and has a 0 balance, the last date of activity was 9/94 Note: Be sure the letters authors name & business phone appear for verbal verification Have the deletion letter faxed to you; dont rely on a customer service rep to snail mail it to you
Legitimate Causes for Updating a CR

Copies of a release of judgment or lienissued by the court. A copy of a canceled check is not sufficient. A copy of a divorce decree removing responsibility for an account (mortgage only)
The three bureaus dont recognize divorce as a reason to rescore; a mortgage lender does. A copy of a paid collection account statement reflecting the corresponding account number and the date the account was paid in full.
Appealing to the creditor (2)

Start by filing a temporary fraud alert. This forces all of your creditors Start with the easiest to build your confidence Keep a conversation log with names dates etc.
Bank cards: very difficult Department store/mail order are the EASIES they want your future biz
12/24/2010
Dan Dobbs. 949) 250-3981 ..Copyright Apr.15,08
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Appealing to the creditor (2)

Department store/mail order are the EASIES they want your future biz Car loans: Impossible. Don't bother Medical bills: Excellent if you deal directly with the doctors and/or hospital
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Disputing with the Bureaus (1)

Start by filing a temporary fraud alert. This forces all of your creditors to reply manually human contact and snail mail to any bureau request regarding your account Most creditors will not take the time or have the capacity or they be out of business Sign up for the bureaus Credit Mgr service this creates a better level of service from the bureaus
12/24/2010
Disputing with the Bureaus (2)

1) Provide each relevant bureau with a copy of the bureaus own credit report & their specific dispute form along w/ your dispute letters (& evidence of on time 3 payment. 2) Provide a US Drivers licenseResident (state) ID card.. Green CardUS Passport.. 3) Provide a copy of your Social Security card http://www.ssa.gov/pubs/10002.html#how
Disputing the Bureaus (3)

4) Provide Proof of Address (copy of utility bills, pay stubs, or W-2 with current address) 5) Provide any documentation/proof to help the credit reporting bureau identify which items (hi lite) is incorrect and need be removed or updated 6) Send certified mail with return receipt 7) Respond quickly to contact from bureaus

8) The Bureau verifies the info provided by creditor and electronically make the changes, corrections or deletions to the raw data stored in the consumers credit file 9) If the creditor doesnt respond to the dispute (i.e. out of biz /doesnt care cant find records typical customer service). 10) The bureau must delete the item within a reasonable time. (i.e.30 days)
12/24/2010 Dan Dobbs (949) 250-3981 ..Copyright Apr.15,08 28

11) The bureau issues a deletion letter; borrowers should retain these letters indefinitely. Typical time to rescore: 45 -60 days. 12) What if I really was late? You can still dispute the creditor accuracy. Bury with paperwork Filing multiple disputes per item will get you a threatening letter.stating your requests are frivilous.ignore them & keep trying Write the 2nd and subsequent letters by hand FCRA requires the bureau to continue to investigate
Dealing with Collection Agencies (CA)

Note: No one gets a MBA to work in debt collection..Be prepared to meet angry people. Never argue with a drunk or a madman youll lose.. Keep calling until you get the pleasant voice A referral to a CA accounts results in two derogatory items 1 from the creditor & 1 from CA: lowering your credit score 30-40 pts.
Dealing with C.A. Blackmail
CALL THE CREDITOR FIRST The creditor just want $$$$.. They probably will agree to settle for less & delete the item They will direct the CA to delete the item The creditor controls the CA. Note: The CA will always claim that they own the account and for you not to contact the creditor
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Before Contacting CA/Creditors
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CA Con Job Read the Fine print

Borrower detects a CA account on CR and then..calls CA with an offer to compromise & payThe CA notes where the call has been made from..and then will call back and start the harrasment tactics No Phones #s are blocked when calling a CA The CA pulls borrowers credit report to check for recent credit applications.. They note any recent inquires (i.e. pending apps) Any mortgage / auto will harden the CAs settlement position, making them less likely to negotiate
CA Con Job Read the Fine print (1)

CA sends/faxes over settlement letter outlining terms for payment saying they will report the debt paid ... insinuating that is will be deleted from the CR..it wont be unless the letter specifically states the item will be deleted as part of the settlement If you pay and dont receive a deletion letter your score will decrease because it now appears as a recent activity
CA Con Job Read the Fine print (2)

It is easier to get a deletion letter when you pay the entire balance in full (vs. pennies on the dollar) (CA work on commission) The higher the balance the better chance of negotiating for a deletion letter Be prepared to pay with 24 hours to increase your bargaining position (wire transfer)
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CA Con Job Read the Fine print(3)

Otherwise Do Not pay off accounts until the close of escrow pre-close pay offs lower fico scores
CA are slow to up date paid accounts with credit bureaus; particularly when payment is for less than owed Forward all settlement letters to all bureaus
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Dealing with C.A. Blackmail

The C.A 1 sells the debt to CA 2extending the debts reporting life indefinitely Proceeds to file in small claims despite the 4 yr. legal limit has expired CA serves you by public notice (their process server may sign a affidavit certifying service) They appear, WIN & garnish your wages Or an abstract of judgment is filed, attaches to your (future)home http://www.fair-debt-collection.com/
Documenting Identity Theft

1/3 of all identity theft cases involve close family members pre-empting prosecution To rescore, a borrower must have a Police Report. Obtain arrest reports, newspaper clippings, insurance reimbursements The Burden of Proof is on the victim
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What is Identity Confusion?

Father and Son ( Jr. vs.. Sr.) Co signers Borrower applies for credit with different versions of their name (married vs. single) Common Surnames: Recent Immigrants (have less traceable residence histories Phantom Debt: this phenomenon often requires a borrower to pay off a debt ..that isnt theirsin order to close escrow
What is Rapid Re-Scoring

Should you require instant rescoring of your credit report (ie an escrow is clsing ..this week !!) A service is available: RESCORING A Credit Re-scorer is licensed (by all bureaus) middleman between mortgage broker & bureaus to update borrowers reports with new data. Borrowers have no access to re-scorers.
What is Rapid Re-Scoring

A Re-scorer verifies the info given to them for accuracy & forwards info to at the 3 bureaus. The Re-scorer notifies the mortgage broker that changes have been made (rescored) orders a new credit report that reflects the updated info scores.
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Providing Documentation
The documentation must be very specific to the disputed entry Letter must be on the creditors letterhead stating: Account number Applicants name How the entry is to be modified/deleted and the effective last date of account activity
Changes for 2011

Co Signers : Late items removed once account has been paid in full for the co-signer only A One time (30 day-) lates are less of an impact on your score Medical Bills in dispute may not be counted for up to 180 days while the billing process is being settled
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In Closing
If you would like to be on my mailing list or discuss the employment opportunities at HighTechLending.. please give a call or an e-mail Id like to know what your thoughts about the webinar & any suggestions to make it better And thank you I know your time is valuable; this market is driving all of us to work harder and smarter..and I hope you feel the time we spent together was worthwhile. Thank you & good luck

Guide To RepairingCredit Scores and Re - Establishing Credit Lines

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Credit Restoration A Guide to Repairing Credit Scores

and Re Establishing Credit Lines

Dan Dobbs (949) 250-3981 ..Copyright Apr.15,08

Dan Dobbs. (949) 250-3981 . .Copyright Apr.15,08

Dan Dobbs.. (949) 250-3981 ..Copyright Apr.15,08

Dan Dobbs..HighTechLending.com. (949) 250-3981 ..Copyright Apr.15,08

Dan Dobbs..HighTechLending.com. (949) 250-3981 ..Copyright Apr.15,08

The Cost of Bad Credit (1)

The Cost of Bad Credit (2)

Free Credit Reports

Risked Based (FICO) Credit Scoring?

What Credit Data Is Analyzed by the Credit Scoring Model?

Chase Bank Credit Score Simulator

Dan Dobbs. ((949) 250-3981 ..Copyright Apr.15,08

Score vs Odds of Mortgage Default

Dan Dobbs. (949) 250-3981 ..Copyright Apr.15,08

Credit Score Killers

Length of Reporting (1)

Dan Dobbs..HighTechLending.com. (949) 250-3981 ..Copyright Apr.15,08

Length of Reporting (2)

Cost of a 30-90 Day late

Dan Dobbs. (949) 250-3981 ..Copyright Apr.15,08

Legitimate Causes for Deletion Letters

Examples of a Deletion letter

Legitimate Causes for Updating a CR

Appealing to the creditor (2)

Dan Dobbs. 949) 250-3981 ..Copyright Apr.15,08

Appealing to the creditor (2)

Dan Dobbs. (949) 250-3981 ..Copyright Apr.15,08

Disputing with the Bureaus (1)

Disputing with the Bureaus (2)

Disputing the Bureaus (3)

Disputing the Bureaus (4)

Disputing the Bureaus (5)

Dealing with Collection Agencies (CA)

Dealing with C.A. Blackmail

Before Contacting CA/Creditors

Dan Dobbs. (949) 250-3981 ..Copyright Apr.15,08

CA Con Job Read the Fine print

CA Con Job Read the Fine print (1)

CA Con Job Read the Fine print (2)

Dan Dobbs. (949) 250-3981 ..Copyright Apr.15,08

CA Con Job Read the Fine print(3)

Dealing with C.A. Blackmail

Documenting Identity Theft

Dan Dobbs..HighTechLending.com. (949) 250-3981 ..Copyright Apr.15,08

What is Identity Confusion?

What is Rapid Re-Scoring

What is Rapid Re-Scoring

Dan Dobbs. (949) 250-3981 ..Copyright Apr.15,08

Changes for 2011

Dan Dobbs. (949) 250-3981 ..Copyright Apr.15,08

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