Picking Up The Pieces: Rebuilding Your Credit After Financial Disaster
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Picking Up The Pieces: Rebuilding Your Credit After Financial Disaster

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It happens to many people sooner or later: a financial challenge knocks you down and your credit goes down with you. How can you stop the descending spiral of financial collapse? ...

It happens to many people sooner or later: a financial challenge knocks you down and your credit goes down with you. How can you stop the descending spiral of financial collapse?

The good news is: while it does take some time and effort, even the worst credit can be salvaged and be well above average again within 12 months!

This special report details strategies that will get you back on a positive financial track and help you rebuild your credit quickly.

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Picking Up The Pieces: Rebuilding Your Credit After Financial Disaster Picking Up The Pieces: Rebuilding Your Credit After Financial Disaster Presentation Transcript

  •  Many people experience a financial challenge that destroys their credit.  The good news is that even the worst credit can be salvaged and put your credit score well above average within 12 months.  Here is a plan that will get you back on track. Introduction
  •  Credit scores range from 300 to 850.  A good credit score: around 680.  There are five (5) components to your credit score: How Your Credit Score is Calculated • 35% of credit score • Based on timely payments Payment History • 30% of credit score • Based on credit utilization Amounts Owed
  • How Your Credit Score is Calculated Cont’d. • 15% of credit score • Based on how long accounts are open Length of Credit History • 10% of credit score • New accounts lower your credit score New Credit • 10% of credit score • Establish varied types of credit Types of Credit
  •  People end up with credit woes for one of two reasons:  Aim to have at least $500 in your emergency fund. Start Your Emergency Fund Not enough savings to weather financial issue More debt than income could support
  •  Consider whether the following things are really necessary: Limit Your Spending and Create a Budget Multiple Cars • Consider car pooling • Realize savings in gas, maintenance & loans if you have one car Cell Phone • Not as utilized in emergencies as most people think • Eliminate land line and keep pre-paid cell phone
  •  Consider whether the following things are really necessary: Limit Your Spending and Create a Budget Cont’d. Internet • Can be a distraction • Utilize free Wi-Fi in public places if you need to use the internet Eating Out • Average family spends 40% of income on eating out • Visit grocery store more
  •  Start thinking about other things you could potentially minimize or remove from your expenses.  Use easily accessible and free resources available to help you develop a realistic budget.  Review your budget weekly and you'll be well on your way to fixing many troublesome money habits. Limit Your Spending and Create a Budget Cont’d.
  •  Consider your free time now that you have eliminated things like cable TV or internet access.  Spend free time generating additional income by getting paid for doing something you enjoy.  It doesn't need to pay a lot to make a significant difference. This is especially true if you've given up an activity that costs money for a new activity that earns you money! Increase Your Income
  •  There are 2 basic strategies to eliminate debt: Eliminate Your Debt “Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” Ogden Nash Eliminate Debt Pay debt with highest interest rate Pay debt with smallest balance
  •  The only debt you should have is debt to generate income, like a mortgage on a rental property that provides a positive cash flow.  Avoid creating new debt while you’re busy eliminating existing debt! “It is the debtor that is ruined by hard times.” Rutherford B. Hayes Tips for Eliminating Debt
  •  There are three components to rebuilding credit: Rebuild Your Credit Minimize negative info Have negative data removed Create new credit
  •  Two main factors help to minimize negatives: Rebuild Your Credit – Minimize Negatives Pay on Time Pay Down Balances
  •  Rebuilding will take some time, but if you're aggressive, you can eliminate any negative information on your credit report, even a bankruptcy. Rebuild Your Credit: Have the Negatives Removed
  • 1. Get a current copy of your credit report. 2. Analyze your credit reports. 3. Write letters to the credit bureaus disputing the information. 4. Send the letters by registered or certified mail. 5. Keep excellent records. 6. Wait. 7. Review your results. 8. Take the next step. 9. Repeat. Rebuild Your Credit – Steps for Having Negative Information Removed
  •  The Fair Credit Reporting Act stipulates that you can receive a free copy of your credit report from Equifax, TransUnion, and Experian every year.  https://www.annualcreditreport.com is the official place to get your free copies. Step 1. Get a Copy of Your Credit Report
  • Step 2. Analyze Your Credit Reports  Negative information in order of seriousness: • Bankruptcy • Foreclosures • Repossessions • Loan Defaults • Court Judgments • Collections • Past Due Payments • Late Payments • Credit Rejections • Credit Inquiries
  • Step 3. Write Letters to the Credit Bureaus Disputing the Information Do not send letter electronically. Mail a physical letter. Include name on account & amount owed. State that you are disputing the accuracy of the report. Include name, date of birth, address, social security number, and a copy of your driver's license
  • Step 4. Send the Letters by Registered or Certified Mail  This is important as you will need proof of when the letters were received by the credit bureaus.
  • Step 5. Keep Excellent Records  Keep copies of all your letters, the responses you receive, and the receipts from your mailings.  Also keep detailed records of any phone conversations. At a minimum, you should record the time, date, to whom you spoke, and what was discussed.
  • Step 6. Wait  After the credit bureaus receive your dispute, they are required to do the following: Respond to all disputes within 30 days. Transmit to the creditor all relevant evidence submitted by the consumer Send written notice of the results within five days of its completion; include a copy of the amended credit file
  • Step 7. Review Your Results  There are only three possibilities: The item has been removed You don't get a timely response The item comes back 'verified'
  • Step 8. Take the Next Step If no response after 35 days: Send letter that they did not comply with the law Request that disputed accounts be removed If returned ‘verified’: Ask for info about method of verification Make request via phone
  • Step 8. Requesting Method of Verification Call reporting agency Get number from report Give them reference number Ask for method of verification per FCRA Section 611(a)(7)
  • Step 8. Requesting Method of Verification Cont’d. If agency cannot confirm they verified with original creditor: Ask for phone number for original creditor Call original creditor Ask for records
  • Step 8. Requesting Method of Verification Cont’d. If original creditor cannot provide records: Ask for a mail copy under new FACTA Act If you are sent records, review them If original creditor has no records, take next step
  • Step 8. Requesting Method of Verification – Next Step Inform the credit bureau that they must open another dispute. Give the name and number of the person who you spoke to at the original creditor. Call the credit bureau back. Tell them the original creditor has no records.
  • Step 8. Requesting Method of Verification – Next Step If they still refuse: Send the information via certified letter along with an intent to sue letter. If credit bureau refuses: Inform them you will sue for willful non-compliance under section FCRA 616.
  • Step 9. Repeat  If you are unable to remove items from report, re-submit dispute with any of the following reasons:
  • Step 9. Repeat, cont’d. • I didn't pay late that month. • Incorrect amount • Incorrect account number • Incorrect original creditor • Incorrect charge-off date • Incorrect date of last activity • Incorrect balance • Incorrect credit limit • Incorrect status - there are about 20 of these. • Incorrect highest credit usage
  • Credit Repair Companies Research to find a reputable company. The process takes them longer than it takes you. Fees are usually set per a certain amount of work each month.
  • Debt Settlement  If you're way behind on your unsecured debt (credit cards) payments, it is possible to have it reduced dramatically by debt collectors.  Did you know that debt collectors are authorized to accept less than the full amount as payment in-full?  This amount can be as low as 25%. “Ten million dollars after I’d become a star I was deeply in debt.” Sammy Davis, Jr.
  • Suing Credit Bureaus  If credit bureaus are in violation of the law, they can be fined up to $1,000 per violation. They are rarely willing to go to court; they will almost always settle just before going to the judge.  The trick is, you have to show up to court. The credit bureaus will always show up, just to see if you show up.  Rest assured, they will settle 99% of the time and agree to remove all the negative information.
  • Create New Credit Secured credit cards Secured loan Variety of credit • Credit limit = Amount of Deposit • Get a secured loan with your collateral • Get a secured loan, secured credit card and store card
  •  Having bad credit is usually either the result of bad decisions or not having an emergency fund to take care of a financial challenge.  It is important to remove the cause(s) of your credit woes. This likely means you need to increase your income and decrease your debts and your spending.  Establish your emergency fund, even if it's just $500 to start! Conclusion
  •  Focus on removing the negative items from your credit report.  Get new credit, no matter what it takes, and guard that credit with your life.  Get started now! The sooner you start the sooner you reap the benefits. “Who goeth a borrowing. Goeth a sorrowing.” Thomas Tusser Conclusion
  • We hope you enjoyed your Special Report! Curtis Roese is an experienced professional with extensive experience in personal finance and small business matters. Curtis writes and publishes articles, courses, guides and special reports on his personal finance blog. Common Cents Wisdom is a website with hundreds of informative articles, special reports, resources to assist you with all of your financial concerns and a free monthly newsletter. Sign up to receive your free eBook "Common Cents" and get started today on the road to financial freedom!
  • This Free Course Includes:  A Complete 80+ Page, 16-Module Home Study Course in PDF format  Companion Worksheets and Cheat Sheets  Budget Helpers, Worksheets, and Trackers  Bonus Audio Interviews with Financial Experts  My Secret Resource List of Helpful Money Sites, Tools, and Calculators  Bonus #1: Boosting Your Value Without a Formal Education  Bonus #2: Building a Wealth and Prosperity Mindset  Bonus #3: 25 Ways To Protect Your Identity Don’t Delay! Get Your Free Course Now!
  • Sign Up ~ FREE Personal Finance Newsletter “Finally… A High-Quality, Content Rich, No BS Newsletter Written Specifically For Those Interested In Personal Finance” What you can expect to receive EVERY Month by signing up:  Special Report – 10 to 20 page in-depth report on Personal Finance topics important to you!  Articles to keep you informed on a variety of topics relevant to your financial freedom.  Action Guides, Worksheets, Resources & Buyer Guides!  Monthly Financial Calendar to keep you organized and current with managing your personal finances.  Periodic reviews of Products and Services – Real Financial Solutions ~ Real Fast! http://www.commoncentswisdom.com/newsletter/