Credit Repair For The Real Estate Investor

It is not absolutely necessary for a real estate investor to have a good credit score in order to become successful. However, a good credit score could certainly make success much easier to attain.

Credit scores range from 350 to 850 and there are five major factors that determine your score:

1 . PAYMENT HISTORY

The largest is your payment history which includes payments that you have missed or fallen behind on, times that your debts have been sold to collection agencies, and any public records such as judgments or bankruptcies. Each of these accounts will affect your score in a different way, but combined they are worth about 35% of your overall credit score. One of the quickest ways to improve your score is by getting listed on someone?s long term well paid account.

2. OUTSTANDING BALANCES

The use of revolving credit has a great affect on your score. When you use over one-third of your available limit, on any one credit card, your score will decrease substantially. A credit score can be raised dramatically by simply transferring some balances to even them out. This factor affects 30% of your total credit score.

3 . LENGTH OF CREDIT HISTORY

The third factor is the length of your credit history. The longer you have had access to credit, the higher your score. In addition to this, the longer it has been since you experienced any credit problems, the better off your score will be. If you have had open revolving accounts for 20 years, your score will be much higher than if you are just beginning your life in the credit world. The dates of last action also have an affect on this portion of your score. By paying off an old collection you may think that you are improving your score, but by paying all or part of that old debt you are only moving the last action date to the present. 15% of your score is determined by the length of your open accounts.

4. TYPES OF CREDIT ACCOUNTS

Factor four is worth about 10% of your score and focuses on the way you use your credit. Included in this factor are the number of open accounts you have, the risk that is associated with each account, and the ratio between revolving accounts (i.e. credit cards) and installment accounts (i.e. bank loans).

5. CREDIT INQUIRIES

Finally, your use of new credit affects approximately 10% of your score. Things like accounts that are too new to rate and credit inquiries show possible creditors that you are currently applying for a lot of cards or loans and could be a credit risk. Having your credit checked often will lower your score.

Low credit scores will inevitably result in you being denied new credit or receiving loans at ridiculously high interest rates. But Credit repair and maintenance will save untold thousands of dollars over a lifetime.

You have two options for getting started:

1. Do the work yourself 2. Hire some of it done for you

1. Do it yourself

If you choose to do it yourself--the first round of repairs is to start a letter campaign. Obtain a copy of your credit reports and scores from the three major credit reporting companies and start a campaign to dispute every bad comment on each report regardless of whether it is valid or not. You do not have to be dishonest?just ask the credit reporting company to investigate each derogatory item on your report. Challenge only one item per letter.

The Fair Credit Reporting Act requires response to inquires within 22 business days or 30 calendar days. If you have challenged an item and the credit bureau does not respond within the required time, they must remove the item. Many times they will not respond in time.

The keys to your success are:

Organization Good record keeping Persistence, persistence, persistence

Date every letter and use certified mail, return receipt requested to have a record of when the letter was delivered. Receipts are essential in proving a lack of response from the credit bureau. Sign the letters yourself and set up a mailing schedule sending only three objections per day per file. Keep copies of every letter and attach the return when it comes back. Set up a system to follow up each letter within the appropriate time frame. Once you question an item, the credit agency must substantiate their information by verifying the entry with original creditor.

Accuracy is Essential

If the credit bureau can prove that you are either lying or making frivolous challenges, they are not required to remove the derogatory item from the report. Ask for complete details on an entry and always be sure the questions are relevant.

For example--Please send me a complete and accurate disclosure of the information for this entry.

When you send a dispute letter there are four possible outcomes. They are the company listing your debt will:

(1) be unable to verify and the item will be removed (2) issue a form letter challenging your dispute (3) verify the item and leave it on file (4) not respond within the required time

Trying to research credit information in old, inactive records can be very time-consuming and labor intensive, and many companies are not willing to invest the time required to respond to the request for verification.

The law says: if the information cannot be verified within 30 days, it must be removed from the consumer?s credit file. The burden of proof is on the company reporting the debt and the credit bureau. This is why it?s especially easy to remove older entries from a file.

File the Dispute Again and if the first attempt fails wait a while and you may file this dispute again. Challenging something different about the item so the credit bureau can?t claim you are being frivolous. Be creative! When the credit bureau receives the second dispute letter, they are still obligated to request verification from the creditor. It?s not unusual for the clerks in the creditor?s office to see the second request and think it?s a duplicate. Many times they won?t bother to do it again. But if they don?t, the item becomes unverified and must be removed. Write a letter to the credit bureau advising them that they have failed to respond to your dispute within the time frame required by law, and that they now must remove the item from the credit file and provide evidence that they have done so.

Public Records

If the derogatory items are public record, they should still be disputed just as you would a creditor?s item. It is the credit bureau?s responsibility to verify the public records within the stipulated time frame and if they do not, the item must be removed. This means that it?s even possible to have a bankruptcy removed from a credit report in less than the 10 years. It won?t always happen, but it?s worth a try.

Hard to Remove Items

Pay attention to the signature on the verification form and write to that person directly. Point out the consequences of incorrect information in a credit file and explain that the item they verified was either incorrect for erroneous. Hint or threaten legal action. Request that either verify it correctly or not at all. At the same time, send another letter to the credit bureau to force another investigation.

I don?t suggest you ever include a 100-word explanation even thou the law allows it. Just keep on working to get the item removed. Many times a new person will review it and delete it.

If the situation is more complicated such as a judgment or bankruptcy you may want to say contact me for complete explanation. Always be prepared to provide explanation when applying for credit.

2. Hire it done

A better option in the beginning is to pay a compamy to get the ball rolling. You will find getting this help much less trouble and less expensive. You can deligate the time consuming tasks of writing all those letters and following up to a company that is set up to do that kind of work. Just click on the Lexington Law banner at the bottom of this article and they will get the ball rolling for you for a very small fee. You can then spend your valuable time finding great real estate deals.

But you?re not finished

A credit repair company is only good for getting the process started. In order to really make an impact on you score you will still have to take some action. The following check list will you insure the highest possible credit score.

Credit repair check list

No matter how good or poor your credit is?it can be made better by doing the items on the check list below. This credit repair is simple and really works wonders but only if you follow the instructions to the letter.

[ ] Sign up for credit repair with Lexington Law

[ ] Pay all your current bills ahead of time

[ ] If you don?t have a credit card get two (even if you have to get a secured card with a deposit)

[ ] Pay all your credit card balances down to and keep under 30% of available credit

[ ] If you don?t have an auto loan take out a small one and pay it in advance each month

[ ] When getting an auto loan never allow your loan to be shopped--get your loan from a bank

[ ] Pay house payments or rent by check

[ ] Be sure the house payment or rent check is dated on or before the due date

[ ] Do not cancel any credit card accounts

[ ] Have a relative or friend put your name on their older on time loans or cards

[ ] Avoid having your credit pulled (you can pull it yourself without loosing points)

[ ] Do not make payments on very old accounts (You?re just starting the clock over)

[ ] Read and study credit repair notes above

[ ] After several months cancel credit repair service and start the next phase

[ ] Next order all 3 reports and scores from Identity Guard

[ ] Print out your merged credit report with scores and highlight the remaining negative items

[ ] Use the suggestions at the top of this report and continue the repair campaign

[ ] Call to negotiate a settlement for any old repo?s or collections

[ ] In your negotiations NEVER admit the debt is yours?just that it is on your report

[ ] Complete and check off each item on this list in order for best results

By doing these simple things you will save yourself many many thousands of dollars on all your future loans. And--if you really want to jump start your score order "7 Steps to a 720 Credit Score" and study the techniques in that program.

In review

► Have errors removed from your credit reports ► Have three or more revolving credit lines ► Have an active installment loan ► Keep credit card balances under 30% ► Verify & correct accuracy of reported credit limits ► Get a letter of deletion before paying off collections ► Set up a structured plan to correct credit ► Order ?Seven Steps to a 720 Credit Score?

"I am a full time real estate investor, trainer and coach. My company, Vanguard Marketing and Investments, Inc., offers real estate services to prospective home owners and real estate investors. Please visit www.vmiproperties.com for more information"