Accelerator: 1.3 Credit Repair Workshop Round 1

Accelerator – DIY Credit Repair
1.3 Credit Repair Workshop Round 1
Cheat Sheet

So far, you’ve cleaned up the names and addresses reporting on your credit reports. You’ve also opted-out of any promotions for the next 5 years. You also have your tools to include your personal identification, letters, stamps and envelopes. Now it’s time to dispute negative accounts reporting on your credit profile, but first you should be able to read and understand what’s actually being reported on you.

1. Understanding your credit profile

1. It’s not as difficult to understand what’s reporting on your credit report if you first know how your credit profile is calculated. 
2. There are five categories that make up your credit profile and when totaled equal 100%:
   • Payment History = 35%: This is a record of how you pay your bills. Creditors look to see if you pay your bills on time or do you have a habit of paying them late. 
   • Amounts Owed = 30%: The amount of debt you have charged to your credit cards and installment loans. The lower amount of debt you have charged to your credit card, the better you appear to creditors. This shows that you are a responsible borrower. 
   • Length of Credit History = 15%: The longer you have accounts in good standing open reflects positively on your credit profile. This also shows that you are a responsible borrower and can handle debt long term.
   • New Credit = 10%: When you apply for financing within a certain amount of time results in hard inquiry pulls. The more times you apply for credit shows creditors that you are desperate and they will not want to extend credit to you. You shouldn’t have more than 5 hard pull inquiries within a two-year period.
   • Types of Credit = 10%: Creditors want to see a mixture of credit reporting on your credit file. The ideal credit profile will have a home loan, auto loan, and two major credit cards, each with a $5,000 credit limit.

2. Here are some things that can happen during credit repair

1. So now you understand how to read your credit report and you’re ready to start the dispute process. But before you begin, you need to be aware of what can happen to your credit during the dispute process. 
2. FICO score can drop. Take into account that if an old account, even if it’s a negative account, is removed from your credit report, that account carries some weight, which we learned earlier is 15% of your overall credit. 
   • The age of an account matters when the credit bureaus are determining your credit score. On the flip side, your score will increase over time because once your credit is repaired, you’ll be able to get new credit and start building up your credit score once more.
3. FICO score can stay the same. Negative accounts may not get removed within the first, second, or third round of disputing them. So your credit score wouldn’t change. 
   • Another reason your score may stay the same is because your debt to credit ratio is too high. In this situation, you’ll either have to pay down your debt or ask your creditor for a credit line increase. 
     1. If your credit is bad, you probably won’t get approved for an increase, so it’s best to start paying down debt that you intend to keep active and open.
4. You can be sued by your creditors for failure to pay. If you’re summoned to court, you must show up and answer the charge. Bring any documentation with you to court that may help prove your case. 
   • Since we are not attorneys and cannot offer you legal advice, you should contact an attorney if any of your creditors attempt to sue you. 
   • One thing is for sure, and that’s if you don’t answer and show up for court, the creditor automatically wins the case. 
5. Once a negative account is removed from your credit report, it can be sold to another collector and that collector can reinstate it on your credit report once again. That means you will have to dispute the account once again.
   • The credit bureaus have five days to notify you that the account is being reinstated. If they don’t notify you, then you have the right to have it removed once again. 
6. Increased FICO score. So now you’ve gotten negative items removed from your credit file, you’re paying your bills on time and before time, and you’re getting mail offers for new credit that will improve your credit score.

3. Negative items to dispute

1. Not only do you need to understand what makes up your credit score, but you also need to know what type of negative accounts you can dispute during the credit repair process. 
2. Here are the negative items you should dispute
   • Collections
   • Charge-offs
   • Public Records: Bankruptcies, Judgements, Tax Liens
   • Late payments
   • Repossessions: Voluntary and Involuntary
   • Student loan payment history

4. There are negative items that you should not dispute, particularly government accounts

1. Child support
2. Student loan account
3. Do not do any disputes online because you actually waive your rights to have the accounts removed from your credit report

5. It’s time to start the dispute process

To begin, open your credit monitoring account or get your hard copy credit report you received from AnnualCreditReport.com. 

1. Click on the tab that says “Review Report” so that you can see the accounts reporting. 

6. Steps to creating your dispute package

1. Locate the negative accounts reporting on your credit reports from all three credit bureaus. 
2. The account status may be reported in the comments section or in the account status section. 
3. Either way, it will say collection account, charge off account, etc. You’ll then want to inspect what’s reporting line by line according to this list:
   • Check the accuracy of the account name 
   • Check the accuracy of the account number
   • Check the accuracy of the terms
   • Check to see if the opening date is correct
   • Check the accuracy of the account type: Late, Collection, Charged off, etc
   • Check the accuracy of the balance owed
   • Check the accuracy of the past due balance
   • Check the accuracy of the payment history
   • Check for any inaccurate comments or statements listed by the creditor or the credit bureau 
     1. If you see in the payment history field “KD,” this means Key Derogatory. Also, any account listed in red for a particular month is an indication that the account was late.  
4. Write down on a sheet of paper no more than six items beginning with public records,next charge offs, then closed collection accounts that are two years old or younger, because these have the greatest impact on your credit score. 
   • Do this for all three credit bureaus. 
   • Medical bills and late pays can be disputed last if you have less than six of the other items mentioned. Else, they can be disputed in future rounds. 
   • Popular reasons for disputes:
     1. Balance reporting is incorrect
     2. The opening date is incorrect
     3. The status is incorrect (Meaning the account may be reporting as a charge off account when it’s actually a collection account)
     4. The account is not late as many times as it is being report
     5. The account does not belong to you
5. Use the editable dispute letters found in the resource section of REI Accelerator, and once you have round 1 letter for Equifax, Experian, and Transunion open, you’ll see blue text. 
6. Here you’ll write in the account name, account number and your reason for disputing the account in black ink to match the remainder of the letter. 
7. Once you’ve completed filling out round 1 letter for any or all of the credit bureaus that the six or less negative accounts are reporting on, it’s time to print your letters out and prepare them for mailing.

7. Mailing letters

1. To prepare for mailing, you will need legible copies of your Driver’s License or State ID, Social Security card, and a utility bill for each bureau. 
2. So if you have three letters, then you’ll need three copies of your personal identification, three copies of your Social Security card, and three copies of your utility bill (Cell phone bill, Gas bill, Electric Bill, Lease, Bank Statement, etc.)
3. Place each letter and a copy of your identification in an envelope and address it to the credit bureaus you’re disputing with. 
4. Be sure to include your return address and place a stamp on the envelopes.
5. Mail off your letters either by certified mail or regular mail.

8. During the credit repair process

1. The credit repair process takes anywhere from 30 to 45 days for you to get a response back from the credit bureaus, so keep track of when you sent off your dispute letters and when you received correspondence from the credit bureaus.
   • If the credit bureaus take longer than 45 days to respond to your dispute, you can use this as a reason for the negative account to be removed from your credit report.

9. During the credit repair process there are things to be mindful of

1. Don’t apply for any new credit because it will drop your credit score
2. Do not close any open accounts because it will drop your credit score
3. Do not increase your debt utilization because it will drop your credit score
4. Do not co-sign for anyone. If they decide to not pay the account, it will report negatively on your credit report
5. Do not dispute any negative account that has a balance over $900 because you risk the chance of being sued by the creditor 
6. Do not fail to pay on your credit cards and installment loans, nor be late paying on your credit cards or installment loans
7. Check your credit report every 30 days with your credit monitoring service for any new negative accounts being reported, what negative accounts have been removed, and what negative accounts still remain
8. Do not incur any new negative debt

10. Things you can do after every 30 days of credit repair

1. It’s important to monitor your credit whether you are still repairing your credit or not as stated above. 
2. Keep track of all correspondence you receive from the credit bureaus, because this is how you will know if an account was verified or removed from your credit file. 
3. Start building your credit by paying down your debt on open accounts that are reporting positively. 
4. You can improve your debt to credit ratio by requesting credit line increases from your creditors every six months.

Words of advice

• You can save money and paper by copying your DL and Social Security card and even a small size utility bill all on the same page. 
• Color copies of your personal identification work best.
• Your utility bill should be a most recent copy. The credit bureaus will only accept utility bills that are no more than 90 days old.
• Now, if you don’t have a utility bill in your name, you can use a W2 form, 1099, bank statement or lease. These documents verify where you live. The address listed on your personal identification and your utility bill, bank statement, lease, W2, or 1099 should match. But if they don’t, still send copies of them to the credit bureaus.
• For the bank statement, you don’t have to send all pages. Just send in the first page that has your name and address and account information listed. The credit bureau doesn’t need to know your credits and debits.
• Disputing more than six items on your credit report will come off as being frivolous to the credit bureaus and they will not take your dispute seriously and will either ignore your letter or mark it as verified. 
• Also, each credit bureau should have their own dispute letter because some negative accounts may report only on one credit bureau and not the other, so be sure to list the six or less negative accounts on the same letter according to which credit bureau they’re reporting on.
• Don’t dispute negative accounts that are near the seven year mark. They’re due to fall off anyway. If you’re applying for a mortgage and your lender insists you take care of the account, then there’s the exception to the rule and you should dispute the accounts close to seven years.
• Paid collections and settlement accounts are still considered negative and should be disputed.
• In case there is more than one reason you find the account is reporting negatively, you should only pick one reason for disputing for the first round of disputes. If your first reason for dispute comes back as verified by the credit bureaus, then you can use any of the other reasons you find as inaccurate for the following rounds of dispute.
• Being that the credit bureaus (Equifax, Experian, Transunion) change their mailing address frequently, it’s best that you look up their mailing address online at the time you will be mailing out your letters. 
• Sometimes the credit bureaus will send you correspondence that says for you to call them or go online to complete your dispute. Don’t do it! Ignore these types of letters. You’ll only be waiving your rights to sue the credit bureaus in the future.
• To be successful in repairing your credit, you must physically mail out dispute letters. 
• You want to receive correspondence from the credit bureaus that list the name and account number of a negative item and the letter reads: “Outcome: Deleted. This item was removed from your credit report. Please review your report for the details.”

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