When The Collection Agencies Call You
1. Don't ignore them, go ahead and answer the phone.
2. Don't tell them you will pay, don't tell them you WON'T pay.
3. Just give them your correct address, and tell them you only want to communicate in writing, and tell them not to call you anymore.
4. Surprisingly, most collection agencies won't call you anymore.
5. When they mail you the collection letters, save them in a folder. Many will have good settlement discounts.
6. Contact me to review your report, and I will tell you if you should pay any settlement offer.
What If You Have No Credit ?
The best way to get credit when you have no credit is to obtain a secured credit card. Bank of America, Wells Fargo, CitiBank, US Bank, and Comerica Bank offer them, as well as Capital One and First Premier online. You must leave a deposit ($200-$300), and the bank will issue you a Visa/MasterCard with the same credit limit. If you use it, just make sure you always pay it on time. You'll get your deposit back in 1-2 years. After your secured credit card starts appearing on your credit report, you'll start getting offers for other credit cards. As long as there's no annual fee or startup fee, go ahead and apply.
Can Credit Repair Fix My Student Loans ?
Most of the time, no. Student loan servicers are very diligent about verifying negative status if you try to dispute student loans. The best way to handle negative student loans is to either resume payment arrangements, or place them into deferment or forebearance so that they no longer report negative. The student loan servicers are not necessarily going to notify you when your student loan comes out of deferment, so keep track so that you don't miss your initial payment.
How To Negotiate With Collection Agencies
If you want, or need, to negotiate with a collection agency, keep these points in mind:
1 - Settling in full for a lesser amount does not hurt your score, all that matters is that the balance is zero. Your score will improve with a zero balance.
2 - You will get the most discount if you can pay in a lump sum, if you want to make payments, they probably won't offer as much of a discount.
3 - Offer 20%, accept anything under 60%.
4 - Try to insist that they email the settlement agreement before you pay, but keep in mind that they aren't required to, and some won't do it.
5 - If the collection agency hasn't updated the collection on your credit report for more than a year, it may be best to ignore it for now (unless your mortgage underwriter is requiring settlement).
6 - In CA, if the account charged off less than 4 years ago, the creditor or collection agency still has the option of suing you. (other states may have different statute of limitation lengths)
Don't Dispute It ! (especially if you're applying for a mortgage)
Credit repair is not magic, and most disputes probably won't work. Regardless of what you've heard, there is no magic dispute letter or "verification" letter that will delete every negative item. That's why it's important to be very selective about which negative items to dispute, because if you dispute the wrong negative item you can make your score worse. And if you're applying for a mortgage, you will not get approved if any accounts with balances have dispute remarks. I always offer a free analysis of your report to identify which items we should delete, and which items we should ignore.
Surprisingly, Identity Theft accounts are the easiest accounts for me to delete. Credit bureaus and creditors are actually very diligent about deleting fraudulent accounts, IF we submit the proper documents. The same for any fraudulent or erroneous addresses and inquiries on your credit report.
How To Qualify For A Mortgage
Surprisingly, it is not that difficult to qualify for a mortgage at this time. FHA mortgage and CalHFA downpayment assistance guidelines start at 640 score. You are allowed to have most chargeoffs or collections with balances, as long as your score is at least 580-640. Which means we usually don't have to fix everything on your credit report, just enough to get your score over 580-640.
How Will Divorce Affect My Credit Report ?
The most important thing to remember about how divorce may affect your credit report is that a divorce judge cannot remove you from any joint accounts.Even if the judge rules that one spouse is responsible for paying a particular joint account (mortgage, car loan, etc), the other spouse will still remain on the account, and the account will still be on both credit reports, and if the responsible spouse makes a late payment, it will be a negative on BOTH credit reports. Please contact me if you have further questions about divorce and your credit report.
Should You Add An Authorized User Account To Your Credit Report ?
If you have a friend or family member who is willing to add you as an authorized user to their revolving account, it will probably help your credit score. BUT, if they have any recent late payments, or their balance is more than 50% of the credit limit, it will probably HURT your score.
Should You Use Credit Karma ?
Credit Karma is the most popular credit monitoring site, and I do recommend that consumers sign up, because it's free, and a convenient way of monitoring the accounts on your TransUnion and Equifax reports (Credit Karma doesn't show Experian).However, the scores that appear on Credit Karma are usually somewhat inflated, especially compared to the scores you would receive from a mortgage lender, so keep that in mind.
Should You Use A "Debt Consolidation" Service ?
Debt Consolidation is almost always a terrible idea. First, most debt consolidation companies are very shady and unreliable. Second, if you have that much bad debt, bankruptcy is ALWAYS a far better option. You will always get better debt reduction terms from a bankruptcy judge, and your bankruptcy attorney will usually cost less than the fees you'll pay a debt consolidation company. Third, debt consolidation will wreck your credit. It will leave you with multiple charge offs that I probably can't fix. But with bankruptcy, your credit score will immediately be ok after the discharge. And I can go back and clean it up even more after the discharge.
What If I Have No Score ?
Your credit score is a summation of your positive accounts and negative accounts.
If you have no current positive accounts, you may find that the credit bureaus won't issue you a score.
You must obtain a positive account, but you won't get approved for anything because you have no score.
Your solution is to obtain a secured credit card.
Secured credit cards are available through Bank of America, Wells Fargo, CitiBank, US Bank, and Comerica Bank.
You must leave a deposit, and they will issue you a Visa/MasterCard that will appear on your credit report. If you use it, make you sure you pay the monthly bill promptly. You'll get your deposit back in 1-2 years and the card will then convert to a regular credit card.
How To Start To Improve Your Bad Credit
1. MOST IMPORTANTLY, get caught up on any open credit cards or installment loans (auto, student, etc). Recent late payments will drastically reduce your score (even more than collections), and can't be fixed through credit repair.
2. Send me your report for a free analysis and estimate. There may be accounts that I can fix or outright delete.
3. Be prepared to settle/pay some collections. However, since your score is more affected by the number of collections (rather than the balances), I almost always will instruct you to settle/pay the smallest collections first (if I can't delete them outright). Depending on your goals, we can usually ignore the largest collections.
Which collections should I pay to maximize my score ?
1 - Some can be deleted without paying. There are many flaky collection agencies that I can delete without having to pay the collection, so send me your report first for a free analysis/estimate.
2 - Start with the smallest. The total number of collections affects the score more than the actual balances of the collections, so the goal is to first settle/pay as many of the smaller collections as possible.
3 - Only settle/pay collections that appear on 2 or 3 bureaus. It's a waste of money to settle/pay a collection that only appears on one bureau, because it usually won't help your mid score at all.
4 - Ignore collections that haven't updated in 12 months, they affect the score much less than collections that have been recently updated.
If you have a low score or other credit issue, send me your report and I will give a free analysis and estimate, usually within 24 hours.
Can Inquiries Be Deleted ?
In general, yes.
But keep in mind that only recent inquiries (less than a month old) affect the score.
So if you only need 5-8 points, we might be able to get those points by deleting recent inquiries.
If you have a low score (or other credit issue), send me your report, and I will provide you with an analysis and cost estimate outlining the score improvement potential.
Carl Bunch Credit Repair
253 N Euclid Ave #A, Upland, CA 91786
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