INSIDER'S Report -  " You & the Credit Bureaus-Knowledge is Power"

Credit CORRECTION - PART 1

You're concerned about your Credit Report, and for GOOD reason.   

You WILL get Credit if it's GOOD.  
You WILL NOT get Credit if it's BAD.

NOT SO SIMPLE.   

Getting Credit, yes or no,  is ONLY ONE reason to "Repair" your Credit and not the most significant.
You can still get Credit if it's BAD.  BAD Credit means you'll pay a lot more for the same loan.  It could
cost you many hundreds of dollars to have a BAD Report.

What you may not be aware of is that your Credit Report can be right or wrong,   
AND whether it's WRONG and gives you BAD Credit or it's RIGHT and gives you BAD Credit, there is
little difference.

BAD Credit -  can, and USUALLY DOES:

1/Increase the cost of your Credit, (Set-up/points/cost of documents)

2/Require a larger down payment

3/Result in a higher rate of interest (same loan)

4/Lower the required debt-ratio.  Debt ratio is debt vs income.  (See Chapter 2- "What You Should Ask
Before Applying" for a detailed explanation)  "A" would get the loan if paying out 50% of his income & "B"
could be turned down.

AND, you'd never know the difference since no one will tell you.  They'd just say you owe too much money. 
They'd be right.  Your Credit Report tells them you can't handle your money.

OR you may have to live with a poor loan rather than the best available because of an incorrect entry for
years!    If your Credit is not "A" because of a derogatory entry, a mortgage lender will oftentimes charge
you 1% more interest on your 30 year loan.   Not to mention extra "points".  If you borrow $100,000 for 30
years 1% can mean a bigger or a smaller monthly payment  EVERY MONTH for 30 years!  

Your payment at 8% is $733.76 a month, and at 9% $804.62 but at 7% $665.30 a month.  
EVERY MONTH for 30 years!

And it doesn't end there.  Your ability to rent/lease a place to live could be, and usually is, affected.  
Many employers "run" your Credit before they offer you a job.  Especially in Management and positions of
trust.  You cannot get on the Los Angeles Police force with BAD Credit.

You can't get a Merchant Account for a new business to take Credit Cards with BAD Credit.

There's probably many more times that BAD Credit Reporting can change the quality of your life but
these are the first that come to mind.

It's interesting to note here that BAD  Credit stays in the Bureaus longer than GOOD Credit for the
most-part.   What's chilling is that it doesn't even have to be right !

AND even more disturbing is that with the exception of the Police Force and possibly a Merchant bank,
you won't be told WHY you were turned down or WHY the Creditor offers Credit that costs so much. 
They don't tell you that there are many levels of Credit.  You just think that's the way it is.

Since there's no one to ask, and no one will offer the information,  you can go on like that for years!
=============================================
The Credit Reporting done by the Bureaus is your Credit "reputation",- a Reporting of the claimed facts as
they say were Reported to them.   We say "claimed" since there are no guarantees that your Credit records
Reported to them are correct.  

Many times items are incorrect due to Reporting errors.  Clerical errors occur at the Bureaus in posting
or at the Reporting agency when Reporting to the Bureau, or at the Reporting agency.
OR, ALL OF THE ABOVE!

So there are several stages at which your Credit history can be posted incorrectly.  In some cases this is
compounded even further.  The major Credit Bureaus Report BAD Credit from small Credit Bureaus who
give only the information that you have BAD Credit, not the source of their Reporting.  

Also included is public record.  Judgements, bankruptcy filings, liens, wage garnishments, Ch 13- Wage
Earner Plans, taken off by low paid clerks who are usually over-worked and are likely to make errors.  

WHAT CAN YOU DO ABOUT IT?

It may come as a shock to you that no one will do it for you under $1,000 (that's the latest figures I know
of) per individual or couple.  You just can't holler "foul" if your Credit Report is incorrect.  Nothing will
be done if you don't do the "steps".  Further, if you ask improperly the Bureaus use a clause in the Fair
Credit Reporting Act and call your request "frivolous".  

There's something you can do about that but we'll deal with it LATER in the chapter:  
"WHEN ALL ELSE FAILS".

In a nut-shell: Creditors and Credit Bureaus can say ANYTHING about your payment history 
RIGHT OR WRONG and it's UP TO YOU TO "POLICE" them.    Sad, but true.

It is your responsibility to be sure that the Credit history being Reported about you is accurate.  
Since no one doing the posting and Reporting really cares if you have GOOD Credit or BAD, it is up to
you to check your Credit at LEAST once a year.  Every six months is preferable.

It's TOO LATE to find out your Credit Report is inaccurate AFTER you are turned down for Credit or
miss that GOOD job or fail to get that apartment or house!

There are several things you must always keep in mind regarding Credit and Credit Correction the most
important of which is that YOU ARE NOT THE CLIENT.   YOU ARE THE COMMODITY!
(or strictly speaking, your "track record" is the commodity)  

Money exchanges hands based on Reports made about you, right or wrong.   But, there is a Federal Law
that can protect you from unfair Reporting.  It is up to you to use this law to protect yourself!

The abuse of the Credit Reporting Agencies was so extensive that the Federal Government created the
FAIR CREDIT REPORTING ACT.   This is the first chapter in a course book to help you use the act to
your advantage and empower you with the Credit Bureaus.

You and Uncle Sam make a formidable adversary.  The trick is to conduct yourself properly and request
investigation and/or correction in the proper way.    IF YOU DO IT IMPROPERLY you'll find that the
Bureaus just "brush you off".  

I suppose they have their problems but the general feeling about the Credit Bureaus is that they are
"mean spirited" and uncooperative.  They have the audacity to hold themselves as if they were a
Government Agency when in truth their business is no different from any other business.  Except for the
structure of their business they must answer to their clients the SAME AS ANY BUSINESS such as the
shoe repair man or the cleaners answers to you.  EXCEPT, in this case, YOU ARE NOT THE CLIENT!

The Bureaus' Clients for the most part are AUTOMATIC SUBSCRIBERS: Major Banks, Travel &
Entertainment Cards, Major Savings & Loans, Major Department Stores, Finance/ Loan Companies,
Collection Agencies.   They Report automatically monthly to the Bureaus who act as a "Clearing House"
for information.  In turn, when they want to determine if you are a GOOD Credit risk, they request a
Credit Report on you.  Since they are Automatic Reporters and they contribute to the information
(COMMODITY) monthly, the Bureaus in turn give them Special Consideration:  Service and Cost.

It must be noted here that it takes a LOT to get an automatic Reporting removed and many times a
Creditor who wants to collect from you will promise to remove the entry from the Bureau but in truth will
only mark it "paid".    What you are left with is a derogatory entry that is paid.  VERY slightly better than
an unpaid one when you apply for Credit.  VERY slightly.  

In fact, there are times when you have limited funds that you should use the money someplace else.  We'll
try to get into that later if time and space permits.

You'll be surprised to find out that many major Financial institutions and Creditors do not Report to the
Credit Bureaus monthly.   We'll discuss that in the next Chapter:  WHAT YOU SHOULD ASK BEFORE
APPLYING.   How and who you go into debt with can be a big factor.

You must also be aware that NO ONE CAN REQUEST YOUR Credit Report LEGALLY UNLESS YOU
GIVE THEM WRITTEN PERMISSION.

It should be noted here that Car Dealers are guilty of "running" your Credit without a signature.  Many
folks have discovered Credit inquiries on their Report after they have paid cash for a car or sometimes
when they have "shopped" a car.  (even called about a car on the phone)

Inquiries reflect on you.  If there are too many on your Report, many times a Credit Manager will turn
you down only because they think you were turned down by the others!   (They think they've missed
something)  Or, if they want your business and can't find anything BAD on their own, they will ask you
for a bigger down payment or give you less generous terms!

You may be surprised to find out that many institutions DO NOT Report your Credit record to the
Bureaus.  They do however, turn BAD accounts over to their collection agency and you can be sure the
collection agency will Report to the Bureau.   They do run your Credit Report before they extend Credit
and many times that inquiry can lead a prospective Creditor to your account, not Automatically Reported, 
GOOD or BAD.  That is, no Reporting, GOOD or BAD, but the inquiry indicates you intended and
probably did get Credit.  If they can't get any information other than that, some Credit Managers assume
you're hiding a debt!   DEBT RATIO is a significant factor in lending too.

THE INQUIRY'S STAY ON YOUR Credit Report FOR ONE YEAR.   REQUEST THEM GONE IF
OLDER.    You should know why by now.

There are many factors other than your "good conduct" paying your debts that are "in play" that result in
BAD Credit or GOOD Credit.   

Say the bank that has your mortgage doesn't Report and you've paid all the little  bills from Creditors
that have AUTOMATIC Reporting.   After 3-6 months of non-payment your mortgage goes into
foreclosure.  It's public record but it isn't where the Bureaus generally get their information.  It's not
picked up.  As a result you still have GOOD Credit.

So it's conceivable that YOU CAN BE IN FORECLOSURE AND STILL GET Credit! 


Also, it's conceivable that you can CONTINUE TO HAVE Credit.  Just don't apply for new if the adverse
is in the Bureau.  If you give them no reason the Credit card company has no reason to check and won't
cancel your Credit after a foreclosure if you've been paying them.  

This is why it's good to know your financial position and what's likely to happen regarding your short-
range future income.   Also, know your Creditor.  See Chapter 2, "WHAT YOU SHOULD ASK BEFORE
APPLYING ". 

With a Homestead and a properly filed Bankruptcy you can have as long as 3 yrs to make up the
mortgage payments.  Even if you sell your house, if you do it right you will have enough for a down-
payment for another house.   Then the new Mortgage lender will find out your sordid past, BUT ONLY
THEN.  

You might be interested that the VA will lend you the money to buy a new house 2 years after a
bankruptcy and many lenders will also if you quickly re-establish or maintain your Credit.

It's also conceivable that you could have paid all your bills on time and get turned down.
An entry clerk posts your account incorrectly or some entries that don't belong to you, but to a person
with a name like yours,  find their way into your Credit Report.

You're beginning to understand that Credit and your Credit Report are dependant on many more things
than if you're a good guy who pays his bills or you're the dead beat who never intended to pay.  

The younger you are, the better chance you have of having a GOOD Credit Report.  American Express
routinely gives Credit to College Students.

Hardly anyone over 35 has not had SOME financial problems.   That's why you must be aware of the
"clocks" (to be discussed later) and your options to  "clean up" even a correct BAD Credit Report.  

In some cases the Report is accurate BUT you have very GOOD reasons. (It could happen to anybody).  
In some cases the Report is wrong and all your appeals have failed.  

In those cases you will go to the Chapter: "WHEN ALL ELSE FAILS".   If you use some or all of the
recommendations (we like to use ALL) It REALLY builds a fire under them!

SO, HERE WE GO!  

First we will give you an over-all view of the Credit cure process and then go into the most common
problems and  what to do to correct them.   It's unlikely that your "cure" will not be mentioned.  
Even if it is not, if you check out a related problem, common sense and an understanding of Credit
Reporting and the process to Repair you Credit will see you thru.

BE PATIENT AND PERSISTENT !  
You'll do fine.
                         GOOD Luck from the Staff of
                         CHARLENE HORN & ASSOCIATES 
                            Santa Fe Springs, CA 

This report was Uploaded by Charlene Horn, [76657,2305]  May 31, 1994
It is the introductory Chapter of "Secrets & Shortcuts" Guide to Credit Repair, a Course Booklet to take
you step-by-step through the Credit Repair process.  

The Booklet was put together originally by the Staff of Charlene Horn & Associates as a Training Manual. 
There is a wealth of material offered by experienced Credit Repair Counselors.