AAA Credit Secrets Table of Contents The Solution to Bad Credit 5 Structure of Social Security Numbers 14 Scoring for Credit 17 The Credit System 20 Credit Card Insights 46 Six Credit Card Secrets Banks Don't Want You to Know 51 Establish AAA Credit in 30 Days 53 The Lure of Bankruptcy 54 Bookkeeping Made Simple 56 Stop Collection Agencies In Their Tracks! 58 If Someone Owes You Money 59 Your Consumer Rights 60 The Free Credit Card Trap 61 How To Get Free Rent 63 Your Money Guide to Free Government Grants 64 How Pawn Shops Work 70 Improve Your Credit By Paying Bills Later Rather Than Sooner 71 Signature Loans 73 Wipe Out Debts Without Bankruptcy 74 Winning The Credit Card Game 75 Women And Credit 76 How to obtain an $800 Loan By Mail - Interest Free! 77 The Secrets Of Credit Repair 78 The Inside Secrets Of Credit Repair 102 Solving Credit Problems 103 Guerrilla Tactics That Will Give You A Good Credit Rating 108 Is it ethical to try and remove legitimate bad credit? 116 Federal Credit Laws 119 Legal Ways To Get The Bill Collectors Off Your Back 121 Choosing A Bank That's Right For You 124 How To Make Big Money With Your Own Business Financing Service 125 50 Ways To Cut Costs And Increase Profits 137 Nine Ways To Lower Your Auto Insurance Costs 140 Sure-Fire Methods Of Raising Instant Cash 144 How To Achieve Wealth The Easy Way 146 Consumer Rights 148 Bankruptcy 150 Divorce and Credit 158 Federal/State Credit Laws 162 Credit Letters 166 Credit Repair Companies 176 Credit Dictionary 177 SkipTracing 186 Tele-Terrorists 192 Women and Credit 195 How To Collect Business Debts 205 Secrets Of The Richest People 221 How To Accomplish Anything You Want In Life 232 Choosing and Using Credit Cards 243 Consumer Handbook to Credit Protection Laws 251 Complaining About Credit 271 Fair Debt Collection 281 How To Dispute Credit Report Errors 285 Managing Your Debts: How to Regain Financial Health 287 Ready, Set...Credit 291 Shop -- The Card You Pick Can Save You Money 295 66 Ways to Save Money 306 How to Get Less Junk Mail 313 Disclaimer This report is sold with the understanding that the publisher is not engaged in rendering legal or accounting services. Questions relevant to the specific tax, legal and accounting needs of the reader should be addressed to practicing members of those professions. This information was gathered from sources believed to be reliable, but cannot be guaranteed insofar as they apply to any particular individual. The authors, publishers, and distributors specifically disclaim any liability, loss, or risk -- personal or otherwise, incurred as a consequence directly or indirectly of the use and application of any of the techniques or contents of this report. The Solution to Bad Credit There's only one way that people are freeing themselves from the shackles of bad credit and that is to create a new credit file on themselves within the credit bureau's computer system. This new file won't have any of your previous credit on it. And as you read an you'll see exactly how to make sure that only your new credit file surfaces when someone is running a credit check on you. This sounds complicated but it's very simple as you'll see. In the credit bureau's computer system are millions of people's names, personal information, and credit histories. With so much information stored on so many people it's common to find many people with the same names and birth-dates. Some of these cases maybe in the same city. The credit bureau has many identities entering their system for the first time or leaving permanently because of the thousands of births and deaths in America each day. Because of the vast number of people in this country and the massive amount of information being stored on every aspect of our lives, accompanied by increased legislation that restricts the ability of different computer agencies to cross reference or exchange information on citizens, a complex situation exists that limits even the most powerful computer system's ability to keep track of these gigantic reservoirs of information compiled on the American people! People that create new credit files on themselves understand these things very well. Contrary to popular belief the computer is not fool proof. It can't think yet. so therefore, it's vulnerable to those that realize this. As it stands today they don't have artificial intelligence and can only act on what's put into them. The way people create a new credit file the credit bureau lacks the safeguards to protect itself from out side manipulation and are limited in their ability to tell if the information that's input into their system is accurate or inaccurate. And because of this there's hardly ever am investigation done on those that create a new credit file because of "how" they manipulate the system to their advantage. Taking all this into consideration, we've discovered the avenue through which new credit files are created called the "LOOPHOLE". Your Name And Personal Information There are 3 ways that people create a new credit file. One is to use their same name with different personal information. Another is to use the same personal information with a different first or last name. And last of all, they use an alias name with the same or different personal information. When I speak of personal information I'm talking about a person's birthdate, social security number, address etc. It's up to you to decide which way is best for you. The credit bureau's computer has to match a person's name and personal information with what's stored in it's memory banks or it won't be able to find the person's credit history! Anyone of the 3 variations mentioned in the previous paragraph throws the computer off in it's search for a person's credit history and as a result a - no record found - is reported back to those performing the credit check. A - no record found - means that a new credit file can be compiled on a person based on the name and personal information used in the initial credit check and would belong exclusively to the person desiring to do such! Thus, a new credit file is in the makings! Just keep reading if you will and I'll show you how easy it is to get a drivers license or State ID card to match the name and personal information a person uses to create his new credit file. And I'll also show you how to establish credit on your new credit file. Let's say that your name is John Doe and you were born on Jan. 38th, 1492, your social security number is 000-00-0000 and your address is 1234 Credit ave. Florida, Alaska. Now let's say that your credit is bad enough to get you turned down whenever you apply for additional credit and you want to get around this obstacle. If you changed your first name to another that starts with a different letter other than the first letter of your real name, such as Robert Doe instead of John Doe. and used your same personal information, a no record found - would surface during a credit check! If you kept your first name and changed your last name to another one that starts with a different letter other than the first letter of your real last name, such as, John Williams instead of John Doe, and used your same personal information, then a - no record found - will also surface. If you kept your real name, both first and last, along with your real birthdate (birthdate must always stay the same in order to match with the birthdate on your License or ID) and changed everything else in your personal information then a - no record found - would surface also. With a completely different first and last name or alias you can keep all your original personal information or make up new personal information (remember that your birthdate must always stay the same ) and a - no record found would surface both ways. If for some unforeseen reason someone else's credit history shows up when trying to create your new credit file it means that you've accidentally chose information that caused the computer to tap into another person's file that has the same name you're using. In the event this happens you'll have to repeat the creation process until a - no record found - shows up. Remember that a - no record found - means that the file is clear, not being used by anyone else and is exclusively yours! Many states, especially California, allow people to use aliases for a number of reasons. People whose names are well known use aliases to escape publicity as they travel, check into hotels, etc. While some wealthy people use them to hide certain assets of theirs from the public's view. Some of these people have drivers licenses, social security numbers, credit cards and other credit in these names! A lot of them borrow money in these aliases. Some people have several aliases with a credit file on each name in the credit bureau's computer Choosing A Social Security Number Your social security number is the most important factor that has to be - adjusted - before creating a new credit file! If you decide to keep your same name, your social security number must be different in order to throw the computer off in the creation of your new credit file. If you decide to change the first, last or both parts of your name you can keep the same social security number. You don't have to worry about having to show proof of the social security number you use when applying for credit at most places. Creditors usually ask only for your license or State ID . And in just about all cases they'll take your word as to what your number is if you tell them you don't have a social security card. On the following page is information titled, What's in a Social Security Number. Read it carefully. It lists the different numbers in a person's social security number (the first 3) that represents the State a person was born in. When changing your social security number all you have to do is substitute your first 3 numbers or State code with those of another State. The rest of your numbers can stay the same. If you use a different social security number to create your new credit file you must also use the State whose 3 digit code you're using as your place of birth in your new personal history because the computer system has the state codes built in them and can spot false social security numbers or those prefixed with the wrong State code when used with your place of birth! Remember that if you're changing your name you can keep your real social security number. The only time you'll change it is when you're keeping your real name. If you're changing your real name you can also have the people at the Social Security Office to give you another card with your new name and same number printed on it. This way you'll have two social security cards. Each one will have the same number and a different name. All you have to do is go to their nearest office and apply for a name change on your card. Then all you have to do is show them your license with your new name on it (more about this as you keep reading) and also show them some type of proof of your original name. No court order is required and they'll mail you a copy of your new card with the name change on it. Your New Drivers License or State ID After you've decided which way you want to create your credit file you'll have to get a drivers license or ID to match. If you decide to keep your real name and use different personal Information to create your new credit file all you have to do Is have a routine address change on your license to match the one used for your new credit file. In the event you decide to change your name to create your new credit file you'll have to get a duplicate license or ID to match the new name you're going to use. All you have to do is go to the to the driver's license bureau. Give them your license or ID number but don't let them know that you have your license or ID with you. Then tell them you want to get a duplicate license or ID because you've misplaced the original. At the same time tell them you want to make both a name and address change on your license or ID. In California they'll do this on your word no requiring a court order. In fact, they can't refuse to do this for you because it's standard procedure. They'll give you a sheet of paper to check the answers to a few questions. After you've completed the sheet give it back to them with the fee they charge to do everything. Then they'll take your picture and issue you a valid temporary drivers license or ID with the changes on it. It shouldn't take more than 3-4 weeks for you to receive your permanent picture license or ID. It will be good for 6 years. Doing things this way you'll have two licenses or ID's. One will be in your real name with your real address on it and the other will be on in your changed new credit name with your new credit address on it. When time comes to renew your license or ID, be it the real or changed one, simply take the license or ID for either one of them and had it along with their application for renewal and their fee to the clerk. Then they'll take your picture and renew it. And it's just that simple. If you choose to create your new credit file by keeping your real name and using different personal information, you don't have to go to the drivers license bureau if all the new credit you want is in the form of credit cards only. In most cases all that's on a credit card is your name without an address or other personal information. So you can use your original license or ID without having to get any changes on it, even though when you applied for the cards you used a different address. The reason why you can do this is because when you use a credit card there's no address on it for a clerk to try to match with your license of ID. The clerk will only want to check to see if you have the name of their card on your ID or license. But if you plan on obtaining major credit and will require you to come before people to show your license or ID then you'll have to get a duplicate with the address on it along with the same you'll be using. One last point that needs to be made about your new duplicate license or ID that you might have to get is that even though the drivers license bureau will change your name and address on your word they won't change your birthdate. So because of this your birthdate must remain the same regardless which way you create your new credit file. Some other states other than California require for you to bring in a court order to the drivers license bureau for a name change to take place on your license or ID. Most attorneys charge $200 - $700 for a name change. But if you fill out all the papers yourself, which is simple to do, it will cost you only $10. Once you sign the papers take them to the county court clerks office and leave them with the clerk along with your $10 fee. The next day or two you'll be able to pick up the court order for your name change signed by the judge. In order for the name change to take effect you have to advertise it in a local paper. If you got the court order and didn't advertise the name change it wouldn't be official and therefore wouldn't appear on your record. This is just what you want! Take the court order to the drivers license bureau and they'll make your name change on the duplicate license or ID that you'll be using for new credit purposes. But don't advertise the name change so it won't appear on your record! Creating the New Credit File Once that you have decided what name and personal information you want to use for your new credit file it's a simple matter to create the file and get the credit report on it. There are three ways to create the file. One way is to mail a letter to the credit bureau requesting for a copy of the file being mailed to you. The other is to go to the credit bureau to get your file. And last of all you can have a credit granting business that's a member of the credit bureau create the new file for you. If you wrote to the credit bureau requesting a copy of your credit report in the name and personal information that you decided to use for your new credit file, then they would mail you a report on that file after they have typed your name and personal information into the system (where it will stay) to see if there's a credit history on the information you sent them. When you receive the report back from them it will more than likely have - no record found - on it. As I've stated, when they type your name end personal information into the system to see if there's a record of you being granted credit before, that information will stay in their system. In other words the computer will absorb the information you supplied them into their system as a new credit file when they search for any credit record in the name and personal information you gave them. And even if it comes back - no record found - it will still have in it's system your personal information such as your name, address, birthdates, social security number, date of birth, place of employment, etc. Your goal is to act like you went your credit report so you can take a look at your credit history. What they won't know is that you already know that you don't have a credit history in that name and personal information end that this is your way of manipulating them to create a new credit file on you by performing a search for what they think is your file, thus creating another one for you in the process! Since your name and personal information stays in their system once they type it in to pull the report end a new credit file is created in the process, then you have truly taken advantage of the loophole in the system to get your new credit file created! Remember that once a person gets the credit report back it will more then likely have a - no record found - on it. And this means that the new created file has been created, it's clear to use the name and personal information you supplied, and the new credit is exclusively yours! Now you can easily re-establish or rebuild your credit wisely on that file. The credit bureau would rather deal with people by mail as much as possible as opposed to having thousands upon thousands of people coming to their offices each day throughout the country. Also keep in mind that it's utterly impossible for them to investigate even a small amount of letters they receive, much less all of them, to see if the information people are supplying is accurate or not. They are more concerned with collecting the fees and keeping their work load down by sending out as many credit reports as possible than they are at finding the very small amount of letters from those smart enough to create a new credit file on themselves. So because the mail is the best means for them to communicate with the public, along with the many variables and sometimes complex circumstances that warrant a person requesting a copy of his credit report, the credit bureau has no other choice but to send the requested report without question as soon as possible regardless if the information the person is using is accurate or not! The fact remains that you will have a new credit file created in their system along with a new credit report on that file! Depending on the time of year you request the file it could take from one week to two months to receive it beck from them in the mail. Just be patient end wait for it because it's going to be sent beck to you! Once you've gotten the valid temporary driver's license or ID slip that they give you until the one with the picture on it comes, you can go down to the credit bureau with it and get a file created on the spot by requesting a copy of your credit report when you get there. They'll give you a paper to fill out asking for your name end personal information. Then they'll go to their computer an pull your credit report, thus creating a new credit file, for a $8 - $10 fee. The safest way to go about creating a new credit file is to go to a business such as a jewelry store that's a member of the credit bureau and reports to them on all their clients. Take your valid temporary or permanent picture ID that you'll be using to create your new credit file en apply for an inexpensive piece of jewelry for about $100 on credit. They will give you a Credit application to fill out. Then they'll go to their credit bureau's computer terminal in their office and run a credit check on you by typing into their computer system your name and personal information in order to pull your credit report, thus creating a new credit file on you in the process! Next they may want you to give them a $20 deposit on the jewelry with the rest of the cost to be paid in smell monthly installments. After you make your first payment on the jewelry the following month they will report to the credit bureau that you have paid as agreed end it will show up on your new credit file as an A-1 rating. The Best Way to Create Your New Credit File The way that seems to he working best for people is for them to use their same name and birthday with all the other personal Information being changed. This way the only thing that has to be done at the driver's license bureau is a routine address change. And instead of trying to go to the credit bureau or write them to get the new credit file created it works out better for people to go to a jeweler and get them to create their new credit file for them. Like I said this is working out with less problem than the other ways I've described to you. But it's up to you to decide which way you want to go about doing it for your self. Employment References After you've gotten your new credit report and matching license or ID you'll need an employment reference so that creditors you'll use to build a strong credit profile can call and verify that you are working before issuing you credit. If you decide to keep your name and use different personal information to get your mew credit file and are employed. This presents no problem to you. Potential credit grantors don't question your employer to see if you gave the correct personal information. When they call they only went to know if you ( the name you gave them) works there, how long and possibly how much money do you make. If you decided to change your name in order to create your new credit file and are also employed, all you have to do is take your new license or ID to your personnel office or employer at your job and they will gladly make the name change on your records so when potential creditors call there it will be no problems. In either case, if you're unemployed, a friend could be an employment reference for you or if you know anyone personally that owns a business, you can ask them if they will be an employment reference for you. Make sure that you tell them that it's only for credit purposes and won't involve taxes. It might work best if you give the person come money as an incentive for helping you. You can also give the appearance that you are working when you are really unemployed by getting a business phone line placed in a friends hone with an answering service attached. Then you can have it listed in the phone book because creditors do check to see if businesses are listed sometimes. Having it in a corner of a friends house and listed would give it a different address other than your own. If you would rather have it at your home you can have only the phone number listed and not the address. Then all you have to do is tell the potential creditors that you work with a small company that's into sales and sometimes everyone is out in the field. But the owner will get back in touch with them if they leave a message on the recorder. This is something that creditors run into sometimes and they won't be surprised at you telling them this. But what they won't know is that either you or one of your friends will be returning their call and giving you an excellent job verification. Sometimes creditors ask to see a check stub from your job. This is an easy thing to get around. All you have to do is open a business account and order the checks that have the most business like check stubs. Remember to always type out your check stubs whenever you have to use them. It usually takes the banks a couple of weeks to get you your permanent checks. As soon as you get them you can close the account, if you want to, because all you wanted was the checks stubs. And always start off using the check with the largest number on it. This will require you to get checks from the rear of the check books. This will make the creditors think that the business has been in business much longer that it has! Bank Loan Procedure These loans are not designed to put money in your pocket. They are designed to get banks to trust you and start loaning you money along with posting A-1 credit ratings on you credit report to show you credit worthy. The best credit reference you can furnish is a record of having borrowed money from a bank. Since bank loans are hard to get, a good reference will usually rate you as AAA-1 and open the doors to the credit world for you. The following is a technique for using the banks money to build an excellent credit rating for yourself. First of all go to a bank of your choice. Make sure they report to the same credit bureau that you are building your credit file at. Open a regular savings account there for no less than $100. Wait 3 days for the account to be posted and then go back to the same bank and ask for a $100 loan offering your savings account as collateral. Since your loan is totally secured by your savings account the bank won't even make a credit or employment check. Take the $100 loan, go to another bank and do it all over again. Go to at least 3 banks doing the same thing. Ask for a 6 or 12 month payment plan for each loan and take your payment account passbook with you each time you ask for a loan because you'll have to surrender it to the bank in order to get the loan. After leaving the third bank you'll still have the $100 cash in hand. Now go to a fourth bank and open a checking account if you don't already have one. Wait two days, then make one monthly payment on each bank loan from your new checking account. Wait a full week and send your second monthly payment to each bank. Repeat one week later with your third month's payment. Once you've followed my plan you'll be eligible for signature loans, credit cards, home or auto financing, or anything else. A credit investigation at this point will list you as an excellent credit risk. And why not? Within 30 days you'll have an active checking account, three $100 savings accounts and three $100 loans on which you are three months ahead on payments. You'll also have 3 A-1 credit ratings on your credit report. And as you continue reading you'll see that you'll also have a fourth A-1 credit rating from the bank that will issue you your visa and/or Mastercard. By making the first 3 payments you have unfrozen equal amounts of cash in your savings account. You can now withdraw enough money from your savings account to make your upcoming payments. Continue In this manner until the loan Is paid off. You'll still retain most of your original $100 because it continues to draw interest while used as collateral. This helps offset the interest charges you pay. Try to keep a little money in each savings account for future references. Credit Scoring System AGE POINTS 18-21 0 22-25 1 26-64 2 65-69 1 MARITAL STATUS Married 1 Single 0 Separated 0 Widowed 0 Divorced 0 DEPENDENTS No Dependents 0 One to three 2 Over three 1 RESIDENCE Rent Unfurnished 2 Rent Furnished 1 Own without Mortgage 4 Own with Mortgage 3 Live with Parents 1 PREVIOUS RESIDENCE 0 to 5 Years 0 6 Years and up 1 MONTHLY OBLIGATIONS 0 to $250 1 Over $250 0 CREDIT HISTORY Loan at this Bank 4 Loan at Other Bank 3 Savings Account 2 Checking Account 2 OCCUPATION Professional 3 Skilled 2 Unskilled 1 YEARS WITH EMPLOYER Under One 0 One to Three 1 Four to Seven 2 Eight or Over 3 MONTHLY INCOME Under $600 1 $600 to $1,000 2 $1,000 to $1,250 3 $1,250 to $1,500 4 $1,500 to $2,000 5 $2,000 and Over 6 TELEPHONE Listed in Applicants Name 2 Not Listed in App's Name 0 In most cases, 18 points is the minimum number of points acceptable if you are to receive an unsecured loan. The factors most leading institutions weigh the heaviest are a good salary, a good paying record and minimal obligations. Some of you can institute this procedure with $300 or $1000 or more. Remember that the more money you use the better your credit report will look to credit grantors. DO NOT ATTEMPT THIS BANK LOAN PROCEDURE UNTIL YOU'VE GOTTEN YOUR NEW CREDIT REPORT. THIS WAY THE STRONG CREDIT PROFILE YOU'RE BUILDING WON'T SHOW UP ON YOUR OLD CREDIT REPORT WITH ALL YOUR BAD CREDIT ON IT. Structure of Social Security Numbers A Social Security Number (SSN) consists of nine digits, commonly written as three fields separated by hyphens: AAA-GG-SSSS. The first three-digit field is called the "area number". The central, two-digit field is called the "group number". The final, four-digit field is called the "serial number". The process of assigning numbers has been changed at least twice. Until 1965, only half the group numbers were used. Before 1972, numbers were assigned by field offices; since 1972, they have all been assigned by the central office. The order in which numbers were assigned was changed in the 1972 transition. There may have been other changes, but it's difficult to get information on how things used to be done. Area Numbers The area numbers are assigned to geographical locations. They were originally assigned the same way that zip codes were later assigned (in particular, area numbers increase from east to west across the continental US as do the ZIP codes). Most area numbers were assigned according to state (or territorial) boundaries, although the series 700-729 was assigned to railroad workers regardless of location (this series of area numbers was discontinued in 1964 and is no longer used for new SSNs). Area numbers assigned prior to 1972 are an indication of the SSA office which originally issued the SSN. Since 1972 the area number in SSNs corresponds to the residence address given by the applicant on the application for the SSN. In many regions the original range of area number assignments was eventually exhausted as population grew. The original area number assignments have been augmented as required. All of the original assignments were less than 585 (except for the 700-729 railroad worker series mentioned above). Area numbers of "000" have never been issued. 001-003 NH 400-407 KY 530 NV 004-007 ME 408-415 TN 531-539 WA 008-009 VT 416-424 AL 540-544 OR 010-034 MA 425-428 MS 545-573 CA 035-039 RI 429-432 AR 574 AK 040-049 CT 433-439 LA 575-576 HI 050-134 NY 440-448 OK 577-579 DC 135-158 NJ 449-467 TX 580 VI Virgin Islands 159-211 PA 468-477 MN 581-584 PR Puerto Rico 212-220 MD 478-485 IA 585 NM 221-222 DE 486-500 MO 586 PI Pacific Islands* 223-231 VA 501-502 ND 587-588 MS 232-236 WV 503-504 SD 589-595 FL 237-246 NC 505-508 NE 596-599 PR Puerto Rico 247-251 SC 509-515 KS 600-601 AZ 252-260 GA 516-517 MT 602-626 CA 261-267 FL 518-519 ID 627-645 TX 268-302 OH 520 WY 646-647 UT 303-317 IN 521-524 CO 648-649 NM 318-361 IL 525 NM *Guam, American Samoa, 362-386 MI 526-527 AZ Philippine Islands, 387-399 WI 528-529 UT Northern Mariana Islands 650-699 unassigned, for future use 700-728 Railroad workers through 1963, then discontinued 729-799 unassigned, for future use 800-999 not valid SSNs. Some sources have claimed that numbers above 900 were used when some state programs were converted to federal control, but current SSA documents claim no numbers above 799 have ever been used. Group Numbers The group number is not related to geography but rather to the order in which SSNs are issued for a particular area. Before 1965, only half the group numbers were used: odd numbers were used below 10 and even numbers were used above 9. In 1965 the system was changed so assignments continued with the low even numbers and the high odd numbers. So, group numbers for each area number are assigned in the following order: Odd numbers, 01 to 09 Even numbers, 10 to 98 Even numbers, 02 to 08 Odd numbers, 11 to 99 Group codes of "00" aren't assigned In each region, all possible area numbers are assigned with each group number before using the next group number. This means the group numbers can be used to find a chronological ordering of SSNs within a region. When new group numbers are assigned to a state, the old numbers are usually used up first. SSA publishes a list every month of the highest group assigned for each SSN Area. For example, if the highest group assigned for area 999 is 72, then we know that the number 999-04-1234 is an invalid number because even Groups under 9 have not yet been assigned. Serial Numbers Serial numbers are assigned in chronological order within each area and group number as the applications are processed. Serial number "0000" is never used. Before 1965, when number assignment was transferred from field offices to the central office, serial numbers may have been assigned in a strange order. (Some sources claim that 2000 and 7000 series numbers were assigned out of order. That no longer seems to be the case.) Currently, the serial numbers are assigned in strictly increasing order with each area and group combination. Invalid SSNs Any SSN conforming to one of the following criteria is an invalid number: Any field all zeroes (no field of zeroes is ever assigned). First three digits above 740 A pamphlet entitled "The Social Security Number" (Pub. No. 05-10633) provides an explanation of the SSN's structure and the method of assigning and validating Social Security numbers. This description of the structure of the Social Security Number is based on messages written by Jerry Crow and Barbara Bennett. The information has been verified by its correspondence to the SSA's Program Operations Manual System (POMS) Part 01, Chapter 001, subchapter 01, which can be found at Federal Depository Libraries. (SSA Pub. No. 68-0100201.) Scoring for Credit FTC, October 1993 How does a creditor decide whether to lend you money for such things as a new car or a home mortgage? Many creditors use a system called "credit scoring" to determine whether you are a good credit risk. Based on how well you score, a creditor may decide to extend credit to you or turn you down. The following questions and answers may help you understand who gets credit, and why. What is Credit Scoring? Credit scoring is a system used by some creditors to determine whether to give you a loan or credit card. The creditor may examine your past credit history to evaluate how promptly you pay your bills and look at other factors as well, such as the amount of your income, whether you own a home, and how many years you have worked at your job. A credit scoring system awards points for each factor that the creditor considers important. Creditors generally offer credit to those consumers awarded the most points because those points help predict who is most likely to pay back the debt. Why is Credit Scoring Used? In smaller communities, shopkeepers, bankers, and others who extend credit often knew by word of mouth who paid their debts and who did not. As some creditors became larger and as the number of their consumer credit applications grew, these creditors needed to establish more systematic and efficient methods for evaluating which consumers were good credit risks. Credit scoring is one such technique. Although smaller creditors still may rely on informal credit evaluations, many large companies now use formal credit scoring systems. Although no system is perfect, credit scoring systems can be at least as accurate as informal methods for granting credit -- and often are more so -- because they treat all applicants objectively. How is a Credit Scoring System Developed? Most credit scoring systems are unique because they are based on a creditor's individual experiences with customers. To develop a system, a creditor will select a random sample of its customers and analyze it statistically to identify which characteristics of those customers could be used to demonstrate creditworthiness. Then, again using statistical methods, a creditor will weigh each of these factors based on how well each predicts who would be a good credit risk. How is a Consumer's Application Scored? To illustrate how credit scoring works, consider the following example that uses only three factors to determine whether someone is creditworthy. (Most systems have 6 to 15 factors.) Example Monthly income Points Awarded Less than $400 0 $400 to $650 3 $651 to $800 7 $801 to $1,200 12 $1,200 + 15 Age 21-28 11 28-35 5 36-48 2 48-61 12 61 + 15 Telephone in home Yes 12 No 0 Some credit scoring systems award fewer points to people in their thirties and forties, because these individuals often have a relatively high amount of debt at that stage of their lives. The law permits creditors using properly-designed scoring systems to award points based on age, but people who are 62 or older must receive the maximum number of points for this factor. If, for example, you needed a score of 25 to get credit, you would need to make sure you had enough income at a certain age (and, perhaps a telephone) to qualify for credit. Remember, this example shows very generally how a credit scoring system works. Most credit scoring systems consider more factors than this example -- sometimes as many as 15 or 20. Usually these factors are obviously related to your credit worthiness. Sometimes, however, additional factors are included that may seem unusual. For example, some systems score the age of your car. While this may seem unrelated to creditworthiness, it is legal to use factors like these as long as they do not illegally discriminate on race, sex, martial status, national origin, religion, or age. How Valid is the Credit Scoring System? With credit scoring systems, creditors are able to evaluate millions of applicants consistently and impartially on many different characteristics. But credit scoring systems must be based on large enough numbers of recent accounts to make them statistically valid. Although you may think that such a system is arbitrary or impersonal, a properly developed credit scoring system can make decisions faster and more accurately than an individual can. And many creditors design their systems so that marginal cases -- not high enough to pass easily or low enough to fail definitively -- are referred to a credit manager who personally decides whether the company will extend credit to a consumer. This may allow for discussion and negotiation between the credit manager and a consumer. What Happens If You Are Denied Credit? While a creditor is not required to tell you the factors and points used in its scoring system, the creditor must tell you why you were rejected for credit. This is required under the Equal Credit Opportunity Act (ECOA). So if, for example, a creditor says you were denied credit because you have not worked at your current job long enough, you might want to reapply after you have been at that job longer. Or, if you were denied credit because your debt-free monthly-income was not high enough, you might want to pay some of your bills and reapply. Remember, also, that credit scoring systems differ from creditor to creditor, so you might get credit if you applied for it elsewhere. Sometimes you can be denied credit because of a bad credit report. If so, the Fair Credit Reporting Act requires the creditor to give you the name and address of the credit reporting bureau that reported the information. You might want to contact that credit bureau to find out what your credit report said. This information is free if you request it within 30 days of being turned down for credit. Remember that the credit bureau can tell you what is in your report, but only the creditor can tell you why it denied your application. Where Can You Go For More Information? If you have additional questions about credit scoring issues, write to: Correspondence Branch, Federal Trade Commission, Washington, D.C. 20580. While the FTC cannot resolve individual problems for consumers, it can act when it sees a pattern of possible law violations. The Credit System By John J. Hawk, Sr. A few words from the author It's sad but true. A large percentage of Americans suffer from a blemish on their credit reports. A blemish that prevents them from obtaining new credit when they need it most. Bad credit is embarrassing, humiliating, and depressing because most credit ors believe a bad credit report dictates a persons worth and value as a responsible human being. Most people with bad credit are not "deadbeats" nor are they unwilling to pay their obligations. In fact, if your like most people, you probably maintained a good credit profile until an unforeseen circumstance like a layoff, medical problem, or divorce prevented you from making a few payments in a timely manner. The truth is that most people struggle long and hard to meet their obligations but the money coming in just doesn't meet the bills going out. If you find yourself in this type of situation, you must be very careful and selective about which bills get paid. If the circumstances become serious enough, you may even have to file for bankruptcy protection. You are not alone. You're not the first person to decide to put food on the table or keep the electricity on rather than paying a credit card bill. You can be sure that most people would rather protect their family and their loved ones first, and then pay their creditors. Even the collection agents, the ones that call and harass other people about their obligations, would certainly protect themselves first if faced with the same tough decision. Now, by knowing, understanding and utilizing your legal rights you can begin taking the steps of regain the good credit you once had and reward yourself with the confidence necessary to rebuild your financial independence and freedom. Of course you must protect your new credit report with honesty, integrity, and common sense. So, as you begin your journey to establish a new credit report, I would first ask you to stop feeling guilty about your previous inability to pay your creditors. It may or may not have been your fault. That is and will remain in the past. Look forward to a new start, new credit report, and a new chance. As publishers, we are not engaged in giving any legal or accounting advice. If you desire and want professional legal advice, please go to our Legal Services Page to get the legal representation you need at a price you can afford. - John J. Hawk, Sr. Introduction Unfortunately today, we live in a society that determines our net worth and value as a human being by the type of credit file we have. If your credit report is good, chances are you will receive and partake of some of the better things in life. But the opposite couldn't be more true if your credit report is bad. There are very few creditors who will extend good credit to people with bad credit. But what if it wasn't your fault? What if you had to make the simple choice between eating and making your car payment? What if a job lay-off, a medical emergency, or some other personal crisis prevented you from making a timely payment? Should you be forced to pay for this for the next seven to ten years? The credit bureaus are judge and jury in relation to your credit file. But there is one difference. A judge will at least give you the chance to defend yourself in court before passing judgment. And in America we are SUPPOSED to have a chance to face our accusers BEFORE judgment is passed. This is entirely untrue when it comes to your credit file. The truth is that your creditors and the credit bureaus have been swapping information about you behind your back for a long time. You are not asked or given any benefit of defense when this happens. It is in effect legal gossip! The system, as it stands today, does not give you the opportunity to defend yourself before inscribing your credit file with negative information, even if it is not yours! You must prove to them that the negative information on your credit file is incorrect, invalid or otherwise erroneous before they will remove it. That means in their eyes, you are GUILTY until proven INNOCENT. You might wonder how a system like this is allowed to operate in our DEMOCRACY, in a country where we've been brought up to believe that a person is innocent until proven guilty. Why aren't we extended some courtesy by the credit bureaus? Why don't they give us a chance to defend ourselves before placing negative information on our credit files? Good questions, aren't they? You may not like the answer though... THEY DON'T HAVE TO! The credit bureaus are private companies and corporations. They are in business to make a profit. And that profit comes from one place and one place only: YOUR CREDITORS. Your creditors pay to see your credit file information and believe it to be true and correct. They also reciprocate by exchanging your credit information with the credit bureaus. So... your creditors pay the credit bureaus and the credit bureaus are in business to make a profit. Where do you fit in? You don't. Unfortunately you are just another number in the vast data bank of numbers. Your credit report and the information it contains are not important or of any consequence to anyone but you. That's why you are the only one that can do anything about it. Well my friend, that's why I put this information together and developed this unique program. I have seen too many people destroyed by the credit reporting system. I have watched helplessly by the wayside as their credit files were corrupted and their self dignity was destroyed in the process. So many people with poor credit have done their best to make timely payments but couldn't because of a personal problem or another. Should they pay for this both financially and emotionally for the next seven to ten years? I don't believe so. I believe everyone deserves a second chance. I believe that you deserve a second chance, no matter what the previous circumstances were. Put those problems behind you now. It's time to move on and re-establish a good credit file. YOU CAN remove past negative information it will take time and tenacity. The process is simple but it's not easy. It will take some work on your part, but if you're serious about getting a second chance, you won't mind. Congratulations! You are about to take the final steps necessary to begin a brand new life with good credit! Study the material, use the information and get a new start! A Few Comments On Credit Repair Companies Over the past fifteen years or so, many "Credit Repair Companies" or "Credit Clinics" have opened up across the nation. Their main purpose is to help the individual remove incorrect and negative items from their credit report. Unfortunately, some of these outfits are scams from the word "GO" and have given the whole industry a bad name. They take the consumer's money and then tell them it will take month s to get results, then disappear without a trace. With the information we have provided you with here, you have no need to take that chance. If, however, you decide to hire one of these companies, check them out! First, if the sales person or company uses the word "Guarantee" or "Delete", Run and don't look back! There is no way to "Guarantee" that ANYTHING will be removed from the credit report! Think about it for a minute. Unless he or she is going to "hack" into the credit bureau's computer, how can he guarantee anything? The Clinic is NOT the one that "deletes" the information! Ask to see their license, get a copy of it, and then contact your State's Secretary of State to make sure that the company has obtained and maintained the necessary license and/or bond. In the State of Nebraska all companies, organizations, or individuals that provide credit services MUST (with NO exceptions) obtain a "Credit Services Organization License". If they charge a fee BEFORE they provide the services they promise, they MUST also maintain a $100,000 Surety Bond for TWO YEARS after they cease doing business in the state. While you are on the phone with the Secretary of State's office, ask if there have been any unresolved complaints against the company. Find out how long they have had their license as well. There have been a number of credit clinics that guarantee to remove any derogatory items from consumer's credit report. Contact the Attorney General's office in your state as well, see if there have been any complaints and find out if they are under any kind of investigation. The Better Business Bureau is also another good organization to check. My company wasn't just LISTED with the BBB, we where actually members of the organization as well. If the firm tells you that you can not take a day to think about it or that it is a 24 hour offer tell them to take a hike! They where trying to scam you! Tell them that you want a copy of the contract you will be signing and any disclosures so that your attorney can take a look at it. If they balk, again, good for you, you just flushed out another con-artist. Call the Attorney General to have them investigated so no one else will fall into their trap! To have unlimited contracts reviewed by an attorney, and tons of other legal services, please visit our Legal Services Page. For five years I owned and operated a company here in Omaha that not only assisted individuals and families re-establish their credit reports and obtain new forms of credit; but we also helped establish a budgets, and save money. The last two items were more important than the first two! If nothing else, TIME will repair a damaged credit report. But without the proper savings and budgeting, the smallest disruption in an individual's cash flow will destroy the BEST credit report. In fact, the "better" the credit, the more potential for damage there is! I will encourage you to go to your local book store and obtain a book on budgeting. Talk to a family member, friend, or clergyman to get help on setting up and sticking to a budget. One of the reasons people run into the credit situations they do is because when the emergencies hit, there is nothing to fall back on. Don't let it happen again! Protect your good credit and your good name! Ten Greatest Myths About Your Credit Credit Bureaus are empowered with some kind of governmental authority. Credit bureaus have no legal authority at all, they are simply private companies who are in the business of selling credit information. The credit bureaus are required by law to keep derogatory items on your credit report for 7 to 10 years. There is no law that the credit bureaus report anything on you at all. Just the opposite is true! Credit bureaus are required by law to automatically remove all derogatory items older than 7 years or in the case of a bankruptcy, 10 years. It is impossible to get a bankruptcy off. Bankruptcies come off just like any other derogatory that is incorrectly reported, obsolete, erroneous, misleading, incomplete, or that cannot be verified. Remember, the nature of the item has nothing to do with its removal under the Fair Credit Reporting Act. The information on your credit report cannot be changed. The opposite is true under the Fair Credit Reporting Act; both the federal and various state laws REQUIRE that items be removed if they are not 100% accurate ore cannot be verified in a timely manner. It is illegal or immoral to have the information on your credit report altered or removed. Not only is it not illegal or immoral, but it is what the Fair Credit Reporting Act is all about. It was enacted by congress for the very purpose of protecting consumers from the intrusion of the credit bureaus into our lives. Paying a past due debt removes it from your credit report. Just because you pay an old debt does not change or erase the fact that at one time you were not paying on it as you agreed. Can this record be changed? Absolutely! Inquiries are not derogatory and will not affect your credit standing. Anything that erodes your financial credibility is damaging to your credit standing. In the case of inquiries, one or two is not too bad, but any more than that and they begin to tell a story of their own. Any prospective credit grantor will look at your credit report and think that you are desperate for credit. If you get a derogatory item removed, it will just come back. Not if it is removed legally. When it is removed with cause under the Fair Credit reporting Act it cannot legally be placed back on your credit report. The same law that required its removal prohibits it from being placed back on. The past equals the future. This is the biggest myth of all. The concept that once bad, always bad, or at least for 7 years is totally false. Anybody can run into hard times or an emergency situation now and then, but that doesn't automatically mean that they are a poor credit risk for a magical 7 years. The simple truth is, no credit report can predict the future. I can't repair my credit report myself. Yes, you can! And you will find all of the information you need to do it right here! The simple truth is you don't have to live with bad credit or pay thousands of dollars to have it corrected. The History Of Consumer Credit Before you establish your new credit identity, it is important to understand how the credit reporting system works, how it operates and how it affects you. The roots of consumer credit goes as far back as man can remember. It starts with someone or some business having a product or service to sell. Either the price of the product is beyond the reach of the average person or payment for the product is not convenient at the time of sale and that's what gives birth to a consumer credit program. Take, for example a moderately priced automobile at $13,500. The manufacturer, in order to make a profit, needs to sell many vehicles at this price. But how many of us can plop down $13,500 in one lump sum? If the manufacturer only sold automobiles to people who could afford to pay in one lump sum, he would sell very few cars. Consequently, the price would skyrocket from $13,500 to let's say $113,500, due to the manufacturer's need to make an equitable profit. On the other hand, the manufacturer couldn't make any money if he sold the same automobile for $400. So the manufacturer needs to sell the automobile at a price consistent with perceived value and quality, but still make it available to people who don't have the entire $13,500. That's why the automobile loan business is so big. Let's take a look at another example. Actually, this next example is rooted deep in our history. When the payment for products or services is inconvenient at the time of sale, a merchant (or creditor) typically offers payment terms, usually within 30 days. This type of consumer credit can be traced back to the General Store days when a patron would typically pick up a few things, charge them to an open account and agree to pay the entire account by the end of the month. Those days are pretty much long gone, replaced by major credit cards and department store cards. But the principle is still the same. The only difference today is that theoretically you never have to completely pay off a charge account. As long as you pay the interest on the account or the minimum payment, you can continue to charge to this account, up to the credit limit, without ever paying off the original debt. This is how a lot of people get into serious trouble and consequently damage their credit files almost irreparably. As an evolution of this process, it was natural that some kind of credit reporting system would emerge. Creditors became concerned that they were doing business with a consumer who would repay their account in a timely fashion, and had proven timely repayment with other creditors as well. So the credit bureaus were born and began to track credit information on individuals and businesses, selling that information to subscribers (creditors) and receiving information as well. You should understand that the relationship between the credit bureau and the subscriber can (with your permission only) receive information about your current credit status. But, in exchange, the subscriber must provide payment history and account information to the credit bureau. This, however, transpires without your permission. In other words, only you can authorize access to your credit file but once you have, your creditor has carte blanch to report any credit information on your file he chooses, even if the information is incorrect! The Credit Bureau System Note that the credit bureaus are private, not government credit reporting companies. All three companies are listed on the New York Stock Exchange. They are in business to make money just like any other business. Their business is to store information reported by many creditors, and in turn, sell back credit bureau information to those same companies. The more credit data that the credit bureau can provide on any individual is to their advantage. How Credit Bureaus Get Their Information SUBSCRIBERS Companies that subscribe to the credit bureaus' services send credit history to the credit bureau. Updates are sent by the creditor to the credit bureau periodically. It should be noted that since the creditors report at different times to each credit bureau, different amounts and dates can appear on each redit report. Many times this information is reported incorrectly and inaccurately. Creditors that report to the credit bureau are most often banks, savings and loans, mortgage companies, large department stores, finance companies, VISA and MaterCard banks, oil companies and companies that are members of the credit bureau. PUBLIC RECORDS Credit bureaus also get their information from public records such as the local courthouse. This information may include judgments, bankruptcies, tax liens, wage attachments and notice of default on properties. It may be noted that the credit bureau may pick up from the public record a notice of default but later fail to record the correct information if the default was corrected. MISSING INFORMATION In reviewing your credit report you may notice that much information is missing or inaccurate. The reason for missing information is that not all creditors belong to the credit bureau. For example, if you are paying off a bill with a small store, and they are not a member of the credit bureau, your good payments will not be reported on your credit report. For a small fee, you are able to list this good credit on your credit report. The Credit Bureaus Across the Nation there are three major credit bureaus; TransUnion, Equifax, & Esperian (TRW). There are, however over 2,000 smaller credit bureaus located in every medium size city in the United States. Because each of these smaller credit bureaus may or may not be affiliated with one of the "Big Three", they will have different information in the consumer's credit file. When you apply for credit, a creditor might check only one credit file. If they find anything derogatory on your credit report, they probably will not check with the other credit bureaus. If you are denied credit, the creditor, by law, has to let you know which credit bureau has the negative information. However, the other credit bureaus may also have the incorrect information. Therefore, when checking your credit you need to look at all of the credit reports. The three major credit bureaus are: TransUnion P.O. Box 390 Springfield, PA 19064 (800) 851-2674 TRW/ Esperian P.O. Box 949 Allen, TX 75013-0949 (800) 392-1122 Equifax P.O. Box 105873 Atlanta, GA 30348 (800) 685-1111 ACCEPTABLE RATINGS Ratings TO Accept PAID IN FULL AS AGREED CREDIT LINE CLOSED BY CUSTOMER NOT RATED (TO NEW) R1 RATING DISPUTED (only if you feel that it is the best you can get) DISPUTE AFTER RESOLUTION (same as above) Ratings NOT TO Accept BANKRUPTCY DISCHARGED BY BANKRUPTCY CONSUMER COUNSELING DISPUTE AFTER RESOLUTION DISMISSED UNPAID MAKING PAYMENTS SKIP WAGE EARNER BANKRUPTCY Your Credit Report And Rights As A Consumer Under the Federal Fair Credit Reporting Act, you: May obtain a credit report from the credit bureau for a reasonable fee ($8 to $15). May obtain a credit report from the credit bureau at no charge within 30 days of being rejected for credit. You must send a copy of the rejection letter to the credit bureau. May be represented by anyone of your choice at the credit bureau. May dispute any information on the credit report that you feel is listed incorrectly. The credit bureau must re-investigate the information and within a reasonable time, verify the information. A reasonable time has been construed to be 20 working days by some credit bureaus. May have derogatory information such as late payments and judgments taken off the credit report within 7 years. Bankruptcies will come off in 10 years. May place a 100-word consumer statement in your file to tell your side of any derogatory information. May have the credit bureau notify those you name (at no cost to you) who have previously received incorrect or incomplete information on you and provide them with the corrected credit report. May have your credit report withheld from anyone, who under the law, does not have a legitimate need for the report. May sue the credit bureau if it willfully or negligently violates the law. The above nine items just list a few of your consumer rights. The Federal Trade Commission The federal Trade Commission is responsible for correcting any credit report problem which a consumer has not been able to correct through the credit bureau. FTC Headquarters Federal Trade Commission Pennsylvania Avenue & 6th Street, NW Washington, D.C. 20580 (202) 523-3830 California : 450 Golden Gate Ave., San Francisco, CA 94102 California : 11000 Wilshire Blvd., Los Angeles, CA 90027 New York : 26 Federal Plz., New York, NY 10278 Texas : 8303 Elmbrook Dr., Dallas, TX 75274 Illinois : 55 E. Monroe St., Chicago, IL 60603 Ohio : 668 Euclid Ave., Cleveland, OH 44114 Washington : 915 Second Ave., Seattle, WA 98174 Colorado : 1405 Curtis St., Denver, CO 80201 Georgia : 1718 Peachtree St., Atlanta, GA 30367 Massachusetts : 150 Causeway St., Boston, MA 02114 If you feel there is a violation of your credit report, you may write to the nearest FTC office with a copy of it going to the FTC, Washington, D.C. office. Don't expect the FTC to take an active interest in your case. They are there to monitor the credit bureau and only to take an active interest in the problem if there are many complaints about the same problem. If you have written the FTC, continue working to correct or restore your credit during this time. Analyzing And Disputing - The Repair Process Disputing information on your credit report... This method is for direct correspondence with the credit bureau. If you find anything inaccurate, incomplete, incorrect, or obsolete, you have the right to dispute that item on your credit report. The credit bureau then has a reasonable time to contact the creditor and have them verify the disputed item. A reasonable amount of time under the Federal Law has been construed to be 20 working days. However, you need to understand that with this type of transaction, it could take from four to eight weeks to receive your reply back. Technically, if the credit bureau does not respond back within 30 days, the incorrect or inaccurate item must be removed. If, after the credit bureau investigates the item and the information is found to be inaccurate or no longer can be verified, the credit bureau must delete the item in question. It should be noted that when a negative item is more than two or three years old, many creditors will not respond to the credit bureau because of lack of records. Therefore, by law, the bureau should remove the item from your report. Since most creditors do not have the space to retain records for a long period of time, there may not be any documentation about your payment history. Understand also that the creditor does not have to provide documentation to the bureau of the disputed item. They simply check various boxes on the statement as to whether you were late, paid on time, etc. Steps to Dispute Get your credit report. Review your credit report. Decide which items you want to dispute. Write letters. Always hand write your letters in your own handwriting. Keep copies of all correspondence. Keep separate file copies on each credit bureau. Follow up if needed. Obtain results. Make sure that when you dispute items on your credit report you do not dispute more than three items at a time. Get those corrected before you dispute three more. Persistence and patience are what you need to get the job finished. Just remember that it usually takes years to get incorrect or inaccurate information ON your credit report. Therefore, your credit report will sometimes take many months to completely clean up. It is important that you keep copies of all correspondence going to and from the credit bureaus. Also keep separate folders for each credit bureau. That will mean three folders if you are disputing information on each credit bureau. (Example: Type your label to say: Esperian (TRW) Correspondence; Equifax Correspondence, and TransUnion Correspondence.) If you do not receive a letter back within 3 to 5 weeks, send a follow-up letter along with all previous information. Credit bureaus are required to send you the results along with an updated credit report. Areas of Dispute Account Paid as Agreed - After reviewing my credit report, I found where "Account name" and "Account Number" was paid in full and as agreed. Your rating is inaccurate. Please change this information immediately to reflect the current status. Charge Offs - I paid "Acctount Name and Account Number" as agreed. You show this as a charge off, which cannot possibly be correct. Please correct the way you are reporting this. (Charge offs are an amount the department store has written off as a bad debt. It is then listed on the report as a charge off). Not Mine - I do not recognize this account, nor have I ever been associated with them. "Account Name and Account Number" needs your complete attention. Please conduct your investigation and remove this from my file. Use this sparingly and only if all else fails. The creditor DOES NOT have to investigate furnther after locating your information (specific dates, ammounts, etc...) They simply have to find your SS#, DOB, Etc...) Late Payments - I was never late paying "Account Name and Account Number". I have always paid this account as agreed and on time. Please update your information. Collections - This cannot be accurate. I have never had any of my accounts go into collection. Please review and remove from my file. Judgements - I have never had a judgment against me, and you show I have two of them Case # and Case #. Please review and remove from my file. Tax Leins - This is not mine. I was not aware of this until I received a copy of my credit report. Please review and remove. Bankruptcy - This is not my bankruptcy. I have never filed bankruptcy. Please review and remove. The bankruptcy listing is not correct. Please remove. (Note that the dollar amount or date may be incorrect. Make the credit bureau verify the amounts. They may or may not be able to verify the amounts or the date). I want all items that are included in may bankruptcy removed from my file, which I have marked. I have included a copy of the itemized list of creditors included in my bankruptcy for you to compare. Thank you. The credit bureaus have been known to leave the item on the credit report, but to flag the items covered under the bankruptcy. An example would be: Sears $100.00 (BK). They also have been known to delete the item altogether. The bureaus have not been consistent with this method, however most credit bureaus will tell you that it will stay on the report with the (BK) notation. Creditor Disputes Disputing Information Directly With The Creditor This method is somewhat like writing letters to the Credit Bureaus, however, the difference is that the dispute letters are sent directly to the creditor. One thing to remember is that the department stores, banks, etc. have the power to take anything off a credit report that they have placed on a credit report. A number of things must be included in the creditor letter. Please give the store your account number. State exactly what the problem on your credit report is, and why it should be removed. Ask the creditor to verify the amounts. Demand that they correct or remove the incorrect item. Unlike the dispute letter method, this type of letter can be typed out rather than written. If you feel that you are correct and cannot seem to get anywhere, ask to talk to a higher supervisor. The higher the supervisor, the more in tune they are to profits; stores want to keep your account, and you as a customer. At some point it may be beneficial for you to have your attorney write a letter to the creditor. Many times just the threat of a lawsuit will get the creditor to change the credit rating. Remember, that if the creditor placed it on the credit report, they can take it off. Having an attorney write a letter may cost you somewhere between $75 and $100. Many times stores will not keep records past 24 months and cannot find the information. Therefore there is a good chance it will be removed. One more option when dealing with creditors is if you have not paid a bill in full with them. The fact that you owe them money can work to your advantage. Most, if not all, creditors would rather get some money instead of none at all. This is true from banks to oil companies. Be willing to negotiate with your creditor. Approach the creditor with the idea that you would like to settle your account difference. Probably you do not have enough money to pay him in full or you would already have. For example, let's say you owe a department store $100. The department store may have already charged it off and reported it to the credit bureau. Offer to pay the store $50 to settle the account with the understanding that they will also remove the negative mark on your credit report. The store can either say yes or no to this proposition. If they want a little more than $50, you will have to decide how high you can go and still stay within your payment schedule. Subscribers have the ability to change your credit rating with the credit bureau. Many will tell you they cannot change the rating, but that is just not correct. Please Note We are not suggesting this method to discount bills that you already owe. We feel each and everyone should pay their bills on time and in full. However, there are times when you just cannot pay 100% of every bill. Another reason for settling could be you where dissatisfied with the merchandise or service. If you were dissatisfied with the merchandise, credit card companies have been known to take the bill off your account and charge it back to the store. However, you must notify your credit card company within one month of the purchase date. If you feel uncomfortable about approaching the creditor yourself, you should hire an accountant, financial consultant, or possibly an attorney to act as your representative. Please check with the professional on how much this will cost you. If you are handling your own case, at some point you will probably reach a settlement. Percentages vary, however. I had a large chemical client that settled for 20 cents on the dollar. Don't expect to get that low in your negotiations. Settlements vary from 30 to 70 percent, with the majority being around 60 percent. If you feel you can afford 60 percent, don't start out at 60 percent. If you do you will probably end up at 70 or 80 percent. You must start at around 40 percent if you expect to end up at 60. Remember that the collection department will start high to end up somewhere in the middle. When you reach a verbal agreement with the collection department have them prepare a SETTLEMENT AGREEMENT and mail it or fax it to you for your review. DO NOT pay your bill prior to receiving this settlement agreement. Arrangements have been known to change from the time of initial phone contact to the receipt of the written settlement agreement. It would also be a good idea to have an attorney review the document for you. Inquiries - What To Do? Excessive inquiries on your credit report can short circuit your loan efforts with any lender. The first thing you have to understand is how inquiries get on your credit report. Any time you apply for credit from any bank, department store or other creditors, they call up a credit report on you. This is called any inquiry, an d the name of the bank will be listed under inquiries for two years. In some cases you will find a bunch of letters and numbers with no names explaining who they are. You will need to ask your credit bureau to verify the names of these individuals. Unfortunately it is now a common practice for car salesmen to run a credit report on you at 10 different finance companies. Before he spends time showing you dozens of cars, he wants to make sure that you will be approved for the one that you want to buy. If he can't get you approved for ANYTHING, he will move on to the next person. Leaving 10 different inquiries in his wake. Naturally, if you have many inquiries listed, it looks like you are in financial trouble and are applying for loans all over the city. If four or more inquiries appear on a credit report within a two month period, a message of Trans- Alert is listed on the credit report. This alerts creditors that you have applied for credit an excessive number of times. Trans-Alert appears on the TransUnion statement. Sometimes banks screen your account to see if you will qualify for their credit card promotions and this just adds one problem upon another. To correct this problem, I believe it is the easiest to deal with the creditor dispute method where you direct your correspondence to the company that listed the inquiry on your report. In your letter you must ask them for proof that you authorized them to check your credit rating. If they cannot find that proof, they will have to get the inquiry taken off the credit report. Many times, creditors do not have the time to go back into their records and verify your account, so automatically you win, and it will be deleted off your credit report. You can also dispute directly with the credit bureau and ask what legitimate business reason they had to give your personal credit information out to "Company Name". If they can not provide this information, please remove the inquiry. Do's And Don'ts Do not type your letters, write them in your own hand writing and use your own words as much as possible. Typing makes the credit bureaus think you are using a credit repair service. Do not send mail by "Certified Mail." Do use your own paper or the dispute forms that come with your credit reports. Do not use legal language. Do not apply for credit during the dispute process, it could reverse any results you have attained. Do not call the credit bureaus for any reason! Always correspond through the mail and make copies of your correspondence. Do keep copies of everything the bureaus send you. Do be patient but do not give up. Millions of people have had negative items removed from their credit report! Do not threaten the credit bureaus or tell them that you will hire an attorney if they don't take the disputed items off of your credit report. They know they have to follow the law. Threats will get you no where. Five Steps To Obtaining A1 Credit Now that you understand the basics of what credit is, and why it is so important, you are ready to follow our plan to get you well on your way toward building a solvent and solid credit record. Follow our 5 step process and you will finish with 3 bank loans, a Visa and MasterCard credit cards, and at least 2 major department store credit cards. But that's not actually the end - it's just the beginning! You will then be in control of your financial destiny and will be better able to make the kinds of purchases embodied on the American Dream As you follow each step, remember that lenders and retailers count on making loans or selling goods on credit. The system helps them as much as you. They want to extend credit to you. Through this plan, you make them do so gladly and legitimately. Step One - Obtaining Bank Loans Laying the Groundwork The first objective after removing negative credit from your credit report is to add positives. This can be achieved by obtaining three bank loans to serve as credit references for future maneuvers. Have you ever noticed that most loan applications require three credit references? Follow this first step and you will have three impeccable references to use for various kinds of credit and loan needs. This step requires some up-front capital to get you going. The results can be achieved using anywhere from $300 and up, although we recommend investing $1,000. Take heart - the money will not be spent, but is used as secure backing in a savings account until the plan is completed. If you need to raise the cash, you can do so through creative means such as a temporary, parttime job or a garage sale. You can also consider borrowing the money because, again, it will not be spent. Just be careful not to start off with funds that you may be likely to need in the weeks to follow. Withdrawing this money before the plan is completed would jeopardize your credit and potentially leave you in greater debt. LOCATING THE RIGHT LENDERS Now you are ready to locate your three lending institutions, which can be banks, savings and loans, or credit unions. You can use the bank where you currently have your checking or savings account, although you will still be opening a new savings account. Use your local Yellow Pages to call area banks and ask these questions: What is the minimum amount they will loan on a passbook savings account? What is the percent you can borrow? For these purposes, you are interested in opening only a regular passbook savings account, so don't get more details than you need about other types of special account and offers. Choose a lender that offers high yeilds and allows you to borrow as much as possible against a secured account. We will now label the banks you have selected Bank A, Bank B, and Bank C. DEPOSIT, BORROW, AND PROSPER! Go to Bank A and open a savings account woth your $1,000 (or whatever amount you have allocated). This should be an interest-bearing account earning the highest rate you can find. Take your passbook home and wait three days. Return to Bank A (dressed and poised for success) and ask to see a loan officer. Take your passbook woth you, and explain to the officer that you wish to take out a loan, for which you are willing to place your savings account as collateral. This is the easiest type of loan to obtain because it is completely secured with cash. Be prepared to name a reason for the loan, although it should be granted regardless of the purpose because it will be backed by your savings account. Make sure you obtain an installment loan, amortized over one year with monthly payments required. Remember, you are building credit, so a loan that is due all in one lump sum at the end of 180 or 365 days will not serve your purpose. While a credit check is not always make for this type of loan, be prepared to acknowledge any bad marks on your credit record and explain that you are trying to re-establish your credit. Assure him/her that you will faithfully make your loan payments. Assume you get a loan for 90% - or $900 - of your savings account, with a 6% interest rate. On a $900 loan you would pay $29.52, owing the bank a total amount over one year of $929.52. Your monthly payments will be $77.46. Once this loan is made, Bank A will freeze your $1,000 so your loan collateral cannot be withdrawn. However, each time you make a payment on your loan, an equal amount (less interest) will be unfrozen in your account and available for withdrawal. Take your loan check for $900 to Bank B and open another savings account with this amount. Wait three days, and get your second loan - this time for $810 (90% of $900). Your monthly payments here will be $69.71. (Again, assuming 6% interest) Now use your $810 and open an account at Bank C. Wait three days, and obtain a 90% loan for $729, with monthly payments due of $62.74. EXAMPLE Bank Savings Balance Loan Amount Payment Amount Total Interest Paid Bank "A" $1,000.00 $900.00 $77.49 $29.52 Bank "B" $900.00 $810.00 $69.71 $29.57 Bank "C" $810.00 $729.00 $62.74 $23.91 DON'T PANIC! By the time you obtain your third loan, about two weeks have passed. You now have three bank loans totaling $2,439 and $729 in cash (your loan from Bank C). How will you pay these loans back? It's easy. Use enough of your $729 to make your first payment on your Bank A loan ($77.46). Do the same at Bank B and Bank C. You should now have made payments that are ahead of their due dates by about one week at Bank A, two weeks at Bank B, and three weeks at Bank C. You have used about $200 of your $729, but you have also freed up frozen funds that can be withdrawn later. Now wait about another two weeks and repeat the loan payment process described above, making another set of payments with your remaining cash. At this point, you should be approximately one full month ahead on all three loans. With the balance left from your cash loan, make your third set of payments on the second payments' due date. By now, your $729 should be almost depleted. Approach each bank and withdraw the funds that have been unfrozen to use towards your next set of payments. Continue this process until at least six payments have been made on each loan. You can pay off your loan in full, if you wish, after that point. Do not pay them off before six months, because this is the time frame usually considered when a payment history is calculated as a possible credit reference. WHAT DID THIS REALLY COST? In our example, the interest rate charged on the loans was 6%. And, your savings accounts were drawing 2% interest, making your net interest only 4% (6%-2%). We will assume the loans where for one year (12 months) and that you did not pay them off early. Bank loan A for $900 charged $29.52 interest, from which we subtracted $20.18 - the 2% interest you gained from your $1,000 savings - for an actual annual cost of $9.34. If you paid off your loan in six month, it would have cost you even less! Overall, it costs pennies to re-establish your credit using this method! That's a very small amount to pay for three fast and easy credit references that indicate your ability to acquire bank loans in varying sizes, make you payments ahead of schedule, and pay the loans off completely before due. These activities will all look very impressive on your new credit report! And, you should still have your original $1,000. Now is a good time to contact your local credit bureau (ask your banks which one they report to) and have this new credit information added to your profile. The bureaus will send you a credit addition form to complete and mail back. There is usually a small fee for each item to be added. They should also send you an updated copy of your new credit report. Step Two - Secured Credit Cards How Secured Credit Cards Work: Now it's time to use these bank references to obtain a credit card. Select on of the banks you particularly liked doing business with and use your initial $1,000 to make a deposit there. After about one week, pick up an application form for either a Visa or MasterCard and fill it out completely at home. Be certain that the card you are applying for allows for cash advances, and include your other two bank references on the application. Then meet with a loan officer at the bank and give him/her your completed form, saying that you are willing to have your $1,000 frozen to secure a credit card with a $1,000 line of credit. This type of secured credit plan is very common and is available to new credit builders as well as credit builders with a bad history. Similar to your bank loan, your savings is used as collateral for any debts you may accrue using the card. The card will look like any other Visa or MasterCard, so only you and the bank know it is secured by your savings. Shopping to Build Credit Once you have your card, use it. It is important now to again demonstrate a good payment record. A credit card that never gets used can actually reflect negatively on your profile! Go to your local shopping mall and find a store that carries a returnable item in the $500 to $800 range (remember; your credit limit is $1,000). You can select a piece of jewelry, a television, audio or video equipment, or other merchandise within this price range. Make sure you understand the store's return policy - you will need to be able to return the item later for a credit on your charge account, not just store credit. Purchase the single item with your new Visa or MasterCard, take it home, and safeguard against damage or theft. After several days, go back to the store and return the item, requesting a credit on your card. When you receive your first monthly statement for your card, you will notice a column marked Payments/Credits. Your credit for the returned item will show up in this column, although it looks the same as of you had paid for the item in full. Anyone examining your credit record will see that you made a sizeable purchase and a very early payment. Obtain a Cash Advance There is one final step to establishing your good credit record with a credit card company. Stop by a different bank than the one that issued your credit card and ask for a cash advance. Visa and MasterCard allow any lending institution that honors their cards (almost all) to make cash advances for varied amounts up to your credit limit. Some allow only a 25% cahs advance, while others will loan your entire amount. Be advised that borrowing money in this manner usually costs more in interest than your card charges for merchandise, so it is not a good way of routinely obtain loans. But it is useful for our credit-building purposes under this plan. Since you will be charged interest on your cash advance from the day you receive it, you may want to time this transaction toward the end of your billing cycle. Let's assume that you get a 50% cash advance on your $1,000 limit, or $500. Don't spend the money. Put it away and wait for your next monthly statement. Use the money to promptly pay back your cash advance charge on your bill. Now you have used a large amount of your credit limit on two occasions, and your record indicates both were paid back in full. Your credit history is looking better and better! Step 3 - Un-Secured Credit Cards Low Interest Pays Off Before taking specific steps to obtain an unsecured credit card, it really pays to shop around for a bank issuing Visa or Mastercards at the lowest possible interest rate. The national average is presently at about 19 to 20 percent. At this rate, an average balance of $650 will cost you $123.50 annually in interest charges. The same $650 balance will only cost you $78 on a 12% card - a savings of $45.50 per year. You also want to consider any annual fee charged for use of the card, which can range from $20 to $50 for premium cards such as MasterCard Gold and Visa Gold. While Gold cards traditionally require a higher annual fee, they typically offer higher credit limits. For the purposes of this plan, we do not recomend obtaining a Gold card. Take a look also at the grace period various banks allow between the time of purchase and when interest starts to accrue. If a bank offers no grace period, you will still be charged interest on your balance in full after each billing period. Again, to find out about rates, fees, and grace periods, you can pull out the Yellow Pages and call around locally. The business sections of major newspapers also often carry ads by local banks promoting the features of their credit cards. However, you do not need to apply for an unsecured card from a local bank. Computer networking makes it easy to quickly access any bank, and most are eager to have new credit card customers, regardless of where they live. You can find a list of U.S. banks offering low interest rates for Visa and MasterCard in the Bank-lists booklet contained in this document. Approaching the Bank Once again, have the new information about your secured credit card included in your credit bureau file. Now go to a bank and apply for whichever credit card (Visa or MasterCard) you do not already have, using your bank loans and current credit card as references. When the bank refers to your credit file, they will find you have an impressive payment history and another credit card with no outstanding balance. They should be more than willing to give you a regular, unsecured bank card. Freeing up Your $1,000 At last, you need to have your $1,000 savings account unfrozen and the credit card released from it's secured status. Go back to the bank where you began this process, and inform the loan officer you now have an unsecured Visa or MasterCard. Explain that you received this card based upon your excellent payment history you established with their bank card. Ask now to have the hold placed on your savings released. If he/she is hesitant, suggest that you will leave your money in the savings account, But no longer want it frozen. If the officer still seems reluctant, you can politely say that you will then have to return the credit card and close your account with them. In most cases, the bank will not want to loose you as a customer and will honor your request. However, if these efforts fail, then go ahead and return your card and close your account. Go to the bank that gave you your unsecured credit card. Tell them that you like their services and rates better than where you previousely banked and want to shift your Visa or MasterCard (whichever one you do not already have there) to that bank. Your second unsecured credit card should arrive in the mail soon after! Step 4 - Department Store Credit Cards Instant Credit With the first three steps completed, you should feel like a credit-building pro and be proud of your new credit profile. This next step is easy. Because you already have a Visa and MasterCard, the credit world is wide open and waiting for you to sign on. Most major department stores offer a form of instant credit - providing you with their store credit card just because you possess a major credit card, so they can collect the interest instead of Visa or MasterCard! Best of all, department store cards are issued on an unsecured, deposit-free basis! You usually will be asked to fill out a brief application form, show your I.D., present at least one major credit card - and you are accepted! This can sometimes be done right while you are making your purchase, or at a special customer relations desk. Many stores are even offering free gifts or special discounts to customers applying fir instant credit. Be cautious, however, to apply only for cards in stores that you normally shop at. A dormant credit card does not look good on your credit report. While many stores of all sizes now offer their own credit cards, for our credit-building exercise it is best to obtain one from a major department store chain with locations around the country. Department Stores Offering Instant Credit Below is a partial list of U.S. department stores offering instant credit. Many may have store locations in your area. All stores listed here report to the credit bureaus. ·Bacons ·Lazarus ·Neiman Marcus ·Broadway ·Lord & Taylor ·Nordstrom ·Castner Knott ·Macy's ·J.C. Penny ·Dillards ·Marshall Fields ·Sears ·Halls ·May Company ·Maas Brothers ·Jordan ·Marsh ·Mervyns Step 5 - Nurturing Your Credit Congratulations! By now you have three bank loans, Visa, MasterCard, and perhaps several major department store credit cards. We have has planted all the seeds you need to cultivate a healthy credit profile. Now it's up to you to take care of your new credit record and allow it to grow with you as you build a more secure financial future. Loan Scoring System Loan Application Scoring System Each bank has a credit scoring system that determines the acceptability of the borrower. This scoring system takes into account your income, length of employment and residence, etc. The five major factors that all lenders give high importance to are: 1. A salary of at least $1,500 per month 2. At least 5 years at present address 3. Employed at present job for at least two years 4. A "paying on time" credit history 5. A telephone in your name Credit Scoring System (This is a sample of the system of a major bank.) Factors_________ Score__________ 1. Years at job: a. Less than one year 0 b. One or two years 1 c. Two to four years 2 d. Four to ten years 3 e. Over ten years 4 2. Monthly income level a. Less than $1,000 0 b. $1,000 to 1,500 1 c. $1,500 to 2,000 2 d. Over $2,000 3 3. Present obligations past due a. Yes 0 b. No 2 4. Total monthly payments to income after taxes comparison a. 50% 0 b. 40 to 49% 1 c. 30 to 39% 2 d. Under 30% 3 5. Prior loans at any branch bank a. No 0 b. Yes, but not closed 0 c. Yes, but closed with two or less eleven-day notices per year 2 6. Checking account at this bank a. None 0 b. Yes, with over five rejected items over the past year 1 c. Yes, with no rejected items In the past year 2 7. Length at present or previous address a. Less than three years 0 b. Three years or more 1 8. Age of newest automobile a. Over one year old 0 b. Less than one year old 1 9. Savings account a. No 0 b. Yes 1 10. Own real estate a. No 0 b. Yes 3 11. Telephone in own name a. No 0 b. Yes 1 12. Credit references a. No 0 b. Yes 1 When you apply for credit, your application is scored and the evaluated on the basis of criteria given by the bank's Credit Policy Committee. These criteria vary from bank to bank. Below we have listed the scoring system. 90-100% of possible points Loan Granted 75-89% of possible points Loan granted unless negative items on credit report 50-74% of possible points Risk 40-49% of possible points Review with possible rejection 0-39% of possible points Automatic rejection Banks Offering Secured Credit Cards United Savings Bank 711 Van Ness Avenue San Francisco, CA 94102 (415) 928-0700 Visa, MasterCard Bank of Hoven 26660 Agoura Road Calabasas, CA 91302 (800) 777-7735 Visa, MasterCard Capitol One P.O. Box C32131 Richmond, VA 23286 (800) 333-7116 Visa, MasterCard Ocean Independent Bank P.O. Box 15414 Wilmington, DE 19885 (302) 322-4305 Visa Pioneer Federal Savings Bank P.O. Box M Lynwood, WA 98046 (206) 771-2525 Visa Key Federal Savings P.O. Box 6057 Havre de Grace, MD 21078 (800) 228-2230 New Era Bank 675 Franklin Blvd Somerset, NJ 08873 (908) 937-4600 First National Bank in Brookings P.O. Box 6000 Brookings, SD 57006 (605) 692-2680 Visa, MasterCard First State Bank P.O. Box 15414 Wilmington, DE 19850 (302) 322-9111 Visa, MasterCard Security Bank of Hurst Texas 1845 Precinct Rd Suite 100 Hurst, TX 76054 (800) 451-0273 Visa Central National Bank Broadway and Charlston at 14th Mattoon, IL 61938 (800) 876-9119 Visa, MasterCard Spirit Visa 19590 E. Main Street Parker, CO 80134 (800) 779-8472 Visa Budget & Credit Counseling Services, Inc. P.O. Box 450 Layfayette, IN 47902 (800) 395-2556 Visa, MasterCard Bank One, Lafayette, NA 55th Ave. 13th Fl New York, NY 10003 (212)675-5070 Visa American National Bank 1890 Palmer Ave., Suite 403 Larchmont, NY 10538 (914) 833-0560 Visa Orchard Bank P.O. Box 19360 Portland, OR 97280 (800) 879-8745 Visa Credit Card Insights The cards we are going to discus here are the Mastercard and Visa only. Banks and Savings & Loans issue these. You can either purchase goods and services using this card or go to the institution who issued you the card and get cash advances, ie., get cash directly against the card. To obtain these cards, one has to have very good credit or reasonably good credit. Checking your credit can be done in different way. One way is by writing to the Credit Bureau near them and getting your credit standing in the Bureau's Credit File. Another way is to evaluate you by their own standards of point system (please see table at the end of this chapter). To get a quick guide of institutions issuing credit cards, get out your yellow-pages and look under Banks and Savings & Loans. Call them and make a list of the ones issuing these cards and then go to them and pickup their applications and keep them ready. Then go through this book and write all the ones listed and get their applications. Get a hold of other institutions using the yellow-pages of major cities and get their applications. Then when you have enough applications at hand, fill them all up and mail the ones from zip codes starting 0 to 5 the first day, the ones of zips 6 to 8 the next day, and zips 9 the third day, so they all reach the institutions the very same day (for California only - other states please improvise). If you get accepted in 10 out of 30, each with a credit limit of $1,000, you can have access to $10,000. This is one of the quickest ways of obtaining a loan in the shortest time (and the safest). A sure-shot way of getting credit card is the secured cards. These are credit cards issued against your depositing cash in that institution. If you have saving or other checking accounts, then you might as well have it at their institutions which give credit cards in return. The credit requirements of these mentioned ones is not very stringent. A good way to raise your credit limit on the secured credit cards is to take cash advances and re-deposit the cash (and pay the debt) till you reach your credit limit. Visa and/or Mastercard There are special bankcard agencies that will issue a Visa and/or Mastercard to anyone that opens a $300 savings account at their bank regardless if the person has bad credit or no credit. It makes no difference if you have a bankruptcy. You're guaranteed the cards regardless hoe bad you credit might he if you open the savings account at the bank! You would receive your card within 30 days from the time you open your savings account with them. The credit limit on the card matches dollar for dollar with the amount of money in your savings account. A lot of people can't part with $300 for long because of bills that are pressing them. There's a way around this. Go ahead and open the savings account and get the card. Then go to a Western Union and make a $300 cash withdrawal on your card and you have your money right back plus the card. Even though you can't charge anymore because you've reached your credit limit, you can still use the card for identification or check writing purposes. Then you can pay your bill down a little at a time as opposed to putting up the entire $300 at one time and leaving it in the savings account. Another way to get around not paying out the entire $300 at one time is for you to work with a close family member or friend in splitting the $300 cost to get the card. Decide on which one of you is going to apply for the card first. And when that person gets his card he's to make a $300 cash withdrawal on it so the other person can apply for his card. When the second person gets his card he's to make a $300 cash withdrawal on it also and give his partner his $150 investment back. This procedure will work for as many as 3 people putting up $100 each to help each other get their cards. There's also a maneuver that a person can utilize with his secured card that will show him more credit worthy than he actually is. It will cause banks to loan him more money and quicker. And it will make creditors want to give you things that they normally would not have. In order to do this you have to be patient and you can't make any charges on you card until you've gotten where you want to be. If you can afford it secure you a Visa and Mastercard. Use one for your personal charges and use the other for the following purpose. First of all, the bank that issued your secured card will report to the credit bureau the transaction. And on your credit report will be the banks name along with your credit limit and credit ratio. At first your credit limit will be only $300 if that's all you put in the savings account that's required for the card. When you get your card make a $300 cash withdrawal on it and put it in the savings account you used to get the card with your original $300. Then you'll have $600 in the saving account- and the bank will report this to the credit bureau which will automatically boost your credit limit on your card and credit report to $600. This move will allow you to make another $300 withdrawal on your card because you've only made one $300 withdrawal but you have $600 in your savings account. So go and make another $300 withdrawal on your card and deposit it into your savings account and this will automatically boost the credit limit on your card and credit report to $900. Repeat this procedure and your limit will he $1,200. continue until you feel that your monthly payments have reached the limit of what you want to pay. Some people have reached a credit limit on their credit report of $5,000! The object of this maneuver isn't to reach a high credit limit on your card but rather it's to show the highest possible credit limit on your credit report. Even though your card may have a $5,000 credit limit the fact remains that it's all charged up. But when creditors or banks see a $2,000 or $5,000 spending limit on your credit report they'll think that you are a preferred customer at the bank that issued you the card. They know that banks don't give out $2,000 - $5,000 spending limits on a major credit card to anyone so therefore they'll think that you are somebody special and will be glad to give you the loan or whatever you're applying for on credit within reason especially if they can look back over time on your credit report and see that you made your payments on time every month. But what they won't know is that you were not a preferred customer at the bank but rather you took advantage of a special Visa and Mastercard program that required for you to secure the card by opening a savings account at the bank with a minimum of $300. And that you legally maneuvered your way to a $2,000 - $5,000 or more spending limit that made you look like you were a preferred customer at the bank. But as the old saying goes, "What a person doesn't know won't hurt him." In rebuilding credit it takes time to walk up the credit ladder. Utilizing this maneuver you'll get things on credit in a few months that would have taken a few years to get if you had not done it because it made you look more credit worthy than you actually were according to the standards of most creditors. The National Credit Bureau is the largest bankcard agency in America that offers a secured Visa and/or Mastercard. Their telephone number is 1-800-433-2455. If you call them requesting their application package they'll send it to you for $39.95 which is a non-refundable fee that covers the expense of setting up your savings account at Transcontinental bank and issuing you the cards. After they receive your application they'll contact you back in 2 - 3 weeks letting you know that your account has been opened all the paper work is complete and all that is needed is your $300 deposit for your savings account. After you send in your $300 deposit you'll receive your Visa or Mastercard in 2 - 4 weeks. And it's just that simple. Most people charge their credit card and pay installment payments each month on a fraction of their debt. Now that is exactly what the issuing banks want you to do because you are helping them to stay in business. In fact, that is how the banks make their money. However it is your loss in the interest you pay. The new tax laws do not permit you to take any deductible on the interest payments of your revolving debt. The right way to charge is to pay the entire balance WITHOUT paying any interest. That you establish credit as well not pay any interest. Which essentially means that you borrowed the money FREE for that period of time. At the same time, the each in hand can be deposited in interest bearing deposit to EARN interest money for you. So if you do not pay in each for your purchases (assuming that you already -have the each in your hands) but charge it every time at the same time keeping the each in hand in an interesting bearing account actually makes you money; which you would have lost if you would have paid by each. How long do you think you could charge and not pay back WITHOUT paying any interest on it ? About one month, right ? WRONG !! It is actually two months. Let us show you how: Take this case: You have a billing date of the 30th. That means the bank bills you once a month or charges accrued during the month, & the bill comes to you dated the 30th. This bill includes all the charges entered on your account up to the end of business on the 30th. You do not have to pay any of these charges for 25 days after the billing date. After 25 days, interest begins to mount up at 12 to 18 percent in most. So you start with 25 days of FREE credit. Example: If you make a local charge -before 3 pm on the 29th, a Monday when Tuesday is not a holiday, and your bank is the same as your retailer's, your real Charge Date is one day later. That is the 30th, but your billing date is the 30th so the charge will appear on the bill of the 30th, and you will have to pay it 25 days later. But suppose you made the purchase after 3 pm on the 29th. Then your real Charge Date is now two days later, or the 31st. That is because the charge receipts are deposited a day later by your merchant in his bank. You will have skipped over the billing date. The charges will not appear until the next billing date...which is 30 days hence. And you will not have to pay for another 25 days. You get 55 days plus the two days between charge date and real Charge Date, for a total free credit of 57 days. By simply shifting your chare form before 3 p.m. to after 3 p.m., you gain 32 additional days of free credit. Obtaining Additional Credit Now that you have the knowledge of how to start building a strong credit profile in your new credit file, you might want additional credit. DON'T BE IN A HURRY TO DO THIS! If you follow my procedure you'll have 3 banks behind you. Concentrate on improving your ability to borrow money from them and getting other banks behind you if you can. After you pay off your first secured loan, ask the bank loan officer what it takes for you to get a small loan without having to secure it with a savings account. That's what you concentrate on and follow their advice so you can start getting loans on your word! Then you're on your way! When the doors to the credit world open for most people they start charging things they really can do without, mainly material possessions. I recommend that you concentrate on you being able to borrow the money for the material things you want in life. Then concentrate on your ability to travel by getting a couple of airline cards along with car rental, car repair cards, and a couple of gas cards. Other than this you might want to get a finance company behind you. ALWAYS REMEMBER THAT ONCE YOU'RE IN GOOD WITH A BANK, NEVER LET THAT RELATIONSHIP SOUR AT ALL COSTS! Six Credit Card Secrets Banks Don't Want You to Know Source: Massachusetts Executive Office of Consumer Affairs and Business Regulation 1. Interest Backdating Most card issuers charge interest from the day a charge is posted to your account if you don¹t pay in full monthly. But, some charge interest from the date of purchase, days before they have even paid the store on your behalf! REMEDY: Find another card issuer, or always pay your bill in full by the due date. 2. Two-Cycle Billing Issuers which use this method of calculating interest, charge two months worth of interest for the first month you failed to pay off your total balance in full. This issue arises only when you switch from paying in full to carrying a balance from month to month. REMEDY: Switch issuers or always pay your balance in full. 3. The Right To Setoff If you have money on deposit at a bank, and also have your credit card there, you may have signed an agreement when you opened the deposit account which permits the bank to take those funds if you become delinquent on your credit card. REMEDY: Bank at separate institutions, or avoid delinquencies. 4. Fees Are Negotiable You may be paying up to $50 a year or more as an annual fee on your credit card. You may also be subject to finance charges of over 18%. REMEDY: If you are a good customer, the bank may be willing to drop the annual fee, and reduce the interest rate ‹ you only have to ask! Otherwise, you can switch issuers to a lower- priced card. 5. Interest Rate Hikes Are Retroactive If you sign up for a credit card with a low "teaser" rate, such as 7.9%, when the low rate period expires, your existing balance will likely be subject to the regular and substantially higher interest rate. REMEDY: Pay in full before the rate increase or close the account. 6. Shortened Due Dates Most card issuers offer a 25 day grace period in which to pay for new purchases without incurring finance charges. Some banks have shortened the grace period to 20 days‹but only for customers who pay in full monthly. REMEDY: Ask to go back to 25 days. Establish AAA Credit in 30 Days To work this plan you need at least $400 to begin. You should borrow this from your friends if necessary. Then go to a bank of your choice and deposit the $400 into a regular passbook savings account. Wait a few days for the account to be posted and return to the bank to ask for a $400 loan - you offer the passbook as collateral. Since the bank is already holding your $400, you go to another bank open a savings account lending you another $400 and they won't even make a credit check. Then, with your borrowed $400, you go to another bank, open a savings account, return a few days later, borrow $400 from that bank using your passbook as collateral. Then repeat the process at a third bank with your borrowed $400. Wait a few days to go to a fourth bank where you open this time a CHECKING account. Wait a few days and make a payment on each of the other three loans. A week later, make payments again on the three loans, and continue paying each week until you have almost paid off the balance. A credit investigation at this point will show you with three active bank loans (which are considered hard to get), a checking account, and a paying history for the three bank loans - with you having paid up in advance. Thus, you have AAA credit in as little as 30 days. From here you go on to apply for loans, credit cards, and other items on credit. The Lure of Bankruptcy Here is a true story about bankruptcy, and the advantages it offers. A husband and wife team of practicing psychiatrists, with a joint income of $78,000 per annum, accumulate personal debts totaling $22,000, and also have outstanding a $33,000 mortgage on their comfortable suburban New York home. They are not in arrears, nor even over their heads. They simply seek more discretionary spending power. Their solution to the problem? They file for bankruptcy and are able to immediately reduce their debt load to a mere 10 cents on the dollar, repayable on an extended schedule in very small amounts. An officer in one of their finance companies notes that they could refinance the mortgage or even sell the house. But you will see in a moment why that was not necessary. Traditionally, personal bankruptcy has been a desperate last resort for those so deeply in debt and harried by creditors, that there really seemed to be no other solution. The typical profile included low-income, under- educated clerical workers or laborers, or perhaps transient non-homeowners. Common age groups were those who were in their twenties, or those over sixty five years of age. This is no longer the case. Today's profile includes people with good jobs, even families with two incomes. It is not surprising to find those with six-figure incomes declaring bankruptcy. The process comes no longer out of a dire necessity, but it is now a means by which people can rid themselves of debts that cramp their lifestyle. The most common applicants for bankruptcy include recent college graduates who file in order to avoid paying back government-guaranteed student loans. Their rationale? They feel society owed them an education. You will also find older, "keep up with the Joneses" types filing for bankruptcy. For suburban executives to Wall Street professionals, they are unwilling to live within their means. The passage of the Federal Bankruptcy Act of 1978 made the whole process much easier. This change significantly liberalized personal filing procedures in the name of consumer rights. Chapter 7 makes no reference at all to the debtor's income. It permits debtors to clear the slate by turning over all their assets except those specifically exempted to creditors. Among the exemptions: Up to $7,500.00 equity in the debtor's house (15,000 if both file); $4,000.00 in accrued dividends; $1,200.00 in automobile equity; $500.00 in jewelry; $200 per category of household items (including clothing, books, etc.) and more! Chapter 13 requires that debtors show only a regular income to handle a reasonable three-year pay-back plan. The court's definition of reasonable happens to be as little as 1% to 10%, even when a payment of 50% could easily be managed. Bookkeeping Made Simple Please don't think I am calling you a "moron" to hurt your feelings in any way. I was a moron when I first started setting up my files. I hated accounting in school and am the type that would much rather add 2+2 on a calculator than in my head -- but you have to do it. You have to force yourself to do it NOW -- right at the beginning! Many of a business has collapsed simply because they lacked organization in their basic accounting business practices. Don't be one of them! As a small mail order business you don't have to really do much in the beginning. Here is how to set up your files from ground zero: 1. Take out a hanging file folder and a label of any kind. (Hanging folders and labels for them can be purchased at K-Mart, Wal-Mart and any office supply store.) 2. Type or hand print "Receipts" on the label and place it on the hanging folder. 3. Now, place 5 MANILA file folders inside the hanging file folder (which you labeled "Receipts") and label each of the manila file folders with the following headings: a. Advertising b. Postage c. Office Supplies d. Utilities and Rent for the Office e. Miscellaneous You now have one large hanging file folder with 5 separate manila file folders inside it. Carefully place your hanging file folder in your metal file cabinet or cardboard banker's box. (A banker's box can be purchased at any office supply store also and normally cost around $4.) Now, wasn't that easy? Some of you reading this will think that I am attempting to insult your intelligence. This is NOT my intention. This report is broken down in a simple, step-by-step way so everybody can understand it _ regardless of their previous knowledge and experience. Remember, some people have never worked in an office their entire life. What seems simple and accepted to some of us, may be something another person would never have known. Okay, let's go back to where we were. You now have one master file completed and we're ready to make another just like it. This time we'll name the hanging file folder "Income" and label 3 manila folders inside it with the following headings: (A) Completed and Shipped Orders (B) Inquiries and Correspondence. (C) Open Orders Still Pending. See how easy? From now on, you simply make another folder as the need arrives and you're files will always be easy to maintain. (Once you get this concept down pat -- you can easily think about getting a computer. A computer organizes its information in the SAME manner. Believe me - this same system works! You'll be amazed at how many mistakes it will help you prevent.) Yes - bookkeeping is a very simple process. All you have to do is keep the system going. For instance, every order that I process, I completely finish before moving on to the next order. Example: 1. Mail is received and opened. As each piece is opened it is placed into individual piles. Orders with pre-payment are placed in one pile, information and daily correspondence in another, and so forth. 2. Each order that has been pre-paid for is processed first - with each one being processed individually to completion. (That means it is in an envelope, a label typed out and the completed order is ready to be mailed at the post office.) 3. During the process, the "date," "amount of check or payment" and "product ordered" is recorded on the outside of the envelope - making sure the customer's full name, address and telephone number (if available) is on the envelope too. 4. Just before closing up the office for the evening, the envelopes are then keyed into the database on our computer (you can substitute a computer for the hanging files in the beginning.) We record all the information that was written on the envelopes during the processing of the order. (Don't think you will remember "what" the order was. That thinking will open you up to make human errors.) As your business grows, your understanding and abilities will grow also. At that time you can grow into a more sophisticated means of keeping the books. Stop Collection Agencies In Their Tracks! Contributed By John Reece You have the right to STOP collection agencies from ever writing or calling you again. The Fair Debt Collection Practices Act contains an empowering tool in for the consumer. By law, a collection agency must stop contacting you after they receive a letter telling them to. The body of the letter should basically read: You are hereby notified under provision of public laws 95-109 and 99-361, also known as the Fair Debt Collection Practices act, that your services are no longer needed. Your organization is to immediately CEASE & DESIST all attempts to collect this debt. I will not recognize any collection agency and will deal only with the original creditor (WHOEVER THE CREDITOR IS) If Someone Owes You Money If you are owed money and have not received any payment over a reasonable period of time, there are several steps you can take to collect, even before going to the expense of hiring a collection agency or lawyer. While making these moves, you can collect evidence in case it becomes necessary to take the matter to court. Call The Debtor This method, handled properly, can have surprisingly successful results. For best results, have another person of the line to witness the conversation. In case the debtor denies the call, you have a witness who can testify otherwise. Write The Debtor Write a letter that confirms and reviews all the pertinent points of the telephone conversation. The goal is to make your letter clear enough to make it stick in court. If The Debtor Is A Business File a complaint with the BBB or the trade organization in which the debtor is a member. Make sure you stick to the facts in order to avoid being sued for libel. Your Consumer Rights Consumer credit reporting agencies (CRAs) collect credit information on you from banks, department stores, credit card companies, and other types of financial institutions that may extend you credit. CRAs make money selling the information they have in their databank, including information about your credit profile. Because of this, it is only prudent that you exercise your legal rights as a consumer, know what is in your credit file, make sure they are accurate and challenge it and have it corrected when necessary. CRAs are required by the Fair Credit Reporting Act to tell you the contents of your file. There are several ways to contact a CRA: IF DECLINED FOR A LOAN, call the lender who is required by the FCRA to give you the name, address and phone number of the CRA it used in evaluating your loan application. IF YOU'RE JUST CURIOUS, you can find out the contents of your file by calling the CRA nearest you. They are usually listed in the phonebook under Credit Reporting Agencies. If your report contains inaccurate information, you may challenge the inclusion of it in your file. One option: If a lender has made an error, point it out to the lender and request that corrected information be sent to the CRA. The Free Credit Card Trap They arrive in your mail - a conspicuous looking mail piece from some "official looking" bank claiming that you have been Pre-Approved for a Mastercard or VISA credit card. Of course, you don't have to have any credit. You can even have bad credit or have just filed bankruptcy or even be rated as a "slow payer." It doesn't matter because these companies want to give you a second chance! These companies want to make it easy for you to obtain a credit card because they only want your money! How the thing works is that you must send $35 to receive an application that provides you with a name and address listing of banks willing to give you a VISA and/or Mastercard without any credit approval. That's a stiff price to pay for a sheet of paper, don't you think? The instructions that come with the application will let you know how the scheme works. You must open up a bank account with the bank once that bank approves you. Big deal! They make it appear that you have won some contest or something and people will feel "good inside" that someone has approved them. But that's not all. The minimum amount you must deposit is $200 but you can deposit as much as you want. In return, you get a Mastercard or VISA credit card with a credit limit up to the amount you deposit. Wow! What a great honor! This is no break! Think about it. If a stranger gave you $200 to hold for him until Friday wouldn't you feel safe in granting them a $200 loan? I mean _ it's their own money you've got. If they default, you've got the full amount to pay off the loan. It takes a twisted mind to take $200 from you, grant you $200 credit with your own money plus charge you astronomical interest rates just to take the money from your hand and give it back to you. That's insane! Of course _ to combat this insanity, the great and wonderful banks claim to help fix your credit report. They say that if you maintain payments in a correct fashion, this information will be reported to the credit bureau. Yea, right! When Shell calls the credit bureau to check your credit for a gas credit card, your report shows 47 defaulted loans and a bankruptcy. However, there is one company that you make payments to on-time. Big deal. Don't you think the rest of your bad credit will still be the deciding factor in Shell's final decision. You bet you bottom dollar! Look at this: the bank makes money from the interest of your deposit. The bank also makes money by charging you 18% to 22% interest for the right to use their Mastercard or VISA. Plus the bank is guaranteed their money because if you don't pay on time, they take the money out of the bank account you opened with them along with any interest you have accumulated. Why would anyone with $200 to deposit want a credit card with a $200 limit? If you have $200 and want to buy an item for $200 _ go out and purchase it. That way, you'll own it lock, stock and barrel. No interest, no payments, no hassle! Plus, you won't owe your soul to the company store _ sort-of-speak. Credit is a wonderful thing if you use it intelligently. I know people who charge $100 at the beginning of the month and use that $100 to make $300. It's free money for 30 days. Then, when the bill comes, they immediately pay the entire balance and come out smelling like a rose with $200 to the good. Credit is also needed in certain circumstances for establishing clout. You can't call in a telephone order unless you can charge the purchase to your credit card. This delays you getting items you want now. In fact some companies will try and make you feel "low class" if you don't own a credit card. I am proud to say that I DON'T OWN one. When I'm in a store and they say "Would you like to put this on your charge?" I promptly say, "No, I pay for everything I buy!" They immediately shut up. And if they would snap back with a rude answer, I'd leave the stuff sitting on the counter, walk out of the store and get what I needed somewhere else. You don't have to take abuse just because you don't choose to line the pockets of the rich credit card companies! It's insane! If you've ever had a credit card and charged $200, you know you end up paying back $400 or more (unless you pay the balance within 30 days.) Stop allowing these so called banks to rip you off. How To Get Free Rent You can get free rent through one of three methods: 1) Manage an apartment. 2) As a building caretaker. 3) House-sitting. Opportunities to get free rent by all three of these methods may be found simply by checking the classified advertising section of newspapers in the area you wish to live in. Most of the opportunities will be listed under "Help Wanted". Managing apartments consists of collecting rents, showing vacancies, making minor repairs such as leaky faucets, replacing light bulbs - and taking care of the grounds. Some units even pay a small salary - depending on the size of the complex. In a very large complex there is usually a separate maintenance man and/or caretaker. The manager only handles rent collecting and showing the vacant units. These positions normally pay only a token salary along with free rent. House-sitting is much more attractive to the average person. The only drawback is that most opportunities are for short terms, 3 months to a year. However, if you only want to locate to an area for a short period of time, this is the way to do it and live rent-free. Many people would rather have someone occupy their home during their absence than have it sit empty. You would be expected to maintain the premises and treat it "better" than as if it were your own. For more insight into the business of apartment managing, write to: APARTMENT MANAGER NEWS, 65 CHERRY AVE., WATERTOWN, CT 06795, for a copy of their publication. Your Money Guide to Free Government Grants Anyone thinking about going into business for themselves, or wanting to expand an existing business should rush for the world's largest "one-stop-money-shop" where FREE MONEY to start or expand a business is being held for you by the Federal Government. It sounds absolutely incredible that people living right here in the United States of America wouldn't know that each year the world's largest source of free business help delivers: over $30 billion dollars in free grants and low-interest loans; over one-half trillion dollars in procurement contracts; and over $32 billion dollars in FREE consulting and research grants. With an economy that remains unpredictable, and a need for even greater economic development on all fronts, the federal government is more willing than it ever has been before to give you the money you need to own your own business and become your own boss! In spite of the perception that people should not look to the government for help, the great government give-away programs have remained so incredibly huge that if each of the approximately 8 million businesses applied for an equal share, they would each receive over $70,000. Most people never apply for a FREE GRANT because they somehow feel it