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Leonard, Robin. Credit repair / by Robin Leonard and Margaret Reiter. — 10th ed. p. cm. Summary: “A how-to guide for cleaning up credit reports, maintaining/improving credit scores, paying debt and building credit for the future, with forms to handle existing debts, avoid overspending, and deal with collection agencies. e 10th edition is reorganized with information on bankruptcy, foreclosure and mortgage debt, and the Credit CARD Act.”— Provided by publisher. ISBN-13: 978-1-4133-1420-5 (pbk.) ISBN-10: 1-4133-1420-1 (pbk.) ISBN-13: 978-1-4133-1489-2 (epub e-book) 1. Consumer credit—United States—Handbooks, manuals, etc. 2. Finance, Personal— United States—Handbooks, manuals, etc. 3. Consumer credit—Law and legislation—United States. I. Reiter, Margaret. II. Title. HG3756.U54L46 2011 332.7'43—dc22 2010052786 Copyright © 1996, 1997, 1999, 2000, 2001, 2002, 2005, 2007, 2009, and 2011 by Nolo. All rights reserved. e NOLO trademark is registered in the U.S. Patent and Trademark Oce. 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About the Authors Robin Leonard graduated from Cornell Law School in 1985. She is the author or co-author of numerous Nolo books, including Solve Your Money Troubles: Debt, Credit & Bankruptcy, How to File for Chapter 7 Bankruptcy, and Chapter 13 Bankruptcy: Keep Your Property & Repay Debts Over Time. Margaret Reiter was a consumer investigator with the Los Angeles County Consumer Aairs Department for four years and worked for 20 years as a consumer prosecutor with the California Attorney General’s Consumer Law Section. She has investigated or prosecuted businesses engaged in consumer fraud, including foreclosure “consultants,” mortgage lenders, debt settlement companies, vocational schools, living trust mill/annuity sellers, prepaid phone card companies, and tax refund anticipation loan providers. She has drafted consumer protection legislation, advocated for stronger consumer protection before regulatory agencies, trained other prosecutors and investigators, and prepared consumer alerts and spoken to the public on Truth-in-Lending, telephone slamming and cramming, truth in phone billing, bankruptcy, and vocational schools, among other consumer topics. Table of Contents Your Credit Repair Companion 1 1 e Elements of Repairing Credit 3 2 Credit Reports and Credit Scores: e Nuts and Bolts 5 How Creditors Evaluate Your Credit Worthiness 7 Credit Reports and Credit Scores: What’s the Difference? 8 Your Credit Report 9 Getting Your Credit Report 11 What Is in a Credit Report? 17 Investigative Reports 22 Who Can Look at Your Credit Report 23 Your Credit Score: What It Is and Why It Matters 27 How Credit Scores Are Calculated 28 What Credit Score Do You Need to Get Credit? 33 Getting Your Credit Score 34 3 e First Step—Cleaning Up Your Credit Report 39 Common Errors in Credit Reports 41 Your Right to an Accurate Credit Report 42 Review Your Report for Errors and Incomplete or Prohibited Information 45 Dispute Incomplete and Inaccurate Information 47 Add an Explanatory Statement to Your Credit File 57 Add Positive Information toYour Credit Report 59 Check Your Credit Reports Often 62 Avoid Credit Repair Clinics 64 4 Assess Your Financial Situation 69 How to Assess Your Financial Situation 71 Determining Your Credit Repair Options Based on Your Financial Situation 81 5 Reducing Current Expenses and Debts 87 Cutting Expenses 88 Reducing Current Debt Obligations 98 6 Reducing Your Mortgage Debt 113 How a Foreclosure Works 115 How Foreclosure Affects Your Credit 118 Federal Programs for Homeowners Having Difficulty Paying eir Home Mortgage 120 Short-Term Solutions 121 Refinance 122 Modify Your Loan Terms 124 Leaving Your Home 127 How a Modification, Short-Sale, or Deed-in-Lieu Affects Your Credit 131 7 Reducing Debt rough Bankruptcy 135 Chapter 7 Bankruptcy 136 Chapter 13 Bankruptcy 139 Bankruptcy and Credit Repair: Does It Help or Hurt? 140 [...]... most people refer to them as credit reports and credit reporting agencies Chapter 2 | credit reports and credit scores: the nuts and bolts | 11 Getting Your Credit Report Getting a copy of your credit report is an essential part of credit repair Even if your credit is strong, you should get and review your reports once every year Under the Fair Credit Reporting Act, credit reporting agencies that... Reports and Credit Scores: The Nuts and Bolts How Creditors Evaluate Your Credit Worthiness 7 Credit Reports and Credit Scores: What’s the Difference? 8 Your Credit Report 9 Getting Your Credit Report 11 Getting a Sample Credit Report .11 Getting Your Free Credit Report from Experian, Equifax, or TransUnion 12 Getting a Free Credit Report... different creditors And those credit scores can change over time, getting better or worse Because credit scores are based on your credit reports, even more important than knowing your credit scores is knowing what is in your credit reports If you want a better credit score, you need to deal with what is in your credit report Your Credit Report Credit reports are statements made by credit reporting agencies... to creditors, debt collectors, credit reporting agencies, and others to aid in your credit repair efforts First steps: Learning about your credit report and assessing your financial situation (Chapters 2, 3, and 4) The first step in credit repair is to get a clear picture of your current financial situation and how it relates to your credit history Start by understanding your credit reports and credit. .. comparison 8 | credit repair of the particular credit to your income, or a comparison of all your debts to your income (See Chapter 6, Reducing Your Mortgage Debt, for more information on debt ratios.) Your credit report generally includes information about your debts, but not about your income Your existing credit and credit limits Creditors also examine your existing credit relationships, such as credit. .. new credit card • opening a checking account • renting a home, or • getting a job offer If you have open-ended credit accounts, like credit cards, and your credit goes downhill, the creditor is likely to increase your interest rate, decrease your credit limit, or cancel credit privileges And if you are trying to get new credit, you will likely pay much more in interest and fees than those with good credit. .. include information about a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living Some creditors will review your credit report directly, others may only review a credit score based on your report, and still others may review both your credit report and one or more of your credit scores Credit reporting agencies are generally... Your Credit Score 34 When You Can Get Your Credit Score for Free 34 Should You Pay to Get Your Credit Score? 37 Chapter 2 | credit reports and credit scores: the nuts and bolts | 7 P eople sometimes assume their credit is much worse or better than it really is Others assume they can improve their credit score, but ignore their credit report Knowing what’s in your credit. .. hearing an ad about getting your credit score A credit score is simply a number that represents a current evaluation of your credit history that is Chapter 2 | credit reports and credit scores: the nuts and bolts | 9 contained in your credit report Creditors use the score to decide quickly if you are likely to repay an account or loan, without having to carefully review the credit report on which it is... never get credit again That’s simply not true As long as your financial troubles are behind you, you’ll probably qualify for limited types of credit relatively quickly Within about two years, you should be able to repair your credit enough to get a major credit card or loan Many creditors are willing to extend credit to people who have turned their financial situations around, even if their credit records . Contents Your Credit Repair Companion 1 1 e Elements of Repairing Credit 3 2 Credit Reports and Credit Scores: e Nuts and Bolts 5 How Creditors Evaluate Your Credit Worthiness 7 Credit Reports and Credit. hard work. l 4 | CREDIT REPAIR C H A P T E R 2 Credit Reports and Credit Scores: e Nuts and Bolts How Creditors Evaluate Your Credit Worthiness 7 Credit Reports and Credit Scores: What’s. toYour Credit Report 59 Check Your Credit Reports Often 62 Avoid Credit Repair Clinics 64 4 Assess Your Financial Situation 69 How to Assess Your Financial Situation 71 Determining Your Credit Repair