Credit Repair Kit For Dummies

411 Pages·2014·9.87 MB·English

by  Steve Bucci

Business & Economics/Personal Finance/Money Management
Making Everything Easier!™ 4th Edition
4th Edition
Jump-start your credit score
Open the book and find: C C redit
with this comprehensive
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credit repair guide • Information on how credit
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reporting works
If you need to clean up your credit, this updated resource is • Tips on cleaning up your d Repair K it
credit reports
full of information to help you get your credit reports looking i
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great, pay down debt, and keep your credit clean. You’ll find • Updated credit scoring

out how to deal with debt collectors, dispute inaccurate examples with new ranges R
information in your credit reports, and set financial goals to • Tricks for dealing with creditors
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stay on track. and debt collectors
• Sources of free p
• Simple, proven steps — get an overview of working with debt
professional help
collectors, filing for bankruptcy, and more a
• The lowdown on preventing
• Rebuilding credit — explore options for starting or restarting identity theft and mortgage i
credit, recovering from bankruptcy or identity theft, and foreclosure r
much more

• Advice on starting or restarting K
• Big brother — find out how credit reporting works, how your credit in real life
spending is watched, and how to monitor your credit for i
• Tips on taking a sustainable
optimal results t
approach to credit
• Credit management for life — discover how to create a realistic
spending plan and protect your credit during major life changes Cover Image: ©iStockphoto.com/YinYang
Learn to:
• FICO facts — dive into the latest information on FICO and
VantageScore credit scoring
• Fix damaged credit or beef up thin credit
• Student loans 101 — find out how to best deal with student
loans and avoid defaulting • Recover from credit score hits
caused by mortgage foreclosure
• Mortgage meltdown — get updated information on how to keep
or identity theft
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Steve Bucci, BA, MA, is a personal finance expert and a nationally
rates on loans
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• Take advantage of new consumer
ISBN:978-1-118-82151-0
protections
52499
Steve Bucci, BA, MA
9 781118821510 Bucci Nationally syndicated columnist for Bankrate.com
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Credit
Repair Kit
4th Edition
by Steve Bucci, BA, MA
Credit Repair Kit For Dummies®, 4th Edition
Published by: John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, www.wiley.com
Copyright © 2014 by John Wiley & Sons, Inc., Hoboken, New Jersey
Media and software compilation copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
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Library of Congress Control Number: 2013954101
ISBN 978-1-118-82151-0 (pbk); ISBN 978-1-118-82150-3 (ebk); ISBN 978-1-118-82157-2 (ebk)
Manufactured in the United States of America
10 9 8 7 6 5 4 3 2 1
Contents at a Glance
Introduction ................................................................ 1
Part I: Getting Started with Credit Repair...................... 7
Chapter 1: Introducing Credit Repair, Credit Scores, and Your Life on Credit .........9
Chapter 2: Turning Your Credit Around .......................................................................25
Chapter 3: Cleaning Up Your Credit Reports ...............................................................41
Chapter 4: Getting the Best Help for Bad Credit for Free ...........................................57
Chapter 5: Coping with Debt Collection .......................................................................69
Chapter 6: Working with Collectors, Lawyers, and the Courts to Manage
Debt Obligations ............................................................................................................91
Part II: Reducing Credit Damage from
Major Setbacks ........................................................ 109
Chapter 7: Reducing Credit Damage in a Mortgage Crisis ........................................111
Chapter 8: Starting Over Again with Bankruptcy ......................................................127
Chapter 9: Repairing Credit Damage in the Wake of Identity Theft ........................145
Part III: Rebuilding Credit, No Matter Where or
When You Begin ...................................................... 155
Chapter 10: Starting (or Restarting) Your Credit in Real Life ..................................157
Chapter 11: Ending Life’s Negative Credit Surprises .................................................177
Chapter 12: Protecting Your Credit During Major Life Challenges .........................189
Part IV: Big Brother Credit Is Watching You:
Credit Reporting and Scoring .................................... 219
Chapter 13: Discovering How Credit Reporting Works.............................................221
Chapter 14: Understanding Credit Reports and Scores ............................................235
Chapter 15: Monitoring Your Credit Reports and Scores .........................................261
Part V: Never Have Bad Credit Again! Successful
Credit Management for Life ...................................... 271
Chapter 16: Putting Yourself in Control of Your Credit ............................................273
Chapter 17: Taking a Sustainable Approach to Your Credit ....................................281
Chapter 18: Safeguarding Your Credit with a Spending Plan ...................................293
Chapter 19: Knowing Your Rights to Protect Your Credit ........................................319
Chapter 20: Protecting Your Identity ..........................................................................335
Part VI: The Part of Tens .......................................... 349
Chapter 21: Ten Consumer Protections Everyone Needs to Know .........................351
Chapter 22: Ten Strategies for Dealing with Student Loans .....................................359
Chapter 23: Ten Ways to Deal with a Mortgage Meltdown ......................................369
Index ...................................................................... 377
Table of Contents
Introduction ................................................................. 1
About This Book ..............................................................................................2
Foolish Assumptions .......................................................................................3
Icons Used in This Book .................................................................................4
Beyond the Book .............................................................................................5
Where to Go from Here ...................................................................................5
Part I: Getting Started with Credit Repair ...................... 7
Chapter 1: Introducing Credit Repair, Credit Scores,
and Your Life on Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Repairing Bad Credit .....................................................................................10
Settling debts ........................................................................................10
Resetting your goals ............................................................................10
Rebuilding your credit by using it .....................................................11
Using a cosigner or becoming an authorized user ..........................11
Finding sources of free help ...............................................................12
Dealing with collectors........................................................................12
Weathering a Mortgage Crisis ......................................................................13
Opting for help .....................................................................................13
Doing it on your own ...........................................................................14
Strategic mortgage default..................................................................14
Filing Bankruptcy ...........................................................................................15
Protecting Your Credit and Your Identity ..................................................16
Getting familiar with credit laws ........................................................16
Receiving free reports and filing disputes ........................................16
Signing up for credit monitoring ........................................................17
Setting alarms, alerts, and freezes .....................................................17
Identifying identity theft .....................................................................18
Maintaining Good Credit Throughout Life .................................................18
Establishing credit for the first time .................................................18
Making credit changes at life’s stages ...............................................19
Avoiding pitfalls ...................................................................................19
Managing Credit in Today’s Unforgiving Economy ...................................20
Planning for success ............................................................................21
Reviewing your credit report .............................................................21
Knowing your credit score .................................................................22
Considering credit a renewable resource.........................................23
vi
Credit Repair Kit For Dummies, 4th Edition
Chapter 2: Turning Your Credit Around . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Understanding How Your Actions Impact Your Credit Score .................26
Using a Cosigner to Raise Your Score .........................................................27
Turning Small Purchases into Big Credit ....................................................28
Maximizing Your Credit Score with Major Expenditures .........................30
Leveraging your mortgage ..................................................................31
Financing your car ...............................................................................33
Paying back student loans ..................................................................34
Understanding How Good Debt Builds Good Credit .................................35
Achieving goals with the help of credit ............................................35
Sending a message to potential lenders ...........................................36
Giving nonlenders a sense of how you handle responsibility .......36
Selecting the Best Tools for Building Your Credit ....................................37
Spending your way to better credit with a spending plan .............37
Tracking your progress: Paying attention to your
credit report and score ...................................................................39
Chapter 3: Cleaning Up Your Credit Reports . . . . . . . . . . . . . . . . . . . . . 41
Understanding the True Value of Good Credit ..........................................42
Reviewing Your Reports for Problems .......................................................44
Using the Law to Get Your Credit Record Clean and
Keep It That Way ........................................................................................46
Identifying and Disputing Inaccurate Information ....................................48
Understanding the dispute process ..................................................48
Correcting all your credit reports .....................................................49
Contacting the creditor .......................................................................52
Adding Positive Information to Your Credit Report .................................53
Opening new credit accounts.............................................................53
Adding a 100-word statement .............................................................54
Chapter 4: Getting the Best Help for Bad Credit for Free . . . . . . . . . . . 57
Knowing Whether You Need Help ...............................................................58
Gauging your need for outside assistance........................................58
Handling situations on your own .......................................................59
Identifying Help You Can Get for Free ........................................................61
Getting help with your mortgage .......................................................62
Considering credit counseling ...........................................................62
Working with an attorney ...................................................................67
Chapter 5: Coping with Debt Collection . . . . . . . . . . . . . . . . . . . . . . . . . 69
Handling Those Collection Phone Calls ......................................................70
Knowing what collectors can do ........................................................70
Knowing what collectors can’t do .....................................................71
Deciding whether to answer the phone ............................................72
Preparing to answer collection calls .................................................72
Knowing what not to say ....................................................................73
vii
Table of Contents
Taking Charge of the Collection Process ....................................................74
Asking for proof that the debt is yours .............................................74
Knowing when debts fade away: Statutes of limitations ................75
Negotiating a payback arrangement..................................................76
Keeping your promise .........................................................................78
Identifying Escalation Options That Help ...................................................79
Asking to speak to a manager ............................................................79
Approaching the creditor ...................................................................80
Fighting harassment ............................................................................80
Communicating with Customer Service Before Being Placed
for Collection ..............................................................................................81
Contacting your creditor promptly ...................................................82
Explaining your situation ....................................................................83
Offering a solution ...............................................................................83
Covering all the bases .........................................................................84
Keeping Collectors in Check ........................................................................85
Calling in a credit counselor ...............................................................85
Referring the matter to your lawyer ..................................................85
Freeing Up Money to Pay a Collector ..........................................................86
Utilizing a spending plan .....................................................................86
Cutting the fat from your monthly spending ....................................87
Avoiding Collectors Altogether ...................................................................87
Getting organized .................................................................................87
Stopping the paycheck-to-paycheck cycle .......................................88
Chapter 6: Working with Collectors, Lawyers, and
the Courts to Manage Debt Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 91
Getting a Handle on Charge-Offs ..................................................................92
So what is a charge-off? .......................................................................92
Making sense of unpaid charge-offs ..................................................93
Making charge-off payments ..............................................................93
Coming to a Debt Settlement Agreement ...................................................95
Considering a debt settlement offer ..................................................95
Hiring a debt settlement firm .............................................................95
Reaching expiration dates on debts ..................................................96
Finding Out about Judgments and What They Mean to You ...................96
Understanding Wage Garnishments ............................................................99
Dodging wage garnishments ..............................................................99
Figuring out how much can be garnished ......................................101
Stating Your Case in Court .........................................................................101
Managing IRS Debts, Student Loans, and Unpaid Child Support ..........103
Handling IRS debts .............................................................................103
Educating yourself about student loans .........................................105
Putting your kids first: Child support .............................................107
viii
Credit Repair Kit For Dummies, 4th Edition
Part II: Reducing Credit Damage from Major Setbacks ...109
Chapter 7: Reducing Credit Damage in a Mortgage Crisis . . . . . . . . 111
Assessing the Damage from a Mortgage Meltdown ................................112
Understanding How Mortgages Differ from Other Loans .......................114
Spotting a foreclosure on the horizon ............................................114
Counting to 90 ....................................................................................115
Knowing Where to Turn for Help ..............................................................116
Finding good help for free.................................................................116
Working with your mortgage servicer ............................................116
Avoiding help that hurts ...................................................................117
Alternatives to Going Down with the Ship ...............................................118
What to do first ..................................................................................119
What to do for more serious problems ...........................................119
What to do to end matters ................................................................120
Managing a foreclosure .....................................................................121
Strategic default: Stopping payments .............................................121
Dealing with Deficiencies ............................................................................123
Preparing for “Credit Winter” ....................................................................124
Chapter 8: Starting Over Again with Bankruptcy . . . . . . . . . . . . . . . . 127
Deciding Whether Bankruptcy Makes Sense for You .............................128
Deliberating the bankruptcy decision .............................................128
Adding up the pluses and minuses ..................................................132
Considering a debt management plan first ....................................134
Understanding Bankruptcy, Chapter and Verse ......................................135
Qualifying for and Filing for Bankruptcy ..................................................136
Qualifying for Chapter 7 ....................................................................136
Qualifying for Chapter 13 ..................................................................138
Managing Your Credit After a Bankruptcy ...............................................139
Telling your side of the story ...........................................................140
Reaffirming some debt ......................................................................141
Repairing your credit score ..............................................................142
Establishing new credit .....................................................................143
Moving forward with a game plan ...................................................144
Chapter 9: Repairing Credit Damage in the
Wake of Identity Theft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Taking Fast Action When Identity Theft Occurs .....................................145
Communicating with the right people ............................................146
Protecting your identity through the FACT Act .............................149
Sending out a fraud alert ...................................................................150
Blocking fraudulent credit lines .......................................................151