Welcome to

A COMPLETE DO-IT-YOURSELF KIT FOR OUR CLIENTS

Credit Repair Flow Chart

How to Analyze Your Credit Report

How to Negotiate with Creditors

How to write Dispute Letters and follow up

The Consumer’s Bill of Rights

Samples and Forms to Help You

UNDERSTANDING CREDIT SCORES

Credit scoring has been around since the 1950’s, and credit bureau scores – scores based solely on credit bureau data – became available in the 1980’s. It is a statistical method of assessing credit risk, summarizing the relative likelihood that an individual will repay a loan whether that loan is a credit card or a home mortgage. This credit score is calculated from a scorecard driven by credit related variables ranging from number of open accounts, active accounts, types of accounts, past delinquencies, severity of delinquencies, length of credit history, current level of indebtedness, and level of recent inquires. Each pattern corresponds to a certain likelihood that a consumer will make his or her loan payments as agreed in the future. The score is based on all the credit-related data in the report – not just negative data such as missed payments or bankruptcies. The credit agencies determine the variables and their relative weight within the scores. Because this information is proprietary, they will not divulge the exact variables used to determine a credit score. The scores available from the three major credit repositories range from 365 to 840. Equifax refers to their score as the Beacon score, Trans Union as the Empirica score, and Experian as the FICO score. However, it should be noted that all of these scores are based on the model created by Fair Isaac & Company. A 680 Beacon score means the same as a 680 FICO score, which means the same as a 680 Empirica score. The reason they differ is the fact that the three competing repositories gather different data. Although your merged in-file report may have duplicates, it also will show some accounts reported differently by the three repositories, or by one but not the others, etc. The better the credit, the higher the score. Up to four reason codes (see explanations below) are give to explain a credit score. Some banks are taking the middle score and throwing out the lowest and highest. Whatever method the banks choose, their score will be used to determine your interest rate, how much you have to put down, and ultimately whether you can get a particular loan product at all.

To summarize, your credit score is similar to the SAT – Standard Academic Achievement scores will get you into college, or keep you out. In the SAT’s, 800 is a perfect score. FICO’s can sometimes go higher than that, but it’s rare. So, 840 is perfect, and anything above 680 is an "A". Some lenders give pricing premiums to borrowers whose scores are above 700, or above 725. Many lenders, especially second trust deed, or equity line lenders, will simply deny any application submitted with a FICO score below 680. The scoring program is extremely complex, and no one will tell you exactly what causes your score to be lower or higher than you expected. Experience has given us a pretty good idea of the most important factors, and they are listed here:

Any account information highlighted in gray is late, delinquent, or otherwise derogatory. There are four levels of badness: 30 days late, 60 days late, 90 days late, or write-off. You should go after the vendors for any and all of these items.

This section contains tax liens, civil judgements, and bankruptcies. These items weigh heavily, especially if they are recent, and especially if the repositories say they are unpaid. No mortgages are ever funded if the lender believes these are outstanding items.

Length of Credit History: If all of your cards or accounts are new, your FICO score will be pretty low. They like to see 10 years or more.

Proportion of Balances to Limits: FICO scores are lower for people who spend all the way up to their credit limits. This also applies to new mortgages, when the balance would be almost equal to the credit limit.

Inquiries: Whenever you shop for a car, or furniture, or any items you might want to buy on credit, the store will run a credit report on you. Every one of these inquiries lower your FICO score, so during the mortgage process, guard your social security number and credit checks very carefully.

The Three Major Credit Repositories

Names and Numbers

For a "consumer disclosure" (credit report), send an $8.00 check or money order, per person, payable to "EXPERIAN" to the address below. If you have been denied credit within the last 60 days, you can get this report for free. Allow 8-10 business days for delivery. You must have a report from EXPERIAN (TRW), with your own customer ID number, in order to file a dispute request.

Experian

P. O. Box 2104

Allen, TX 75013-2104

For a credit report, send an $8.00 check or money order, per person, payable to "EQUIFAX" to the address below. If you have been denied credit within the last 60 days, you can get this report for free. Allow 8-10 business days for delivery. Equifax sends a "Research Request Form" with its credit reports - this can be faxed, should you have a dispute with their data.

EQUIFAX

P. O. Box 105783

Atlanta, GA 30348

For a credit report, send an $8.00 check or money order, per person, payable to "Trans Union" to the address below. If you have been denied credit within the last 60 days, you can get this report for free. Trans Union sends an "Investigation Request Form" with its credit reports - this can be faxed, should you have a dispute with their data.

TRANSUNION CORPORATION

P. O. Box 390

Springfield, PA 19064-0390

Spouse's Name

Present Home Address

Verification of Present Home Address (copy of Driver’s License, utility bill, or recent statement from a major creditor)

Previous addresses for the last five years, with apartment numbers and Zip Codes

Daytime (Work) Phone Number

Evening (Home) Phone Number

Social Security number

Date of Birth

The Negotiation Method consists of calling the original creditor or collection agency and verifying the account. Sometimes they will tell you they have no record of the account. At that point you obtain that information in writing from them and submit to Credit Reporting Agencies for deletion. Use the "Credit Verification Form" included in this kit. If they verify the account and you know the information is correct you try to negotiate with them to remove it from your credit. If they say yes, then obtain that in writing and submit letter to the Credit Reporting agencies for deletion.

Negotiation may consist of paying in full or a portion of unpaid balances in exchange for deletion. If you do pay, use a Cashier’s Check sent via registered mail, and follow up to make sure they have updated the credit bureaus. This really does take at least 30 days, so allow enough time for the information to be processed.

Helpful Hints: The following will assist you in removing or modifying incorrect negative accounts appearing on your credit report.

• Do not use your own home or office telephone to place calls to Collection Agencies. They will hound you to an early grave with Caller ID, and they are unremittingly nasty.
• Write down the date and time that you called, and most importantly, the name and phone number or extension of EVERYONE you speak with.
• If you mail anything, send it registered mail with Return Receipt requested.
• Get all agreements in writing. We have a blank form for your creditors if they do not provide one of their own.
• Remember, there is no financial incentive for these people to hand out good news about you. You must request, cajole, and relentlessly follow up.

• Contact the creditor and state the following: "My name is I'm calling to verify some information. I only need to know if what I have on the credit report is true."
• Give the creditor the following information off the credit report: Account Number, Date Opened, and Balance (if there is a balance, just say there is an open balance). Now tell the creditor that you are not aware of any past due delinquencies. Ask them if they agree with all that. If yes, see step 4, if no, see Confirmed Accounts. If unable to verify, see Unable to Verify. If they agree, ask them nicely to fax over or mail the information you just confirmed with them. If they can not do that suggest that you send a standard form to them to sign and fax back. (See Credit Verification Form in Forms to Help You) Tell your creditor you need something in writing for your records.

Several accounts or late payments appearing on a credit report within the last 12 months are very difficult to remove with the negotiation method! Here are some tips.

Ask the creditor if these accounts are reported correctly. For example, a creditor may report a 30-day late if the payment was just a few days overdue. If this is the case, get canceled checks from your bank. Ask them where are the payments sent and is there a delay period.

If the creditor is unable to verify the information you have requested, suggest the following to the creditor: If they do not have their own form, that they use for ALL THREE repositories, feel free to use the one in this manual. Look in the FORMS TO HELP YOU Section. Offer the fax the creditor a standard letter stating unable to verify. They will sign and fax back. Make sure to take down their name and extension number for the Credit Reporting Agency to verify via phone, and follow up every day until you get something in writing.

If the creditor says there are delinquencies, let them know how surprised you are and inquire as to how many lates there are showing. Ask if they have any record of contacting you or attempting to contact you for an explanation as to why they were late. Find out what you can. DO NOT DISPUTE AT THIS TIME. Once you know as much as you can about the situation, decide how you will dispute the claim. If you decide to negotiate, call the creditor with your story. See if you can persuade the creditor to understand that you are in the process of buying a home, car or obtaining new credit cards and this is the only thing holding it up. Here are some helpful hints:

The Dispute Letter Method consists of sending letters to the Credit Reporting Agencies disputing the incorrect negative entry in question. Please see sample Dispute Forms attached. If you receive a negative response from the Credit Reporting Agency, don’t get discouraged. They will try to discourage you. They don’t want consumers disputing their information. It makes more work for them, and cuts into their profits.

In your first letter of dispute, you should fill out the "Dispute Form" or "Re-Investigation Form" sent to you with your report, or write a separate letter stating exactly what you are disputing (See Samples and Forms to Help You). Photocopy the letter and send it Certified Mail to the Credit Reporting Agency (or it can be faxed). If they phone you – do not discuss it. You cannot document a phone call. You then will receive the signed certified receipt card. Keep it. They have to respond to your dispute within 30 days. If they don’t they must remove the item in dispute – This is the law.

Once the Credit Reporting Agency receives your dispute they will then TRY to verify the disputed information with the creditor. This is done in writing and the creditors have only 21 days by law to respond. With the bulk of mail the Credit Reporting Agencies and the creditors receive sometimes it is impossible to respond in the time required by law. No response or a late response from the creditor constitutes the removal of the negative item by law. If you keep getting letters within the 30-day periods from the Credit Reporting Agency confirming the negative item is correct, keep disputing the item until it is removed. I know this is time consuming but the inaccuracies will eventually come off. This means you may be sending letters every 30 days until they remove it.

HELPFUL HINTS

• Keep disputing when they respond within 30 days confirming negative items.
• Each letter should be more stern.
• When they don’t respond timely, quote the law or laws about time response on the next letter you send. See laws and Regulations or Sample Dispute Letters attached.
• Be sure to include your name, address, social security number and date of birth on all dispute letters.
• Don’t get discouraged – that’s what they want to happen.
• Don’t take no for an answer.
• Incorrect Negative information must be removed or you can file a complaint – see Consumer’s Bill of Rights for phone numbers and addresses for complaints.

"The Consumer Bill of Rights"

(Appendix A to Part 601 of Fair Credit Reporting Act (FCRA)

A Summary of Your Rights

Under the Fair Credit Reporting Act

The federal Fair Credit Reporting Act (FCRA) is designed to promote accuracy, fairness, and privacy of information in the files of every "consumer reporting agency" (CRA). Most CRAs are credit bureaus that gather and sell information about you -- such as if you pay your bills on time or have filed bankruptcy -- to creditors, employers, landlords, and other businesses. You can find the complete text of the FCRA, 15 U.S.C. 1681-1681u, at the Federal Trade Commission's web site (http://www.ftc.gov). The FCRA gives you specific rights, as outlined below. You may have additional rights under state law. You may contact a state or local consumer protection agency or a state attorney general to learn those rights.

• You must be told if information in your file has been used against you. Anyone who uses information from a CRA to take action against you -- such as denying an application for credit, insurance, or employment -- must tell you, and give you the name, address, and phone number of the CRA that provided the consumer report.
• You can find out what is in your file. At your request, a CRA must give you the information in your file, and a list of everyone who has requested it recently. There is no charge for the report if a person has taken action against you because of information supplied by the CRA, if you request the report within 60 days of receiving notice of the action. You also are entitled to one free report every twelve months upon request if you certify that (1) you are unemployed and plan to seek employment within 60 days, (2) you are on welfare, or (3) your report is inaccurate due to fraud. Otherwise, a CRA may charge you up to eight dollars.
• You can dispute inaccurate information with the CRA. I f you tell a CRA that your file contains inaccurate information, the CRA must investigate the items (usually within 30 days) by presenting to its information source all relevant evidence you submit, unless your dispute is frivolous. The source must review your evidence and report its findings to the CRA. (The source also must advise national CRA’s -- to which it has provided the data -- of any error.) The CRA must give you a written report of the investigation, and a copy of your report if the investigation results in any change. If the CRA’s investigation does not resolve the dispute, you may add a brief statement to your file. The CRA must normally include a summary of your statement in future reports. If an item is deleted or a dispute statement is filed, you may ask that anyone who has recently received your report be notified of the change.
• Inaccurate information must be corrected or deleted. A CRA must remove or correct inaccurate or unverified information from its files, usually within 30 days after you dispute it. However, the CRA is not required to remove accurate data from your file unless it is outdated (as described below) or cannot be verified. If your dispute results in any change to your report, the CRA cannot reinsert into your file a disputed item unless the information source verifies its accuracy and completeness. In addition, the CRA must give you a written notice telling you it has reinserted the item. The notice must include the name, address and phone number of the information source.
• You can dispute inaccurate items with the source of the information. If you tell anyone -- such as a creditor who reports to a CRA -- that you dispute an item, they may not then report the information to a CRA without including a notice of your dispute. In addition, once you've notified the source of the error in writing, it may not continue to report the information if it is, in fact, an error.
• Outdated information may not be reported. In most cases, a CRA may not report negative information that is more than seven years old; ten years for bankruptcies.
• Access to your file is limited. A CRA may provide information about you only to people with a need recognized by the FCRA -- usually to consider an application with a creditor, insurer, employer, landlord, or other business.
• Your consent is required for reports that are provided to employers, or reports that contain medical information. A CRA may not give out information about you to your employer, or prospective employer, without your written consent. A CRA may not report medical information about you to creditors, insurers, or employers without your permission.
• You may choose to exclude your name from CRA lists for unsolicited credit and insurance offers. Creditors and insurers may use file information as the basis for sending you unsolicited offers of credit or insurance. Such offers must include a toll-free phone number for you to call if you want your name and address removed from future lists. If you call, you must be kept off the lists for two years. If you request, complete, and return the CRA form provided for this purpose, you must be taken off the lists indefinitely.
• You may seek damages from violators. If a CRA, a user or (in some cases) a provider of CRA data, violates the FCRA, you may sue them in state or federal court. The FCRA gives several different federal agencies authority to enforce the FCRA:

SAMPLES AND FORMS

• Personal Credit Report Request Form for Equifax

• Personal Credit Report Request Form for Experian (formerly TRW)

• Personal Credit Report Request Form for TransUnion

• Credit Verification Form

• Sample Agency Dispute Letter (1) The First Letter
• Sample Agency Dispute Letter (2) After 15 Days
• Sample Agency Dispute Letter (3) After 30-45 Days
• Sample Agency Dispute Letter (4) After 60-90 Days

• Sample Bad Debt Dispute Letter

• Sample Collection Agency or Charge off Creditor Dispute Letters

Sample Agency Dispute Letter #1

The First Letter

(You can use this as a cover letter to accompany their dispute forms)

(Date)

TRW

P.O. Box 2106

Allen, TX 75013

Dear Sirs,

Upon obtaining a copy of my credit report, I noticed there are inaccuracies being reported. I would appreciate the following items being investigated as soon as possible.

Creditor/ Account #/ Balance/Reason (Not Mine, etc)

(List all accounts)

Furthermore, I would also appreciate a complete updated credit report be sent to me indicating the removal of the erroneous entries. Thank you for your prompt attention.

Yours Truly,

John Doe

(Address)

(SSN)

(DOB)

Sample Agency Dispute Letter #2

(After 15 days, if no response)

(Date)

TRW

P.O. Box 2106

Allen, TX 75013

Dear Sirs,

Per your request, I have contacted these creditors and straightened out the problems. The creditors have advised me to dispute with your office again in order for them to verify with you. Please reinvestigate the following.

Creditor/ Account/ Balance/Reason (Not Mine, etc)

(List all accounts)

Yours Truly,

John Doe

(Address)

(SSN)

(DOB)

Sample Agency Dispute Letter #3

(After 30-45 days, if no response, or if you have talked to the creditors)

(Date)

TRW

P.O. Box 2105

Allen, TX 75013

Dear Sirs:

Your office is falsely reporting information on my credit report and hindering my eligibility for obtaining credit. I am requesting that this information be removed for the following reasons:

Account # Balance

Countrywide 94970884 $0

You show that account is in foreclosure. This is incorrect. This account was paid as agreed. Please investigate and update to "paid as agreed".

City Finance 040550061 $100

You show that I was 30 days late 5 times. This is incorrect. This account was paid as agreed. Please investigate and update to "paid as agreed with no lates".

Chapter 7 Bankruptcy 1116142 $79K

I have never filed bankruptcy Please investigate and delete.

Evidently, if you had truly investigated this information as you indicated to me, you would have received the same response. I believe your tactics of having me do your work is harassment and unlawful under Section 607of the Fair Credit Reporting Act. I am, therefore, giving you written notification to remove the above mentioned items from my credit report IMMEDIATELY, non-compliance, on your part, will result in a formal complaint to the Office of the Attorney General and the Federal Trade Commission for further investigation.

Yours truly,

John Doe

(Address)

SSN

Sample Agency Dispute Letter #4

(After 60-90 days, if not corrected)

(Date)

TRW

P.O. Box 2106

Allen, TX 75013

ATTN: SUPERVISOR

Dear Sir,

You have erroneously reported the following accounts on my credit. I have personally corresponded with these agencies over the last 3 months. They have NO VERIFICATION OF THESE DEBTS WHATSOEVER. These accounts are not mine. I demand that they be removed immediately from my credit or I will file a formal complaint against your office for reporting false information. Had you investigated this matter properly and required proof of these debts, you would have been able to see by the lack of proof provided by these agencies that they are in fact not mine and I demand that they be removed immediately.

Creditor/ Account #/ Balance/Reason (Not Mine, etc)

(List all accounts)

Yours Truly,

John Doe

(Address)

(SSN)

(DOB)

Sample Bad Debt Dispute Letter

International Credit Services

Attn: Fred Young and Thomas Palmer

55 New Montgomery, Suite 205

San Francisco, CA 94105-3728

RE: Account # 11333

Original Creditor: Franklin Bank

To Whom It May Concern,

I hereby dispute this account entirely as not being valid and not belonging to me. I have never opened an account with Franklin Bank. From 6/89 through 2/90 somebody stole and was using my personal information without my consent. Per the Fair Credit Reporting Act I demand verification that this debt does belong to me. If you cannot provide verification of this debt, including my signature for this account, I demand it be removed from any and all credit reporting agencies including but not limited to TRW, Trans Union, and Equifax Credit Services (CBI). I also demand that you do not contact me by telephone regarding this account pursuant to the Fair Debt Practices Act. If you continue to contact me by telephone, I will have my attorney press charges for harassment. Also, since Franklin Bank continues to pursue this erroneous allegation, I have had my attorney include this account in a bankruptcy I recently filed, just to prevent any illegal judgment falsely obtained by a harassing collection agency such as you.

Furthermore, if this matter is not handled immediately and you continue to pursue me or report this on my credit, I will file a complaint with the Attorney General’s office and press charges against your company for falsely reporting information to the credit bureaus and hindering my ability to obtain credit

Sincerely,

JOHN DOE

(Date)

Sample Collection Agency or Charge off Creditor Dispute Letter

Collection Agency or Charge off Creditor

111 Scam Avenue

Fullerton, CA 92632

RE: Account # 399285

Original Creditor: Dr. Hand Squeeze

To Whom It May Concern,

The above account was satisfied back in 1989 with the original creditor. I hereby dispute this account entirely as not being valid and not belonging to us. Per the Fair Credit Reporting Act I demand verification of this debt. If you cannot provide verification of this debt, I demand it be removed from any and all credit reporting agencies including but not limited to TRW, Trans Union, and Equifax Credit Services (CBI). I also demand that you do not contact us by telephone regarding this account pursuant to the Fair Debt Practices Act.

Furthermore, if this matter is not handled immediately I will file a complaint with the Attorney General’s office and press charges against your company for falsely reporting information to the credit bureaus and hindering our ability to obtain credit

Sincerely,

John Doe

(Address)

cc: Dr. Hand Squeeze

Date: ___________________________

To: EQUIFAX

P. O. Box 105783

Atlanta, GA 30348

Attn.: Customer Relations Department

Please send to me, at your earliest convenience, a copy of my credit report. I have listed below the information required, and included an $8.00 check, as you require. Also enclosed is a copy of my driver’s license confirming my current address. Please do not hesitate to contact me should any additional information be required to process this request.

Sincerely,

My current address is:

______________________________________

I have lived here for _____________________.

Home Phone: _____________________

Work Phone: ______________________

Other Information:

Previous Address: ___________________________________

___________________________________

___________________________________

Social Security Number: __________-_____-_______

Date of Birth: ________/_________/________

Date: ___________________________

To: Experian

P. O. Box 2104

Allen, TX 75013-2104

Attn.: Customer Relations Department

Please send to me, at your earliest convenience, a copy of my credit report. I have listed below the information required, and included an $8.00 check, as you require. Also enclosed is a copy of my driver’s license confirming my current address. Please do not hesitate to contact me should any additional information be required to process this request.

Sincerely,

My current address is:

______________________________________

I have lived here for _____________________.

Home Phone: _____________________

Work Phone: ______________________

Other Information:

Previous Address: ___________________________________

___________________________________

___________________________________

Social Security Number: __________-_____-_______

Date of Birth: ________/_________/________

Date: ___________________________

To: TransUnion Corporation

P. O. Box 390

Springfield, PA 19064-0390

Attn.: Customer Relations Department

Please send to me, at your earliest convenience, a copy of my credit report. I have listed below the information required, and included an $8.00 check, as you require. Also enclosed is a copy of my driver’s license confirming my current address. Please do not hesitate to contact me should any additional information be required to process this request.

Sincerely,

My current address is:

______________________________________

I have lived here for _____________________.

Home Phone: _____________________

Work Phone: ______________________

Other Information:

Previous Address: ___________________________________

___________________________________

___________________________________

Social Security Number: __________-_____-_______

Date of Birth: ________/_________/________

CREDIT VERIFICATION FORM

To: __________________________ Re: __________________________

_____________________________ (Name)

_____________________________ __________________________

_____________________________ (Social Security Number)

(Name)

(Social Security Number)

Please verify the following entry to ensure the accuracy of the information listed:

Account Number: _______________________

Date Opened: _______________________

Approximate Balance: __________________

Pay History: ______________________________________________

The above information has been verified as indicated below:

( ) The information is correct, as written above

( ) The information is unverifiable as is has been purged from our system.

( ) We have no record for the above client name, social security number, and/or

account number.

Date Signed: __________________

Printed Name: ________________________________

Signature: ___________________________________

Telephone Number: _______________________________