Table of Contents - Good Credit is SexyIntroduction.......................................... 1 Section I: The Basics of Credit........................3 Chapter 1: How Does Credit Affect You?.................5 Joanne's Story.........................................5 Everyone Has a Credit History/Rating...................5 Three Big Filing Cabinets:The Credit Bureaus...........6 Who Regulates the Credit Reporting Agencies (CRAs)?....7 Chapter 2: How to Build Credit if You Don't Have Any...9 Steve's Story..........................................9 No Credit is the Same as Bad Credit....................9 Situations Ripe for Building Credit...................10 Before You Apply Yourself.............................10 Four Ways to Add Positive Credit to Your Credit Report.11 Credit Lines That Won't Help..........................12 Section II: Your Credit Report........................13 Chapter 3: Obtaining Your Credit Report...............15 Susan's Story.........................................15 Why Would You Want to Obtain Your Credit Report?......15 Contact Information for the Three Bureaus.............17 Merged Credit Reports.................................18 Innovis, the 4th Credit Bureau.............19 Other Credit Bureaus..................................20 Chapter 4: Analyzing Your Credit Report...............23 More of Susan's Story.................................23 What Does All That Information Mean?..................23 Each CRA Has Its Own Information and Layout...........24 Those Ugly Blemishes on Your Credit Complexion........24 How Long Do Negative Items Stay on Your Credit Report.27 Chapter 5: Credit Scoring.............................29 John and Marie's Story................................29 What is a Credit Score?...............................29 What Exactly Factors into Your Credit Score?..........30 Things You Can Do to Improve Your FICO Score..........34 Federal Government Publications.......................35 Usinge Your Credit Score to Predict Behavior..........35 Section III: Credit Cards.............................37 Chapter 6: Credit Card Types..........................39 Wayne's Story.........................................39 Which Card Should You Get?............................39 Basic Credit Card Types...............................40 ATM Cards and Debit Cards.............................42 Contacts for Credit Cards.............................44 Chapter 7: Good and Bad Deals in Credit Cards.........45 More of Wayne's Story.................................45 Factors to Consider...................................45 Tips for Cutting Your Credit Card Expenses............49 Students Beware!......................................50 Chapter 8: Making Purchases with Credit Cards.........51 William's Story.......................................51 Credit Cards vs. Debit Cards..........................51 Additional Info When Making a Credit Card Purchase....52 Using a Credit Card as a Check Guarantee..............53 Surcharges............................................54 Charge Minimums ......................................54 Reservation Guarantees................................55 Shipping and Payment..................................55 Billing Due Dates.....................................55 Payments Via Automatic Withdrawal.....................56 What to Do When Merchants Aren't Following the Law....56 Chapter 9: Billing Errors and Overcharges.............57 Mischa's Story........................................57 The United States Fair Credit Billing Act.............57 Act Quickly to Dispute Billing Errors and Overcharges.58 Tips to Remember When Disputing Errors................59 The Next Step:Asking for a Credit in Writing..........59 What if You Paid Your Bill in Full Before Noticing an Error...60 Unauthorized Charges..................................60 Section IV: Mortgages.................................63 Chapter 10: Your Credit and the Mortgage Approval Process.....65 More of Joanne's Story................................65 Qualifying:A Sure Sign of Sex Appeal..................65 Putting Your Best Bikini Forward......................66 What Income Can You Count?............................67 What Debts Count Against You?.........................68 The Dreaded Debt-to-income Ratio......................69 Financial Stability...................................70 Cash in Savings.......................................70 Qualifying When Your Application is a Tad Tarnished...71 If You've Had a Bankruptcy............................72 Chapter 11: Bankers Versus Mortgage Brokers:Which to Use?....73 Josh's Story..........................................73 Who Has the Better Deal?..............................74 Bankers...............................................74 Brokers...............................................75 Chapter 12: Mortgage Costs............................77 Don and Ann's Story...................................77 Money for Closing Costs and, O Yeah, a Down Payment...78 The Costs of a Loan...................................78 Other Fees You Likely Will Be Charged for a Loan......78 Fees Profiting the Mortgage Company...................81 The Role of the Loan Officer..........................81 Is Your Loan Officer Jacking Up Your Interest Rate?...84 Locking Down Your Interest Rate.......................84 Buying Down the Interest Rate.........................85 Truth in Lending......................................85 The Uniform Settlement Statement......................86 Chapter 13: Second Mortgages..........................87 Norma's Story.........................................87 What is a Second Mortgage?............................87 Types of Second Mortgages.............................87 Why Would You Want a Second Mortgage?.................88 Are Second Mortgages a Good Idea?.....................88 What Kind of Credit Do You Need?......................88 Section V: Other Types of Loans.......................91 Chapter 14: Automobiles...............................93 Martin's Story........................................93 Rule #1...............................................93 The Variables.........................................93 Financing Options.....................................95 Leases................................................97 Payment Shaver Loans.................................100 Financing Wisdom.....................................100 Chapter 15: Student Loans............................101 Esteban's Story......................................101 Types of Student Loans...............................101 Applying for Student Loans...........................102 Eligibility for Student Loans........................104 Defaulted Student Loan Information...................105 Repaying Student Loans Held by the U.S. Department of Education...106 Statute of Limitations...............................107 Online Information...................................107 Section VI: Protecting Your Credit...................109 Chapter 16: What You Can Do to Protect Yourself......111 Jennifer's Story.....................................111 Why Should You Protect Your Credit?..................111 How You Can Protect Your Credit......................112 Chapter 17: If You Are a Victim of Identity Theft....119 Michael's Story......................................119 What to Do if You Are a Victim of Identity Theft.....120 If Someone Fraudulently Changes Your Address.........123 If Your Social Security Number Has Been Misused......123 If Someone Is Making Phone Calls in Your Name........124 If Your Driver's License Number Has Been Misused.....124 Other Identity Theft Resources.......................124 Chapter 18: Divorce and Your Credit..................125 Jack's Story.........................................125 A Divorce Decree Does Not Relieve Joint Debt.........126 Myths About Divorce Decrees..........................126 What Could Jack Have Done Differently?...............127 How to Protect Your Credit During a Divorce..........128 Section VII: Over YourHead in Debt...................131 Chapter 19: Collection Agencies......................133 Carl's Story.........................................133 Your Rights When Dealing with a Collection Agency....133 Common Collections Tactics and Rebuttals ............135 Chapter 20: Overwhelmed With Debt....................137 Jane's Story.........................................137 You're Not Alone.....................................139 Things To Do if You Are Overwhelmed With Debt........139 Chapter 21: Negotiating Your Debts for Less than You Owe..143 John's Story.........................................143 Which Debts Are Negotiable?..........................144 Statute of Limitations...............................145 The Effect on Your Credit............................147 Getting Ready to Negotiate...........................147 What Makes a Creditor Say 'Yes' to a Debt Settlement?.150 What Makes a Creditor Say 'No' to a Debt Settlement?..151 How Much Should I Offer?.............................151 Repayment Plans......................................153 Other Negotiation Tips...............................156 Negotiate Your Credit Rating.........................157 Writing the Offer....................................159 Tips on Payment......................................160 Some Legalities......................................161 Tax Consequences of Debt Settlement..................162 Chapter 22: Nonprofit Credit Counseling Services.....163 Rachel's Story.......................................163 Consumer Credit Counseling Services..................164 Alternatives to CCCS.................................165 Beware of the Wolf in Sheep's Clothing!..............166 "Nonprofit" Doesn't Mean No One Makes Money..........166 Debt Relief Companies................................167 Debt Settlement/Debt Negotiation Companies...........167 Chapter 23: Bankruptcy...............................169 Elaine's Story.......................................169 What Elaine Could Have Done Differently..............170 Can YOU Avoid Bankruptcy?............................170 Chapter 7 Bankruptcy.................................170 Chapter 13 Bankruptcy................................175 Chapter 24 - How to Budget...........................179 Randy and Val's Story................................179 So What's the Secret?................................180 Finding Extra Dollars in Your Current Income.........182 Comparison to the Average Person's Expenditures......184 And the Money Left Over?.............................184 Other Online Resources...............................185 Section VIII: Repairing and Rebuilding Your Credit...187 Chapter 25: Repairing Your Credit....................189 Eduardo's Story......................................189 Can You Really Fix Your Credit?......................189 Basic Strategy.......................................190 If a Removed Item Comes Back onto Your Credit Report.198 Specialized Credit Repair Techniques.................199 Federal Government Information Sources...............199 Chapter 26: Erasing Credit Inquiries.................201 Simon's Story........................................201 When Is It Worthwhile to Get Inquiries Removed?......201 Permissible .........................................202 Basic Strategy.......................................202 Chapter 27: Credit Repair............................205 Marlena's Story......................................205 Do Credit Repair Agencies Work?......................205 Credit Segregation:Is It Legal and What is It?.......206 How Do They Do It?...................................206 Consumers Beware.....................................207 Problems With a Credit Repair Agency?................207 Marlena's Solution...................................208 Chapter 28: Debt Validation..........................209 Judy's Story.........................................209 Debt Validation:The Ultimate Secret Weapon...........209 Original Creditor vs. Collection Agency..............211 Step-by-Step Process.................................211 Chapter 29: Vacating a Judgment......................213 Marianne's Story.....................................213 Can a Judgment Be Overturned?........................213 Some Definitions.....................................214 Prepare Your Motion and Declaration to Vacate........214 File the Paperwork...................................215 Notify the Plaintiff.................................216 What If They Offer to Settle Out of Court?...........216 What Happens at Court?...............................217 What Happens When You Win?...........................217 Chapter 30 Ð Suing Creditors, Collection Agencies and Credit bureaus who violate your rights...219 Shirley's Story......................................219 Will This Really Work?...............................220 I'm Pretty Intimidated by the Court System...........220 So Who Can You Sue and What Can You Sue For?.........221 How Do You Prove Harassment?.........................225 Filing Suit..........................................226 The Importance of Documentation......................229 Glossary.............................................231 Appendix 1: Fair Credit Reporting Act................237 Appendix 2: Fair Credit Billing Act..................311 Appendix 3: Fair Debt Collection Practices Act.......319 Appendix 4: State Statutes of Limitations............331 Appendix 5: State Statutes of Limitations: Judgments.333 Appendix 6: State Laws Relating to Credit............335 Appendix 7: Sample Letters...........................353 Requesting the Removal of Inaccurate Information.....354 Requesting the Removal of Inaccurate Information #2......356 Getting the Credit Bureau to Update Bankruptcy Accounts..358 Follow-Up After Initial Contact with the Bureau Contact..359 Requesting the Removal of Inquiries..................361 Credit Bureau Verification Procedure Request.........362 An Agreement to Compromise Debt......................364 Acceptance of Verbal Offer (Debt Settlement).........365 Counter Offer (Debt Settlement)......................366 Unsolicited Offer....................................367 Settle With Your Credit Card Companies...............368 Cease and Desist to a Collection Agency..............369 Debt Validation......................................370 Debt Validation Follow Up Letter to a Collection Agency..372 After the Collection Agency Fails to Validate Your Debt/The Letter to Send to the Credit Bureaus..373 Getting the Original Creditor to Verify Debt........ 375 Asking ChexSystems to Remove a Listing...............377 Notice of Intent to File a Lawsuit...................378 Request for Credit Report If You Were Denied Credit..380 Request for Credit File from Innovis.................381 Request for Credit Report If You Are Buying One......383 Remove My Name from Mailing List.....................384 Contact Your Credit Card Companies...................385 Appendix 8: Sample Legal Documents..................387 Motion to Vacate.....................................388 Basis of Lawsuit.....................................390 Appendix 9: FTC Opinion Letters.....................393 The Cass-Lefevre letter..............................394 The Wollman letter...................................396 Appendix 10-Budget Worksheet.........................397 Index................................................399 |
