Oct 19 2007
My Credit Sucks!
Yes it does! I had a past client tell me yesterday that “that’s the American way”. I do not know if that is the true but I will tell you that this year I have personally pulled over fifty 400 FICO score credit reports. The scale runs from 300-850. 300 sucks, 850 is awesome. To give you a point of reference, when we were the preferred lender to Oakwood Homes we would pull credit on 600-700 people per year and in 2001 if we saw one 400 score that was amazing.
What’s happened?????????? Who cares!!!!!!!!!!!!!!!!!
What we do care about is getting your score repaired. You must improve your credit score if you are going to get a mortgage today. All the bad credit score programs are gone. What is the first step?
Step 1: Pay your bills on time!!! If you have bad credit you have very few options. One of the options you lose is the ability to have disputes over your credit. You have bad credit and start paying on time; great! Than you get a bill from a department store on an item you returned. What do you do? “Well, I’m not paying that”. What happens? They show you as a late pay; more bad credit. You say “wait I have an excuse”. Yes you do but I don’t believe you because your credit sucks! Now, I am not saying you should pay for an item that was returned, what I am saying is that you need to make a payment while you are disputing the charge. Is that fair? No but your credit sucks!
Step 2: Get help from a FICO score optimization company, not a credit counseling company. What is the difference? A credit score optimization company is going to tell you the things you need to do to raise your score. Paying off old collections could hurt your score because when you pay it off it brings old news to current news. A five year old collection paid today re-sets the clock to today, now it is a current problem. Make sense? No, not really but that is what is so confusing about credit scores and really cleaning up your credit.
It also clouds the ethical question of “I borrowed it, so I owe it”. What do I mean by that? Sometimes it is better to have a collection remain old or fall off your credit report instead of paying it. They fall off in 7-10 years. Is it better to have a high score or to have paid everyone? That is your call but if you are coming to me for a mortgage I vote for a high score.
Now why did I say to avoid credit counseling companies? First the disclosure, credit counseling is always good, we never know too much, however, many credit counseling companies help a consumer by getting your current payments reduced. In other words they get Sears to agree to take $50/month instead of the required $100/month. That can be a help but what they do not negotiate is Sears will take less money but they still report you late every month to the credit bureaus. So you are now being responsible and making payments but your FICO score is still dropping.
Two credit optimization companies I use are Veracity Credit Consulting and Advantage Credit. Post,call or email me if you need help.
Jeff, this was a great article, I would just like to add that whether your 3 months or a year away from good credit, get started now, yes you can do these things on your own, however, it is time consuming and if you don’t know the laws of credit reporting you can find yourself going in continous circles. Feel free to check out any of the credit optimization companies that offer free up front consultations.