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HOW TO NEGOTIATE AND SETTLE YOUR DEBTS WHILE RESTORING YOUR CREDIT

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Contents

1. How to get, read, and understand your credit report..................................................................................................132. Credit brueau coding system..........................................................................................................................173. Lifestyle changes....................................................................................................................................274. How to rebuild your credit rating....................................................................................................................315. Techniques for dealing...............................................................................................................................with bill collectors 356. Determining your financial status....................................................................................................................437. How and when to make a settlement offer..............................................................................................................498. How to negotiate with a creditor.....................................................................................................................539. Techniques for maintaining a good credit rating......................................................................................................6110. Sample letters to credit bureaus, original creditors, collection agencies, and a state-by-state guide of statute of limitations.....................65

Chapter One

You may ask why you need your credit report in order to negotiate your debts. The answer is really simple. You may not know every creditor who is reporting negative information to your credit bureau reports. Additionally, each creditor's address and telephone number will be listed on your report; so it is vital you have a CURRENT copy of your credit reports. The three major credit bureaus are: TransUnion, Equifax, and Experian.

When Congress passed the Fair Credit Reporting Act, they required each of the credit reporting agencies (the credit bureaus) to provide us with a free copy of our credit report once each year.

To obtain a copy of your credit report you must request a copy from each of the three major credit bureaus. You will receive a free credit report, but not your credit score. No need to worry about your score at this time; as you will be making significant changes in a relatively short period of time which will enhance your overall credit scores.

To receive your free credit report, go to www.Annualcreditreport.com or you can contact each bureau separately. Their addresses are:

TransUnion—www.TransUnion.com 1-800-916-8800 P.O. Box 1000 Chester, PA 19022

Equifax—www.Equifax.com 1-800-685-1111 P.O. Box 74021 Atlanta, GA 30374-0241

Experian—www.Experian.com 1-888-397-3742 P.O. BOX 2104 ALLEN, TX 7501

Ok, you have ordered and received your credit reports and perhaps, in some cases, it looks hopeless. You may ask yourself: "Is it worth it to even try?"

"I'll never get my credit in good shape again so why go through this process?" Don't be discouraged. You wouldn't have bought and be reading this book if you didn't at least HOPE to get your life back on track. Yes, it will take TIME, EFFORT, DILLIGENCE, DESIRE, and some MONEY on your part; but re-establishing your good credit rating will save you thousands of dollars in interest payments alone on any future purchase and that is if you can even get a lender to extend credit to you.

I strongly recommend you start a savings account or better yet, a trust account you cannot access unless there is a dire financial emergency. This is the safest way to insure that the money you set aside to settle your debts and improve your credit score are used for those purposes ONLY! Lets be honest, if we had been more diligent and better money managers, none of us would ever have been in a position to need our debts settled and our credit scores improved.

All right now lets learn how to read and understand, the credit reports, so you can take decisive action TODAY! You know about TransUnion, Equifax, and Experian, but you may have also heard you have a FICO score and perhaps you wonder what it means. FICO stands for Fair Isaac and Company. Fair Isaac is an INDEPENDENT company that developed software programs for banks and other lenders to quickly identify what type of credit risk you may be. Credit scores range from 300-900 and the higher the score, the better risk you are and therefore, lenders are more willing to extend credit to you. It is important to know that each of the three major credit bureaus have their own scoring system and that is why when your credit report is run, you will see three different scores. That is because each system rates your credit information a little differently. TransUnion uses the Emperica system, Equifax uses the Beacon system, and Experian uses Experian/Fair Isaac system. Your credit score is determined by several factors including: Income, how long you have had the same job, how and when you pay your bills, how much credit you currently have, the balances available to you, what percentage of your credit you are using (30% or less of your available credit is most desirable for a favorable credit score); length of time you have had credit, the TYPES of credit you currently have, and the number of inquiries on your report

Chapter Two

Here is a complete list of the credit reporting agencies coding so you can better understand what all those numbers next to the items contained in your credit reports mean. The list below lists the score factors and/or the reason for the risk scores assigned to your credit profile. These risk scores are the ones used by TransUnion, Equifax, Experian, and Fair Iaasic as well as for UniQuote a mortgage credit bureau that is available through TransUnion for mortgage companies.

CODE NUMBER REASON

1. - Amounts owed on accounts is too high 2. - Level of delinquency on accounts 3. - Too few bank revolving accounts 3. - Proportion of loan balances to loan amount is too high 4. - Too many bank or national revolving accounts 4. - Lack of recent installment loan information 5. - Too many accounts with balances 6. - Too many consumer finance company accounts 7. - Account payment history is too new to rate 8. - Too many inquiries in last 12 months 9. - Too many accounts recently opened 10. - Proportion of balances to credit limits is too high on bank or other revolving accounts 11. - Amounts owed on revolving accounts is too high 12. - Length of time revolving accounts have been established 13. - Time since delinquency is too recent or is unknown 14. - Length of time accounts have been established 15. - Lack of recent bank revolving information 16. - Lack of recent revolving account information 17. - No recent non-mortgage balance information 18. - Number of accounts with delinquency 19. - Too few accounts currently paid as agreed 19. - Date of last inquiry too...