Dearborn Financing Secrets of a Millionaire Real Estate Investor 2003_4

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Dearborn Financing Secrets of a Millionaire Real Estate Investor 2003_4 53 4 / Working with Lenders How do I get negative information removed from my creditreport? You may find some information on your report that is justplain wrong. Accounts that are not yours, judgments against peoplewith similar names, and duplicate items are ver y common. Someitems are more subtle, such as the fact that a debt is listed as still un-paid when in fact is was discharged in your bankruptcy. Ask the creditbureau in writing to reinvestigate the information. Under federal law,the bureau must reinvestigate and report back within 30 days. Insome states, the law requires a shorter time period. If the bureau doesnot report back within the requisite time period, the item must be re-moved. Communicating with Credit Bureaus Send your letter by certified mail, return receipt re- quested. If you do not get results within the time period specified by your state law or the FCR A, you can write a sterner letter threatening to sue un- der state or federal law. You can also try to contact the creditor directly. Keep in mind that a creditor may also be liable for reporting wrong informa- tion. Before jumping into court, tr y contacting your regional Federal Trade Commission office and your state Attorney General’s Consumer Fraud Department. If you have “bad” items on your credit report, such as late pay-ments, charge-offs, judgments, or a bankruptcy, the credit bureaus canlegally report this information. However, if the information is stated inan incorrect or misleading format, you can still ask the bureaus to re-investigate the information. Sometimes you will get lucky and the bu-reau does not report back within the required time period. In thisevent, the information must be removed.54 FINA NCING SECRETS OF A MILLIONAIRE REAL ESTATE IN VESTOR Disputing Items on Your Credit Report Do not be too specific with your request. For ex- ample, if a bureau reports that you had a judgment against you and it was paid, do not volunteer that information (a record of a judgment rendered and paid off is still worse than no judgment in the first place). Simply state that the information is incom- plete and request that it be reinvestigated. In some cases, it is less work for the credit bureau to re- move the item than to recheck it. What things affect my credit? Credit reports are based on a com- puter model, called a FICO score, developed by Fair Isaac, and Co. (FICO, www.fairisaac.com). Although the FICO formula is not gener- ally known to the public, certain things tend to improve your score, such as the following: • Installment loans (e.g., home mortgage, automobile) that are paid on time • A few open credit lines with low balances • A history of living at the same address • Owning a home Beyond the obvious late payments, judgments, and bankruptcy, there are certain subtle things that lower your score, such as the following: • Too many revolving credit card accounts • Too many inquiries • High balances on credit cards • Too many recently-opened accounts 55 4 / Working with Lenders How can I improve my credit? A good credit score is generallyabove 660. Some loans are so stringent that they require a FICO scoreabove 700. If your score is above 700, you have excellent credit. Thebad news is, if you keep borrowing, your score will fall, even if youare current on all payments. So, in short, use your credit wisely. Youcan check your own FICO score at . If you do not have late payments but want to improve your creditscore, you should • stay away from multiple department store cards—too many open accounts; • bring a copy of your credit report when shopping for a loan— car dealers may run your credit a dozen times in one day of shopping, leaving damaging “inquiries.” • separate your credit file from your spouse’s and remove each other’s names from your credit cards; if you have authorization to use your spouse’s card, it ends up on your credit file, too. C an I get a loan with bad credit? W hether you can get a loanwith poor credit depends on the type of loan. Unsecured loans, suchas credit cards and bank signature loans, usually require a good credithistory. Secured loans, such as home mortgages and car loans, are abit more f lex ...