I put up a prospective client the other day. The reason I call him a prospective client is that, like many people, he has less than ideal credit. Like many people, it was not his fault.
You see, this young man served his county by completing two tours in Iraq. He returned home to his young wife, only to find that she was ill and sadly passed away.
He took care of her and stayed by her side until the end. His job suffered and he was on the list when the layoffs occur. Medical bills piled up, house payments piled up, and he lost his home.
He couldn’t find a place to rent or buy due to bad credit and the fact that he didn’t have a job, so he bought a truck and lived in it. He made that van his library and his office. He worked, went to school, and got a degree, but he still had bad credit.
It was then that we met. He knows a friend of mine, and my friend thought he could help him. I invited him to dinner. He wouldn’t let me pay until I made him understand it was a business meeting and not a charity.
I started by telling him to write a letter, explaining why he has bad credit, and send it to the credit bureau. I told him to have the credit bureau put the letter on his credit report. Then I told him to request a free annual credit report.
I suggested that he examine the report very carefully and dispute anything that did not seem correct, such as debts he does not recognize. You should dispute these debts by writing a dispute letter. I told him that this report would not show a credit score, but it would show the information that is used to calculate your credit scores, from the three credit bureaus, TransUnion, Equifax, and Experian.
I told you that a Fair Isaac Corporation (FICO) score ranges from 300 to 850. So I wanted you to know that a credit score starts to get questionable when it drops below 650. A credit score is divided into the following areas:
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Payment history 35%
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Outstanding debt 30%
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Length of your credit history 15%
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Types of credit 10%
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Work history and identity
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Consultations made on credit within fourteen days.
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How long did it take to pay off debts in the past?
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Late payments
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Bankruptcies, foreclosures, and bonds
The following are some of the things I told you to do to start repairing your credit:
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Pay rent and other bills in advance
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Don’t take out extra credit cards
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Pay two months rent as a security deposit, instead of one month
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Get a roommate
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Pay with direct deposit
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Get recommendations from employers and other companies you’ve bought from
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Use a credit repair company to validate debt, prevent providers from reporting past bad debts and questionable accounts. Some credit repair companies are Lexingtonlaw.com, Skyblue, creditrepair.com, and Ovation.
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Find a good mortgage broker
Lastly, it usually takes about two years to do the things listed above before your credit is repaired. When someone with less than ideal credit is ready to buy a home, they should try to buy the home through a company, such as American Rent To Own. This way they could rent and then buy the house. American Rent To Own allows part of the rent to be used for the purchase of the home.
