Picking Up The Pieces: Rebuilding Your Credit After Financia

2. Introduction • Many people experience a financial challenge that destroys their credit. • The good news is that even the worst credit can be salvaged and put your credit score well above average within 12 months. • Here is a plan that will get you back on track.

3. How Your Credit Score is Calculated • Credit scores range from 300 to 850. • A good credit score: around 680. • There are five (5) components to your credit score:

4. How Your Credit Score is Calculated Cont’d.

5. Start Your Emergency Fund • People end up with credit woes for one of two reasons: • Aim to have at least $500 in your emergency fund.

6. Limit Your Spending and Create a Budget • Consider whether the following things are really necessary:

7. Limit Your Spending and Create a Budget Cont’d. • Consider whether the following things are really necessary:

8. Limit Your Spending and Create a Budget Cont’d. • Start thinking about other things you could potentially minimize or remove from your expenses. • Use easily accessible and free resources available to help you develop a realistic budget. • Review your budget weekly and you'll be well on your way to fixing many troublesome money habits.

9. Increase Your Income • Consider your free time now that you have eliminated things like cable TV or internet access. • Spend free time generating additional income by getting paid for doing something you enjoy. • It doesn't need to pay a lot to make a significant difference. This is especially true if you've given up an activity that costs money for a new activity that earns you money!

10. Eliminate Your Debt • There are 2 basic strategies to eliminate debt: “Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” Ogden Nash

11. Tips for Eliminating Debt • The only debt you should have is debt to generate income, like a mortgage on a rental property that provides a positive cash flow. • Avoid creating new debt while you’re busy eliminating existing debt! “It is the debtor that is ruined by hard times.” Rutherford B. Hayes

12. Rebuild Your Credit • There are three components to rebuilding credit:

13. Rebuild Your Credit – Minimize Negatives • Two main factors help to minimize negatives:

14. Rebuild Your Credit:Have the Negatives Removed • Rebuilding will take some time, but if you're aggressive, you can eliminate any negative information on your credit report, even a bankruptcy.

15. Rebuild Your Credit – Steps for Having Negative Information Removed • Get a current copy of your credit report. • Analyze your credit reports. • Write letters to the credit bureaus disputing the information. • Send the letters by registered or certified mail. • Keep excellent records. • Wait. • Review your results. • Take the next step. • Repeat.

16. Step 1. Get a Copy of Your Credit Report • The Fair Credit Reporting Act stipulates that you can receive a free copy of your credit report from Equifax, TransUnion, and Experian every year. • https://www.annualcreditreport.com is the official place to get your free copies.

17. Step 2. Analyze Your Credit Reports • Negative information in order of seriousness: • Bankruptcy • Foreclosures • Repossessions • Loan Defaults • Court Judgments • Collections • Past Due Payments • Late Payments • Credit Rejections • Credit Inquiries

18. Step 3. Write Letters to the Credit Bureaus Disputing the Information

19. Step 4. Send the Letters by Registered or Certified Mail • This is important as you will need proof of when the letters were received by the credit bureaus.

20. Step 5. Keep Excellent Records • Keep copies of all your letters, the responses you receive, and the receipts from your mailings. • Also keep detailed records of any phone conversations. At a minimum, you should record the time, date, to whom you spoke, and what was discussed.

21. Step 6. Wait • After the credit bureaus receive your dispute, they are required to do the following:

22. Step 7. Review Your Results • There are only three possibilities:

23. Step 8. Take the Next Step

24. Step 8. Requesting Method of Verification

25. Step 8. Requesting Method of Verification Cont’d.

26. Step 8. Requesting Method of Verification Cont’d.

27. Step 8. Requesting Method of Verification – Next Step

28. Step 8. Requesting Method of Verification – Next Step

29. Step 9. Repeat • If you are unable to remove items from report, re-submit dispute with any of the following reasons:

30. Step 9. Repeat, cont’d. • I didn't pay late that month. • Incorrect amount • Incorrect account number • Incorrect original creditor • Incorrect charge-off date • Incorrect date of last activity • Incorrect balance • Incorrect credit limit • Incorrect status - there are about 20 of these. • Incorrect highest credit usage

31. Credit Repair Companies

32. Debt Settlement • If you're way behind on your unsecured debt (credit cards) payments, it is possible to have it reduced dramatically by debt collectors. • Did you know that debt collectors are authorized to accept less than the full amount as payment in-full? • This amount can be as low as 25%. “Ten million dollars after I’d become a star I was deeply in debt.” Sammy Davis, Jr.

33. Suing Credit Bureaus • If credit bureaus are in violation of the law, they can be fined up to $1,000 per violation. They are rarely willing to go to court; they will almost always settle just before going to the judge. • The trick is, you have to show up to court. The credit bureaus will always show up, just to see if you show up. • Rest assured, they will settle 99% of the time and agree to remove all the negative information.

34. Create New Credit

35. Conclusion • Having bad credit is usually either the result of bad decisions or not having an emergency fund to take care of a financial challenge. • It is important to remove the cause(s) of your credit woes. This likely means you need to increase your income and decrease your debts and your spending. • Establish your emergency fund, even if it's just $500 to start!

36. Conclusion • Focus on removing the negative items from your credit report. • Get new credit, no matter what it takes, and guard that credit with your life. • Get started now! The sooner you start the sooner you reap the benefits. “Who goeth a borrowing. Goeth a sorrowing.” Thomas Tusser

37. We hope you enjoyed your Special Report! Curtis Roese is an experienced professional with extensive experience in personal finance and small business matters. Curtis writes and publishes articles, courses, guides and special reports on his personal finance blog. Common Cents Wisdom is a website with hundreds of informative articles, special reports, resources to assist you with all of your financial concerns and a free monthly newsletter. Sign up to receive your free eBook "Common Cents" and get started today on the road to financial freedom!

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