Credit Reporting - How To Get The Financing You Need
An old business adage has been "Business' that fail to plan, plan to fail"
The only thing about it is. This is not only a business adage. This should be a way of life for every person today.
I have worked as a Credit Counselor for many years. Helping people, the way I was helped. At one point, many years ago. I found myself with a massive credit problem. I was not using my credit smart. It took me many years to get out of that problem. I had to make many sacrifices. As many of you out there are doing today.
Today, there are many opportunities. The entrepreneurial spirit is alive and well. And the dreams of today have not changed dramatically from years ago. We all want the level of security that owning a home provides. We all want the freedom of being self employed. Becoming your own boss. And the feeling of being in charge of your own life, and destiny.
Unfortunately, these opportunities cost money to start. So often, the only option to getting started in any of these opportunities means, we have to borrow money from someone. Whether it is the Small Business Association (SBA), your bank, or some private party. Often though, there is a problem.
Qualifying.
It doesn't matter how business savvy you are. How creative you are. If you don't have the start up capitol, or the money to keep yourself going while you build your business, it just is not going to happen. And no-one, is going to loan money for enthusiasm.
The days of 100% financing, are long gone. The days of qualifying for financing by stated income, will not be seen any time soon.
To borrow money, you have to understand. There are many different kinds of money. The kind of money, that you can qualify for. Is dependent upon how good your credit is. Realistically speaking, if you have a credit score of 680 or less. You are left out in the cold. As no one, even the hard money lenders, will lend you money.
There is some good news though. For those of us, who have less than pristine credit. If you plan well, and follow your plan. The reality of owning your own home, can come true. The dream, of having your own business, can become your reality.
Here is how you do that. And keep in mind. Utilizing the tips I present to you here, you can easily, raise your credit score 200 or more points, within a few short months.
Acquire all three of your credit reports
Dispute, Dispute, Dispute
Take care of any remaining negative items on your report
Start building your credit
I will explain all of these steps a little more.
First, you have to get a copy of all 3 of your credit reports. You will need all 3, as some of the items that will be on one report, may not show up on the others. So, to get a full picture, you need to get all three. Plus, only with all three, can you get an idea of what your true credit score is. When you go for financing on a house. They will pull all three reports. Each report will have a different score, based on the information on that report. They will, in most cases, discard the high score, and the low score. And use the one in the middle. And this is the overall score they will use.
Second, Dispute, Dispute, Dispute. Your reports, will list your good credit references. Then it will list all of the bad credit references. Items that were defaulted on, have gone to collections, or even gone to judgments. If you purchase your credit reports from an online service, they will usually have a process to dispute the negative items on your report. You may be able to get some, or all of them dropped. They may be dropped because they are such an old debt, that they have given up collecting on it. Or it may be over 10 years old, which it should drop off automatically. Or, the creditor, simply could not find the paperwork for the debt. And was unable to respond in a timely fashion.
A sobering fact, which proves the importance of pulling your credit reports, is that up to 90% of all credit reports. Have errors on them. It is bad enough to be penalized for your own problems. You don't need to be penalized for someone else's issues.
Once you have disputed your negative items. The items that remain, you can work on clearing up. Contact the agency that is listed. If the agency is the one who issued the credit, you will have to negotiate the payment with them. However, if the creditor listed, is a collection agency? You now have some leverage to get out from this debt, for a fraction of the cost of the original debt.
Most creditors will pursue you for a while, trying to collect on the debt. However, at some point and time, they give up. And in steps the collection agency. They purchase the right to collect on these debts, from the original creditor, for a very small fee. Most of the time, for only about.05 -.10 cents on the dollar. So, if you have an original debt of $500 with a creditor. When the collection agency came along, they bought the debt for $25-$50. You can contact the collection agency, and negotiate a payment of maybe $100 to satisfy this debt. And most of the time, if it is an old debt, they will be glad to do so.
However, when dealing with a collection agency, you need to negotiate what they will do about their entry on your credit report. You can request from them, and you can ask this in writing from them, that they will either remove it entirely. Or better, get them to change the status, to paid in full. Then, the item is changed from a negative item. To a historical item. It is not good, or bad. It is simply a credit account that was paid in full, and is now closed. Which is much better, than them simply removing the item from your report.
Once you have removed as many of the negative items as you can from your report. You can start to build your credit again. Sad to say, credit cards were very easy to get, before this economic hick up our country has been experiencing over the last few years. And even considering that credit is harder to get today, there are still some cards that are easier to get, than others. For example. Some department store cards are relatively easy to get. The easiest cards, by far, to qualify for. Are gas cards. Your local gas stations will have credit applications at the station. Simply pick one up, and fill it out. You can even apply for some of the secured credit cards. As long as you use them, and pay your bill on time. They will report your good payment status to the credit bureaus.
Don't over use the cards, and get yourself into trouble. Use them. Spend $20-$50 dollars. Then pay them off at the end of the month. Stay ahead of them. Don't put so much on them, that you can not pay them off each month. Otherwise, you start paying interest, and once you are on that ride. It is very hard to get off.
Now, one quick note about building your credit. As you look at your credit file. There will be an area of the report that lists credit inquiries. There are two kinds of inquiries. Soft, and Hard. Soft inquiries are credit checks that have been run on you. For the purpose of a job application, or rental application. This is simply an inquiry, to judge if you are in trouble financially, and to determine if you are responsible. These do not affect your credit rating. A hard inquiry is one that is made by a company who is trying to determine, if they will extend you credit. Hard inquiries will affect your overall credit score. If they see you are applying for several loans, or cards within a short period of time. A creditor may view this as a red flag. That is why you need to remove as many of the negative items from your files. Before you attempt to build your credit again. This will ensure that you will have the best chances of being approved for your early credit accounts. And you will be able to spread out the cards you are applying for, to 1 per month. Till you have a little credit history built up. After 3 or 4 months, you can apply for the more difficult cards, like your bank cards. By this time, your credit rating will have increased substantially. Making it much easier to qualify, for the loans with the lower interest rate.
