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					                “Credit Restoration”
         A Guide to Repairing Credit Scores
                  Daniel Dobbs….Sr. Loan Officer
                  American Commerce Mortgage
             (949) 250-3981

                        Dan (949)
11/15/2012                                                      1
                            250-3981 ..Copyright Apr.15,08
• Daniel Dobbs; 24 yrs. as a loan consultant
• Professional public speaker. Available for speaking
  engagements at office meetings and trade assoc.
• Closed over 1,000 personal transactions
• Brokers & Notary License
• B.A in Communications from CSUF…
• Published writer, photographer
• Have produced 4 RE videos & 4 highly ranked
  (Google) Websites
                   Dan (949)
11/15/2012                                                 2
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             Additional Webinars
• 203K Financing… A Guide to Re Hab Lending
• “Credit Restoration” …A 90 Day Guide to
  Higher Credit Scores

• “Attracting Buyers to your Website”… A
  Guide to Google Website Promotion\

 “The Specifics of “Reverse Mortgages”

                 Dan (949)
11/15/2012                                               3
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             Today's Objectives
• Start Thinking about credit as a process vs. an
• Show the inside workings of a rogue industry
• Develop some strategies for limiting damage
• Teach you to “play the game”& lower the
  frustration… credit is an emotional issue
• Provide you with a hard ,applicable
  information that you can use RIGHT NOW!
                 Dan (949)
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              Dan (949)
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             Dan (949)
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               Dan (949)
11/15/2012                                             7
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             The Cost of Bad Credit (1)

• Lack of available of credit “HELOC” .. is cut off
• “Universal Default” ….HOW STUPID IS THIS?
• Cost of Credit.. skyrockets
• If you are late with “MC” ALL unsecured
  creditors will jack up your rate 31 %
• Embarrassment.. Harassment… Inability to

                     Dan (949)
11/15/2012                                                   8
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             The Cost of Bad Credit (2)

• Loss of Security Clearance (Aerospace
  Engineers, Military, Police)
• Lifestyles are lost…
• Marriages Fail ..Kids are uprooted...
• Higher car insurance rates (not in Calif. –yet)
• Higher Homeowner rates (not in Calif. -yet)

                    Dan (949)
11/15/2012                                                  9
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             Free Credit Reports
• California law entitles consumers to one
  CREDIT REPORT per year… per bureau… “
• Log on.. and you’ll be steered away from the
  “free” to every service the bureau is selling
• Each bureau uses a unique reporting “format”
• Typically bureaus only supply minimal data
  on reported accounts, (i.e. no addresses or
  contact phone #s for current & past creditors).
                 Dan (949)
11/15/2012                                               10
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                 Risked Based
             (FICO) Credit Scoring?
• It’s a “Scoring Model” to objectively evaluate all the
  of information in your credit file.
• Most creditors report to only 2 bureaus (cost)
• Experian (90%) TransUnion (70%) Equifax (30%)
• Each scoring model analyzes & balances pieces of
  credit info to assess the risk for repayment of future
• It’s a “Snapshot” of your credit file; at a given point
  in time. It is your “Financial DNA”

                   Dan (949)
11/15/2012                                                 11
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    What Credit Data Is Analyzed by
      the Credit Scoring Model?
• Past Payment History - approx. 35% of weight
      – Includes information from public records on
        bankruptcies, foreclosures, tax liens district
        attorney , etc.
•   Debt Capacity vs. Debt Utilization – 30% weight
•   If balances are “maxed” your score is lower
•   Length of Credit History – 15%
•   Type (Install vs secured) 10%
•   Applications for New Credit: “Inquiries” 1-10%
                      Dan (949)
11/15/2012                                                    12
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Chase Bank Credit Score Simulator

             Dan (949)
11/15/2012                                           13
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    Score vs Odds of Mortgage Default
        Below 600                       8 to 1

        620 - 659                       26 to 1

        660 – 679                       38 to 1

        680 – 699                       55 to 1

        700 – 719                       123 to 1

        720 – 759                       323 to 1

        760 – 799                       597 to 1

        Above 800                       1292 to 1

                    Dan (949)
11/15/2012                                                  14
                        250-3981 ..Copyright Apr.15,08
              Credit Score Killers
•   Divorce proceedings
•   MD Bills / Insurance Corps/Collection agencies
•   IRS & State Taxes..DMV//Prop Taxes (time share)
•   Student Loans (beware of account transfers)
•   Identity Theft / Identity Confusion
•   Renter’s utilities bills (electric– gas– etc)
•   Small Unpaid balances that clients blow off
•   Credit Card annual (auto) renewal fee’s
•   Cancelling a credit card “auto pay”

                    Dan (949)
11/15/2012                                                  15
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             Length of Reporting (1)
• Bankruptcies: Impossible to remove from CR
• Chapter 7: 10 years from date of DISCHARGE
• Chap.13: 7 yrs from date of DISCHARGE +5yrs it
  takes to pay off all creditors.
• Judgments: valid for 10 years; 7 yrs. May be
  renewed for another 10 yrs. and at 12 % APR
• Consult “the rule of 72” for compounding interest
  (the initial judgment doubles every 6 years)
• Unattached “Abstact Judgements” 7 yrs.
                  Dan (949)
11/15/2012                                                16
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             Cost of “BK”

             Dan (949)
11/15/2012                                           17
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             Length of Reporting (2)
• “30-90 day” lates, & “Charge offs” 7 yrs.
• Rolling “Collection Accounts” 7 yrs. from
  last update
• Unpaid tax liens …Indefinitely
• Don Sieveke …BK Attorney…714 543-
  8419.. A typical BK: $2500
• If you have secured assets -don’t use a
                   Dan (949)
11/15/2012                                                 18
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             Cost of a 30-90 Day late

                   Dan (949)
11/15/2012                                                 19
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Legitimate Causes for Deletion Letters
•   Wrong billing address by creditor
•   Spouse’s debt resulting from the divorce
•   Documented ID Theft/ “ID confusion”
•   Account closed before item is reported
•   Creditor originates deletion letter
•   Don’t waste time on “lates” over 4 yrs.
•   Begin disputes with the easiest creditor 1st
•   I.e. Depart.stores (they want you future biz)
                  Dan (949)
11/15/2012                                                20
                      250-3981 ..Copyright Apr.15,08
         Examples of a Deletion letter
• ABC credit card has been paid as agreed and any
  derogatory info showing for acct # 123 in John Doe’s
  name is to be removed from his credit files.
• Acct # 3333 in John Doe’s name was discharged in a
  bankruptcy on 9/94 and has a 0 balance, the last
  date of activity was 9/94
• Note: Be sure the letter’s author’s name & business
  phone appear for verbal verification
• Have the deletion letter faxed to you; don’t rely on a
  customer service rep to snail mail it to you
                   Dan (949)
11/15/2012                                                 21
                       250-3981 ..Copyright Apr.15,08
  Legitimate Causes for Updating a CR
• Copies of a release of judgment or
  lien…issued by the court. A copy of a
  canceled check is not sufficient.
• A copy of a divorce decree removing
  responsibility for an account (mortgage only)
      – The three bureaus don’t recognize divorce as a
        reason to rescore; a mortgage lender does.
      – A copy of a paid collection account statement
        reflecting the corresponding account number and
        the date the account was paid in full.
                     Dan (949)
11/15/2012                                                   22
                         250-3981 ..Copyright Apr.15,08
             Appealing to the creditor (2)
•   Start by filing a temporary fraud alert.
•   This forces all of your creditors
•   Start with the easiest to build your confidence
•   Keep a conversation log with names dates etc.
      – Bank cards: very difficult
      – Department store/mail order are the EASIES they
        want your future biz

                     Dan (949)
11/15/2012                                                   23
                         250-3981 ..Copyright Apr.15,08
             Appealing to the creditor (2)
      – Department store/mail order are the
        EASIES they want your future biz
      – Car loans: Impossible. Don't bother
      – Medical bills: Excellent if you deal directly
        with the doctors and/or hospital

                     Dan (949)
11/15/2012                                                   24
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      Disputing with the Bureaus (1)
•       Start by filing a temporary fraud alert.
•       This forces all of your creditors to reply
        “manually” human contact and snail mail to
        any bureau request regarding your account
•       Most creditors will not take the time or have
        the capacity or they be out of business
•       Sign up for the bureaus “Credit Mgr” service
        this creates a better level of service from the
                     Dan (949)
11/15/2012                                                   25
                         250-3981 ..Copyright Apr.15,08
      Disputing with the Bureaus (2)
1) Provide each “relevant” bureau with a copy
    of the bureaus own credit report & their
    specific dispute form along w/ your dispute
    letters (& evidence of on time 3 payment.
2) Provide a US Driver’s license…Resident
    (state) ID card.. Green Card…US Passport..
3) Provide a copy of your Social Security card
                Dan (949)
11/15/2012                                              26
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             Disputing the Bureaus (3)
  4) Provide “Proof of Address” (copy of utility
   bills, pay stubs, or W-2 with current address)
  5) Provide any documentation/proof to help
   the credit reporting bureau identify which
   items (“hi lite”) is incorrect and need be
   removed or updated
  6) Send “certified mail” with return receipt
   7) Respond quickly to contact from bureaus
                    Dan (949)
11/15/2012                                                  27
                        250-3981 ..Copyright Apr.15,08
             Disputing the Bureaus (4)
• 8) The Bureau verifies the info provided by
  creditor and electronically make the changes,
  corrections or deletions to the raw data
  stored in the consumers credit file
• 9) If the creditor doesn’t respond to the
  dispute (i.e. out of biz /doesn’t care can’t find
  records …typical customer service)….
• 10) The bureau must delete the item within a
  reasonable time. (i.e.“30 days”)

                   Dan (949)
11/15/2012                                                 28
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             Disputing the Bureaus (5)
11) The bureau issues a deletion letter; borrowers
  should retain these letters indefinitely. Typical time
  to rescore: 45 -60 days.
 12) What if I really was late? You can still dispute the
  creditor accuracy. “Bury with paperwork”
   Filing multiple disputes per item will get you a
  threatening letter.stating your requests are
  frivilous….ignore them & keep trying
• Write the 2nd and subsequent letters by hand
• FCRA requires the bureau to continue to investigate
                   Dan (949)
11/15/2012                                                 29
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Dealing with Collection Agencies (CA)
 • Note: No one gets a MBA to work in debt
   collection..Be prepared to meet angry people.
 • Never argue with a “drunk or a madman” -
   you’ll lose..
 • Keep calling until you get the pleasant voice
 • A referral to a CA accounts results in two
   derogatory items 1 from the creditor & 1 from
   CA: lowering your credit score 30-40 pts.
                 Dan (949)
 11/15/2012                                              30
                     250-3981 ..Copyright Apr.15,08
             Dealing with C.A. Blackmail
•   The creditor just want $$$$.. They probably
    will agree to settle for less & delete the item
•   They will direct the CA to delete the item
•   The creditor controls the CA.
•   Note: The CA will always claim that they
    “own the account” and for you “not to
    contact the creditor
                     Dan (949)
11/15/2012                                                   32
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     Before Contacting CA/Creditors

              Dan (949)
11/15/2012                                            33
                  250-3981 ..Copyright Apr.15,08
“CA Con Job” “Read the Fine print”
• Borrower detects a CA account on CR and then..calls
  CA with an offer to compromise & pay…The CA
  notes where the call has been made from..and then
  will call back and start the harrasment tactics
• No Phones #s are blocked when calling a CA
• The CA pulls borrowers credit report to check for
  recent credit applications..
• They note any recent inquires (i.e. pending apps) Any
  mortgage / auto will harden the CA’s settlement
  position, making them less likely to negotiate

                   Dan (949)
11/15/2012                                                 34
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   CA Con Job “Read the Fine print” (1)
• CA sends/faxes over “settlement letter”
  outlining terms for payment saying they will
  report the debt “paid” ... insinuating that is
  will be deleted from the won’t be unless
  the letter specifically states the item will be
  deleted as part of the settlement
• If you pay and don’t receive a deletion letter
  your score will decrease because it now
  appears as a recent ‘activity”

                Dan (949)
11/15/2012                                              35
                    250-3981 ..Copyright Apr.15,08
   CA Con Job “Read the Fine print” (2)
• It is easier to get a deletion letter …when you
  pay the entire balance “in full” (vs. “pennies
  on the dollar”) (CA work on “commission”)
• The “higher the balance” the better chance of
  negotiating for a “deletion” letter
• Be prepared to pay with 24 hours to increase
  your bargaining position (wire transfer)

                 Dan (949)
11/15/2012                                               36
                     250-3981 ..Copyright Apr.15,08
   CA Con Job “Read the Fine print”(3)

• Otherwise… Do Not pay off accounts
  until the “close of escrow” “pre-close”
  pay offs lower fico scores
• CA are slow to up date “paid accounts ” with
  credit bureaus; particularly when payment is
  for less than “owed”
• Forward all settlement letters to all bureaus

                Dan (949)
11/15/2012                                              37
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             Dealing with C.A. Blackmail
• The C.A “1” sells the debt to CA “2’…extending the
  debt’s reporting “life” indefinitely
• Proceeds to file in small claims despite the 4 yr. legal
  limit has expired…
• CA serves you by “public notice” (their process
  server may sign a affidavit certifying “service”)
• They appear, WIN & garnish your wages
• Or an abstract of judgment is filed, attaches to your

                     Dan (949)
11/15/2012                                                   38
                         250-3981 ..Copyright Apr.15,08
             Documenting Identity Theft
• 1/3 of all identity theft cases involve close
  family members pre-empting prosecution
• To rescore, a borrower must have a Police
  Report. Obtain arrest reports, newspaper
  clippings, insurance reimbursements
• The “Burden of Proof” is on the victim

                    Dan (949)
11/15/2012                                                  39
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             What is Identity Confusion?
• Father and Son ( Jr. vs.. Sr.) “Co – signers”
• Borrower applies for credit with different
  versions of their name (married vs. single)
• Common Surnames: Recent Immigrants (have
  less traceable residence histories …
• Phantom Debt: this phenomenon often
  requires a borrower to pay off a debt ..that
  isn’t theirs…”in order to close escrow……
                     Dan (949)
11/15/2012                                                   40
                         250-3981 ..Copyright Apr.15,08
             What is Rapid “Re-Scoring”
• Should you require instant rescoring of your
  credit report (ie an escrow is clsing ..this week
  !!) A service is available: RESCORING
• A “Credit Re-scorer” is licensed (by all
  bureaus) “middleman” between mortgage
  broker & bureaus to update borrowers
  reports with new data.
• Borrowers have no access to re-scorers.

                    Dan (949)
11/15/2012                                                  41
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      What is Rapid “Re-Scoring”
• A Re-scorer verifies the info given to them for
  accuracy & forwards info to at the 3 bureaus.
• The Re-scorer notifies the mortgage broker that
  changes have been made (“rescored”) orders a new
  credit report that reflects the updated info scores.

                   Dan (949)
11/15/2012                                                 42
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             Providing Documentation
      • The documentation must be very specific
        to the disputed entry
      • Letter must be on the creditor’s
        letterhead stating:
      • Account number
      • Applicant’s name
      • How the entry is to be modified/deleted
        and the effective last date of account

                   Dan (949)
11/15/2012                                                 43
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             Changes for ‘09
• Co Signers : Late items removed once account
  has been paid in full for the co-signer only
• A One time (30 day-) “ lates ” are less of an
  impact on your score
• Medical Bills “in dispute” may not be counted
  for up to 180 days while the billing process is
  being settled

                 Dan (949)
11/15/2012                                               44
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                    In Closing
• If you would like to be on my mailing list or discuss
  the employment opportunities at HighTechLending..
  please give a call or an e-mail…
• I’d like to know what your thoughts about the
  webinar & any suggestions to make it better
• And thank you …I know your time is valuable; this
  market is driving all of us to work harder and
  smarter…..and I hope you feel the time we spent
  together was worthwhile.
• Thank you & good luck

                   Dan (949)
11/15/2012                                                 45
                       250-3981 ..Copyright Apr.15,08

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