The Better Credit Blog

The fastest and easiest way to increase your credit score is to dispute any negative items on your credit report that are incorrect or not yours. If you haven’t checked your credit report in a couple of years, there are likely incorrect items that are hurting your credit. This is another reason to check your credit report every six months or so. When I checked my credit report after letting it go a couple of years I found two debts marked as CHARGE OFF that weren’t even mine. After disputing these items my credit score increased 70+ points.

Items that may have a negative impact on your credit score

Refer to my list of negative items when looking for inaccuracies to dispute.

Don’t forget to look over the “Personal Information” section of your credit report. This is the section that lists your current and previous employer(s) and address(es). Both of these can impact your credit score and they are often inaccurate. The calculation of your credit score takes into account how stable you appear to be. Therefore, if your credit report shows 15 previous addresses and 5 employers in the past 2 years it will lower your score by a dozen or so points. While personal details such as address and employer do have some impact, it’s not very much, so this should be the least of your worries if you have debt. Nonetheless, just double check for small inaccuracies such as multiple listings of the same address (this is very common).

How to dispute credit report inaccuracies

The credit reporting agencies have made the process of disputing an inaccurate item manageably simple. In most cases, however, it has been my experience that after you file a dispute, it can take them a couple of months to investigate and correct the error (don’t get freaked out if you haven’t heard anything in a month). It can be a particularly lengthy process if the item in question involves identity theft.

There are generally 3 ways to dispute an inaccuracy: online, by phone, or by mail. Do it online, because otherwise it will take forever. All 3 of the credit reporting agencies have online forms you can fill out to file a dispute. Very easy.

Here are links to the credit reporting agency’s dispute centers

• Equifax Online Dispute
• Experian Online Dispute
• TransUnion Online Dispute

Keep in mind: If an inaccuracy is listed on all three credit reports, you must dispute it with all three credit agencies.

Don’t dispute accurate entries

Some people will claim that you should dispute items even if they are completely accurate in hopes that the creditor will be unable (or unwilling) to verify the disputed item. I am advising you against this for a few reasons.
First, it’s against the law. Second, if the debt is a large amount you can bet your ass the creditor will take the time to prove it’s yours and it’s accurate. Third, if you attempt to file multiple disputes at once, the credit agency will lock you from filing a dispute for awhile.

Once the investigation is complete

Once the investigation is complete you will receive an email (if you filed online) that the correction has been made. Also, you will receive a free copy of your corrected credit report (this is required by law). Note: this does not count towards your free annual credit report. Depending on the item that was corrected your credit score will also change to reflect the correction. Again, getting inaccuracies corrected can greatly improve your score and in most cases it’s an easy process.

Never call a debt collector and arrange to pay them over the phone. To better ingrain this into your head please refer to the visual representation below.

Here is what I did wrong:

I gathered all of my debt collection letters and started calling collection agencies. This was a big mistake. Tip: If possible contact the original creditor. For example, if you have a debt from a Capital One credit card, but are getting letters from a 3rd party collection agency, attempt to contact Capital One first. Click here to see my article on how to do this –in this article I will show you how to negotiate to get charge offs completely removed from your credit report

It is my experience that while many times it may appear as though a debt was sold to a collection agency, the original creditor still owns the account and are simply using the 3rd party collection agency to collect the debt. Therefore you can still cut the 3rd party agency out and contact the original creditor directly. Keep in mind: a debt has only been sold to a collection agency if the debt has a ‘Collection’ status on your credit report.

Always communicate with creditors via certified mail. This means that the creditor is required to sign for the letter before the post office will give it to them. The post office will also send you verification once it is signed for. I recommend paying the extra couple of bucks to get a copy of the signature once they have received it in case you ever have to go to court (many times creditors will claim they never received your letter). You can do this completely online. Download one of my example letters, edit it to fit your needs and go to the USPS website and upload the file.

A few things will happen if you contact a debt collector over the phone (particularly a 3rd party collection agency).

• You will be welcomed by the rudest people on the planet. If you do have to speak to one of them, try to remember that most phone debt collectors are under 25 and make $7 an hour –they don’t care about your problems. Some collection agencies hire employees as young as 16 years old.
• Collectors will say almost anything to get you to pay over the phone. Also, when you deal over the phone and they lie, you have very few legal protections. I will speak in another post about The Fair Debt Collection Practices Act and my bad experience attempting to get any protections under this.
• Resist! They will push hard for you to pay right there. They will ask for your bank account information so they can setup automatic deductions. In my case, they threatened a lawsuit if I didn’t pay them right away.

Remember that most of the tactics executed over the phone by collectors are done to scare the shit out of you. Keep in mind that collectors will say such things as, “Do you know what you have done? Do you know what is going to happen to you? Do you even realize how much trouble you are in?” In another words, they will make it sounds as though paying off the debt is the most important thing in your life, and while it may seem as though it is, never fall for this –it’s not the most important thing in your life.

I fell for this. I setup for automatic payments to be deducted from my bank account. I cannot tell you how many problems this caused me. Never give out your bank account information

Take home points:

1. Never make a deal over the phone. Request for everything in writing.
2. Always communicate with creditors via Certified Mail.
3. As difficult as it may be, never buy into their scare tactics.
4. Never give out your bank account information.

(1 votes, average: 5 out of 5)

Everyone will tell you this, but I am going to tell you again: Don’t do anything until you have your credit report in your hand and you’re looking at it.

I didn’t do this and later it came back to kick me in the ass. I went around the house and grabbed all of the letters from creditors and started paying off the small ones first –the debts I knew were for a large amount had been left unopened for months because I was too nervous or depressed about the situation to open them. If you are reading this, there is a good chance you know the feeling. The same goes for phone calls from creditors

Here are some reasons why you should check your credit report before paying any debts.

• Some of the debts may have not yet gone to collections.
• Even if some of the debts have gone to collections, there is a chance that the debt has not yet been added to your credit report. (keep in mind that once a debt has been added to your credit report, by law, it can stay on there for 7 years –even if you pay it off. I will talk more about this later.)
• Most debts (unless they are for an extremely small amount) can be negotiated –this brings up a whole new topic that I will cover in another post, so for now just note that point.

I will briefly speak to each point listed above.

1. Any debt that has not yet been to collections SHOULD BE PAID FIRST. I cannot say this loud enough. It’s pretty easy to find out if a debt has gone to collections without having to call them –just check your credit report and then look through your letters for two separate companies demanding payment for the same debt. Dealing with deceptive and nasty debt collectors should be avoided at all costs.
2. If a charge has gone to collections but hasn’t been added to your credit report (an unlikely scenario in all honestly), pay it. The point here is that why pay off debts that are already on your credit report (and likely will be for 7 years) before you pay off debts that have not yet been added to your report?
3. Negotiations skew into a topic that is very important: negotiate with creditors. This point is so important that I will dedicate a whole (or a couple) posts to it. For now keep in mind that sometimes you can get a creditor to remove a debt from your credit report completely by simply negotiating!. However, if you can’t wait for some ungodly reason check out my resources section. I have created some sample credit removal letters in Microsoft Word format to guide you.

How do I get my credit report?

The good news is that most people can get one free credit report every year (in some states it’s two). Check your state here

Also, and this is important: there is only one website that is truly authorized to provide this free credit report, and it is www.annualcreditreport.com. I am sure you have seen that commercial for freecreditreport dot com (I won’t even dignify this wretched company with a link). It has that corny idiot saying something like, “I happen to be thinking of a number. Do you know what it is? It’s my credit score, and it happens to be a 740!” As a matter of fact, I read a few weeks ago that they got themselves in big trouble for deceptive practices –if you look at the bottom of their new commercial there is a disclaimer that says (and I’m paraphrasing), “the credit report is free but you have to pay us a monthly fee for some other crappy product”.

If you have already used up your free credit report or for some reason you can’t get it at www.annualcreditreport.com, I recommend getting one from one of the 3 credit reporting agencies: Equifax; Experian; or Transunion. I will talk more about the 3 credit reporting agencies in another post. Personally, I would go with Equifax for the simple reason that it is the most popular, and thus is probably the most accurate (because this will likely be the first credit reporting agency a creditor will report to). Also, if you are doing this for the first time, I recommend paying the extra money to get a 3-in-1 report. All of the credit reporting agencies offer this report, and for the extra $10 or so you will get a credit report that shows entries from all 3 agencies.

You can get your credit score or credit report over the phone, if you are worried about security

Here are the phone numbers:

• Equifax: 1-800-685-1111
• Experian: 1-866-200-6020
• TransUnion: 1-800-888-4213

Take home points:

1. Get a copy of your credit report before you do anything.
2. www.annualcreditreport.com is the only truly authorized website to get your free credit report.
3. Pay debts that haven’t be added to your credit report first.

Got your credit report?

Continue to My Third Mistake >>

(1 votes, average: 5 out of 5)

I am tempted to say, “Well, you’re here reading this blog so you have begun the process of improving your credit score.” I’ll keep it in these deceptive quotes however –for two reasons. First, it’s too cliche. Second, it’s pretty much bullshit when it boils down to any real progress. I am not telling you to stop reading this blog and learning from my mistakes, I am simply attempting to illustrate my first mistake: I kept telling myself, “I don’t have any money right now to pay off any debt –what can I do?” Once I woke up I realized there was something I could do, so I got another job.

I won’t give you a pep rally or a guilt trip, I’ll use math to get my point across (a point that took me a long time to realize):

debt + interest = more debt
more debt + time = hard times

A Glorious Story of Credit Salvation

I’ll tell you the story real quick behind how I finally got this concept and said to myself, “Ok, it’s time to act and just get it over with.” I was working for this guy that lived up in the mountains (Colorado). He had about one stupid “build a website and get rich” idea a week, so he paid me to construct prototypes that would later be clumsily built in India.

During the course of my employment with this fellow, he was going through an ongoing dispute with a “potential” buyer of a heavily wooded lot next to his. Apparently my employer had cut down a dozen or so trees on the lot this man was going to buy. My employer claimed he was cutting down the trees to protect his property (and the neighbors) from wildfire –he claimed it an altruist act. While I understand there may be some logic in executing this strategy, I can also attest that my employer used that wood for his fireplace.

One day while my employer was out and I was quietly working away, a knock came at the door. “Knock, Knock” –like that. I answered the door and it was a man with a summons for my employer. A lawsuit had been brought forth by the gentlemen interested in the formally wooded lot. I could not accept this summons on behalf of my employer and as common knowledge has taught us one must be served in person before expected to appear in court.

At the time I wished that I had never showed up to work that day, because for the next two months, about twice a week, a man would come to the door with the summons and my employer would beg me to go downstairs and tell the man that he was in Mexico on vacation. On the last day of my employment, the man came to the door and I, again, obliged my employer in making up an excuse for his absence. When I went back upstairs he said (projecting humor, but in all seriousness), “I am a prisoner in my home!” I sort of blew my lid because it seemed so ridiculously obvious to me and I yelled, “Man, are you an idiot?! It’s not going to go away! It will just get worse and eventually you’ll have to deal with it!”.

I got fired, but on the drive home down the mountain, I realized that I was doing the same thing with my debt/credit situation.

Take home points:

1. The longer you wait, the worse everything will get: debt, stress, life in general.
2. Do what you have to do to get started even if it means temporary discomfort.
3. Don’t cut down your neighbors trees.

Onward to My Second Mistake >>

(1 votes, average: 5 out of 5)

A couple of years ago I found myself 20 grand in debt –a mix of credit cards, random medical bills, and old college debt. I am starting this blog because when I decided to tackle the challenge of settling my debts and increasing my credit score I found that there were (and still are) very few resources on the internet to guide a person through this process. I simply wanted to hear someone’s personal experiences and suggestions. Unfortunately, at the time, I didn’t find the right resources and I became too impatient.

There are of course an array of websites that sell services that promise to increase your credit score, but in all honestly my logic could not justify paying someone to help me get out of debt –it seemed more like I would be getting myself in more debt. I have since learned that most of these companies (even the so-called nonprofit organizations) will indeed cost you more money than good they will do. I will talk more about this in another post, but in short: these companies aren’t in any better position to settle your debts than you –it’s not like they possess some secret relationship with creditors that allows them to negotiate.

The first steps I took to improve my credit score were all wrong and it cost me a lot of money that I could have otherwise saved. In the next post I will outline my first mistake and tell you the best way to go about it. Keep in mind that everyone’s situation is different and while many of the resources and steps provided on this blog will be helpful in determining a general method to go forward, some circumstances require different approaches. In this case please Send me an
email. Also, if there is some information you can’t find on this blog, shoot me an email and I’d be glad to give you my two cents.

One last note: I’m not a debt or credit professional, but I did get myself out of a lot of debt and go from a credit score of 520 (horrible) to 750+ in about 2 years.