WHAT YOU NEED TO KNOW ABOUT YOUR CREDIT SCORES AND HOW TO IMPROVE THEM!

An Excerpted Report From Attorney Darren G. Smith and Senior Loan Consultant Karen Clark

WHAT ARE CREDIT SCORES?

HOW ARE CREDIT SCORES CALCULATED?

WHAT IS CONSIDERED "GOOD" CREDIT?

HOW CAN I OBTAIN A COPY OF MY CREDIT REPORT?

WHAT DO I DO IF MY CREDIT REPORT CONTAINS INCORRECT OR DEROGATORY INFORMATION?

WHAT SPECIFIC ACTIONS CAN I TAKE NOW TO RAISE MY CREDIT SCORES?

WHAT IF I HAVE SO MUCH DEBT THAT THINGS LOOK HOPELESS?

PLEASE NOTE THAT THE INFORMATION CONTAINED IN THIS REPORT IS FOR GENERAL ILLUSTRATIVE PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS LEGAL ADVISE.

WHAT ARE CREDIT SCORES?

Credit scores are predictive models which rate consumers in terms of their likelihood of defaulting on a contemplated loan. There are three widely used score models on the market today and each credit reporting bureau has its own criteria for scoring. For example, Experian (formerly known as TRW) calls its score "FICO". Trans Union calls its score "Emperica" and Equifax calls its score "Beacon".

HOW ARE CREDIT SCORES CALCULATED?

Credit scores are calculated using just under 100 variables. Each variable carries a value. The score is determined using only three or four variables that have the greatest negative value. The maximum score is 900 and minimum is 350.

WHAT IS CONSIDERED "GOOD" CREDIT?

A FICO score of over 620 is usually considered to be good, i.e. "A" paper. Scores under 600 are considered marginal. Still lower scores are treated by lenders with extreme caution.

HOW CAN I OBTAIN A COPY OF MY CREDIT REPORT?

Write or call (1) Experian (EXP) at PO Box 2106, Allen, TX 75002-2106, ph (800) 422-4879; (2) Trans Union Corp (TU) at PO Box 390, Springfield, PA 19064-390, ph (800) 916-8800; and (3) Equifax (EFX) at PO Box 740241, Atlanta, GA 30374-0241, ph (800) 378-2732. For faster service, you can go in person to Experian's Orange office and to Trans Union's Fullerton office to obtain your reports.

WHAT DO I DO IF MY CREDIT REPORT CONTAINS INCORRECT OR DEROGATORY INFORMATION?

First, contact the creditor that reported the information by sending a certified or registered letter demanding that the error be corrected at once. A carbon copy of that letter should always be sent to the credit reporting bureaus as well. Pursuant to federal law, the creditor will have to delete the disputed information if it cannot be confirmed. The creditor must respond to the credit bureau's inquiries within 30 days and must either confirm the validity of the debt or otherwise resolve the disputed issue within that time.
If the creditor confirms the disputed debt, you may then attach a "Statement of Dispute" stating that you disagree with the information supplied by that creditor. The Statement of Dispute becomes part of your record on your credit report. Do not, however, send a note admitting the validity of the debt by explaining your excuses for not paying, because that may cause the seven year reporting period to be extended beyond the date of the original debt.

WHAT SPECIFIC ACTIONS CAN I TAKE NOW TO RAISE MY CREDIT SCORES?

Here are ten steps you can take immediately:
•Stop shopping for credit, since the fewer credit inquiries you have on the report, the better.
•Don't run your credit up to the maximum limits - try not to exceed 80% of your maximum credit limits, and try to pay more than the minimum payment.
•Pay your bills on time, or better yet, pay early.
•Reduce the number of credit cards you have - you should have a maximum of five open trades with minimum balances.
•Avoid high interest department store cards and finance company cards.
•Do not ask your credit card company to raise your available credit limit, even if you don't plan to use it.
•Avoid those "90 Days Same As Cash" or "6 Months No Interest or No Payments" plans, since as time goes on, the outstanding balance will increase (due to accrued interest) and exceed your approved credit limit, making you appear to be overextended.
•Reduce, pay off credit cards, close accounts, and consolidate debt.
•Scrutinize every proposed purchase you want to make on credit - do you absolutely need to buy it?
•If you're in way over your head, get professional help immediately, e.g. from Consumer Credit Counseling, a mortgage lender, or an attorney who specializes in credit issues.

WHAT IF I HAVE SO MUCH DEBT THAT THINGS LOOK HOPELESS?

Although it is extremely painful to be hounded by creditors, rarely are things as hopeless as they might seem right now. A trained professional such as an attorney can help you settle with your creditors - for many time at pennies on the dollar. Moreover, while you are represented by an attorney, most creditors are restrained by federal and state law from calling you or otherwise harassing you. As a last resort if you must file bankruptcy, a skilled attorney can advise you of the advantages and disadvantages of Chapters 7, 11, and 13. A bankruptcy attorney will also strategize with you so that you discharge the maximum number of debts allowable by law (including many taxes!) while retaining all or substantially all of your assets in bankruptcy.

Your particular credit history may require personal attention and advice. For a consultation to determine your options in obtaining a mortgage loan, call Karen Clark at Real Estate Home Loans at (714) 285-8899

If you would like a full copy of this excerpted Report with more information on how you can improve your credit scores, or need legal assistance in any real estate, financial reorganization, or business-related matter, call Darren Gordon Smith, a Professional Law Corporation today at (714) 505-2700.