Credit Repair Kit For Dummies

Foreword xvii Introduction 1 About This Book 2 Foolish Assumptions 3 Icons Used in This Book 4 Beyond the Book 4 Where to Go from Here 5 Part 1: Getting Started with Credit Repair 7 Chapter 1: Introducing Credit Repair, Credit Scores, and Your Life on Credit 9 Repairing Bad Credit 10 Settling debts 10 Resetting your goals 11 Rebuilding your credit by using it 11 Using a cosigner or becoming an authorized user 12 Finding sources of free help 12 Dealing with collectors 13 Weathering a Major Crisis 13 Mortgage meltdowns 13 Medical debt 15 Student loans 16 Car loans 16 Understanding Diversity in Credit 16 Filing Bankruptcy 16 Protecting Your Credit and Your Identity 17 Getting familiar with credit laws 17 Receiving free reports and filing disputes 18 Signing up for credit monitoring 18 Setting alarms, alerts, and freezes 19 Identifying identity theft 19 Maintaining Good Credit Throughout Life 20 Establishing credit for the first time 20 Making credit changes at life’s stages 21 Avoiding pitfalls 21 Managing Credit in Today’s Unforgiving Economy 22 Planning for success 22 Reviewing your credit report 23 Knowing your credit score 23 Considering credit a renewable resource 24 Chapter 2: Turning Your Credit Around 27 Understanding How Your Actions Impact Your Credit Score 28 Using a Cosigner to Raise Your Score 29 Turning Small Purchases into Big Credit 30 Maximizing Your Credit Score with Major Expenditures 33 Leveraging your mortgage 34 Financing your car 36 Paying back student loans 37 Understanding How Good Debt Builds Good Credit 38 Achieving goals with the help of credit 38 Sending a message to potential lenders 39 Giving nonlenders a sense of how you handle responsibility 39 Selecting the Best Tools for Building Your Credit 40 Spending your way to better credit with a spending plan 40 Tracking your progress: Paying attention to your credit report and score 41 Chapter 3: Cleaning Up Your Credit Reports 43 Understanding the True Value of Good Credit 44 Reviewing Your Reports for Problems 47 Using the Law to Get Your Credit Record Clean and Keep It That Way 50 Identifying and Disputing Inaccurate Information 53 Understanding the dispute process 53 Correcting all your credit reports 54 Contacting the creditor 59 Adding Positive Information to Your Credit Report 60 Asking your landlord to report your rent payments 60 Adding your utility and cellphone payments to your report 60 Opening new credit accounts 61 Adding a 100-word statement 61 Chapter 4: Getting the Best Help for Bad Credit for Free 63 Knowing Whether You Need Help 64 Gauging your need for outside assistance 64 Handling situations on your own 65 Identifying Help You Can Get for Free 67 Getting help with your mortgage 68 Considering credit counseling 69 Working with an attorney 74 Chapter 5: Coping with Debt Collection 77 Handling Those Collection Phone Calls 78 Knowing what collectors can do 78 Knowing what collectors can’t do 80 Deciding whether to answer the phone 81 Preparing to answer collection calls 81 Knowing what not to say 82 Taking Charge of the Collection Process 83 Asking for proof that the debt is yours 84 Knowing when debts fade away: Statutes of limitations 84 Negotiating a payback arrangement 86 Keeping your promise 87 Identifying Escalation Options That Help 89 Asking to speak to a manager 89 Approaching the creditor 90 Fighting harassment 91 Communicating with Customer Service Before Being Placed for Collection 92 Contacting your creditor promptly 93 Explaining your situation 94 Offering a solution 95 Covering all the bases 96 Keeping Collectors in Check 96 Calling in a credit counselor 96 Referring the matter to your lawyer 97 Freeing Up Money to Pay a Collector 97 Utilizing a spending plan 97 Cutting the fat from your monthly spending 98 Avoiding Collectors Altogether 98 Getting organized 99 Stopping the paycheck-to-paycheck cycle 100 Chapter 6: Working with Collectors, Lawyers, and the Courts to Manage Debt Obligations 101 Getting a Handle on Charge-Offs 102 So what is a charge-off? 102 Making sense of unpaid charge-offs 103 Making charge-off payments 104 Coming to a Debt Settlement Agreement 105 Considering a debt settlement offer 105 Hiring a debt settlement firm 106 Reaching expiration dates on debts 106 Finding Out about Judgments and What They Mean to You 107 Understanding Wage Garnishments 110 Dodging wage garnishments 110 Figuring out how much can be garnished 112 Stating Your Case in Court 112 Managing IRS Debts, Student Loans, and Unpaid Child Support 114 Handling IRS debts 114 Educating yourself about student loans 115 Putting your kids first: Child support 117 Part 2: Reducing Credit Damage from Major Setbacks 119 Chapter 7: Reducing Credit Damage in a Crisis 121 Assessing the Damage from a Mortgage Meltdown 122 Understanding How Mortgages Differ from Other Loans 124 Spotting a foreclosure on the horizon 124 Counting to 90 125 Knowing Where to Turn for Help 126 Finding good help for free 126 Working with your mortgage servicer 126 Avoiding help that hurts 127 Alternatives to Going Down with the Ship 128 What to do first 129 What to do for more serious problems 129 What to do to end matters 130 Managing a foreclosure 131 Strategic default: Stopping payments 132 Dealing with Deficiencies 134 Preparing for “Credit Winter” 136 Curing Medical Debt 136 Understanding new reporting and scoring rules 137 Reviewing your options for paying medical bills 137 Discovering how insurers get your medical information 138 Monitoring insurance claims for errors 138 Dealing with denied medical claims 139 Managing Student Loans 139 Default timelines 140 Loan forgiveness programs 140 Where to get help 141 The impact of the CARES Act on student loans 141 Avoiding Car Repossession 141 Repossession: What you can do 143 Dealing with auto loan default deficiencies 143 Coping with So-Called Acts of God and Other Things That Are Not Your Fault 144 Chapter 8: Filing for and Recovering from Bankruptcy 145 Deciding Whether Bankruptcy Makes Sense for You 146 Deliberating the bankruptcy decision 146 Adding up the pluses and minuses 150 Considering a debt management plan first 152 Understanding Bankruptcy, Chapter and Verse 154 Qualifying for and Filing for Bankruptcy 155 Qualifying for Chapter 7 155 Qualifying for Chapter 13 157 Managing Your Credit After a Bankruptcy 159 Telling your side of the story 159 Reaffirming some debt 161 Repairing your credit score 161 Establishing new credit 163 Moving forward with a game plan 163 Chapter 9: Repairing Credit Damage in the Wake of Identity Theft 165 Taking Fast Action When Identity Theft Occurs 165 Communicating with the right people 166 Protecting your identity through the FACT Act 169 Sending out a fraud alert 171 Blocking fraudulent credit lines 171 Getting and Using Credit After Identity Theft 172 Closing and reopening your accounts 172 Altering your PINs, passwords, and radio transmissions 173 Changing your Social Security number and driver’s license number 174 Part 3: Rebuilding Credit, No Matter Where or When You Begin 175 Chapter 10: Starting or Restarting Your Credit in Real Life 177 Debunking Misinformation about Banking and Credit 178 Why you need credit 179 Why credit is safe 180 Obtaining Credit: Starting Out on the Right Foot 181 Establishing a credit file without a Social Security number 182 Setting goals before you set out 183 Establishing a relationship with a financial institution 185 Using prepaid and reloadable cards 186 Fattening up your credit file 187 Avoiding high interest, fees, and scams 189 Overcoming Credit Fears and Mistakes 190 Qualifying for First-Time Cards and Lending 192 Getting a credit card 192 Using savings for credit 194 Considering Credit for Students and Military Members 195 Giving credit to students 195 Following military credit rules 197 Chapter 11: Ending Life’s Negative Credit Surprises 199 Keeping Your Credit from Hurting Your Job Prospects 200 Dealing with Rental Application Checks 201 Knowing what’s on your reports 202 Taking action 203 Qualifying for a Mortgage 203 Ordering your credit report and score 204 Looking at your credit file like a lender 205 Preparing to Purchase a Car 205 Arming yourself with information 206 Reviewing what to consider when you’re at the dealership 207 Unveiling the Relationship between Your Credit and Your Insurance Premiums 208 Understanding insurance scores 209 Getting a copy of your insurance score and insurance claim report 209 Figuring out what to do with your newfound knowledge 210 Taking other factors into account 211 Chapter 12: Protecting Your Credit During Major Life Challenges 213 Tying the Knot in Life and in Credit: A Couples’ Guide to Building Good Credit 214 Engaging in prenuptial financial discussions 214 Considering joint accounts 216 Managing joint debt 218 Avoiding money conflicts 219 Protecting Your Finances in a Divorce 220 Taking precautions when a split-up looms 220 Preparing your credit before heading to court 221 Protecting your credit in a divorce decree and beyond 222 Keeping Credit Strong While Unemployed 226 Preparing your credit for the worst-case scenario 226 Using credit when you don’t have a job 226 Protecting your credit lines 228 Curing Medical Debt 229 Reviewing your options for paying medical bills 230 Discovering how insurers get your medical information 234 Monitoring insurance claims for errors 235 Dealing with denied medical claims 236 Resolving Credit Issues After the Death of a Spouse or Partner 238 Understanding what happens to joint credit when you’re single again 238 Knowing exactly what your liability is 239 Building your credit record on your own 240 Fitting Credit into Retirement 240 Budgeting on a fixed income 241 Using credit for convenience 241 Part 4: Making Sense of Credit Reporting and Scoring 243 Chapter 13: Discovering How Credit Reporting Works 245 Grasping the Importance of Your Credit Report 246 What is a Credit Report, Exactly? 247 Revealing the facts about your financial transactions 248 Providing insight into your character 252 The Negatives and Positives of Credit Reporting 253 The negatives 253 The positives 255 Your Credit Report’s Numerical Offspring: The Credit Score 255 Cracking credit score components 256 The reasoning behind risk factors 259 Chapter 14: Understanding Credit Reports and Scores 261 Getting Copies of Your Credit Reports 262 Where to get your reports 263 What you need to provide 264 When to get copies of your credit reports 265 Tracking Down Specialty Reports: From Apartments to Casinos to Prescriptions 268 Perusing Your Credit Reports 271 Identifying information: It’s all about who you are 272 Accounts summary: An overview of your financial history 272 Bankruptcy public records: The most serious element in a credit report 273 Credit inquiries: Tracking who has been accessing your file 273 Account history: Think of it as a payment CSI 274 Your optional 100-word statements: Making sure your voice is heard 281 Correcting Any Errors You Find 283 Contacting the credit bureau 283 Contacting the creditor 283 Getting and Understanding Your Credit Scores 284 Ordering your score 285 Telling a good score from a bad one 287 Connecting pricing to your credit score 290 Knowing the reason for reason statements 292 Chapter 15: Monitoring Your Credit Reports and Scores 295 How Credit Monitoring Really Works 296 Understanding the Types of Monitoring Services Available 297 Making a Case for and against Third-Party Credit Monitoring 299 Monitoring on your own 300 When paid monitoring may be worth the time and money 301 Recognizing the protection you have already 302 Getting Your Money’s Worth from Monitoring Services 303 Setting Alarms, Alerts, and Freezes 304 Alarms 305 Fraud alerts 305 Credit freezes 305 Part 5: Successfully Managing Your Credit for Life 307 Chapter 16: Putting Yourself in Control of Your Credit 309 Determining Your Credit Style 310 Balancing Spending, Savings, and Credit Use 312 Spending on your terms 312 Saving for financial emergencies 312 Using credit to enhance your life 313 Remembering the Importance of Planning When It Comes to Your Credit 313 Zeroing in on the plans others have for your money 314 Developing your own plans for your future 314 Chapter 17: Taking a Sustainable Approach to Your Credit 317 Going Green: Treating Credit as a Renewable Resource 318 Recognizing your credit environment 318 Taking a closer look at the parts that make up your credit ecosystem 319 Sustaining Your Credit Ecosystem for Life 321 Funding college 321 Home sweet home 322 Credit on wheels 322 Steering Clear of Credit Pollution 322 Endangering your payment history 323 Clear-cutting your credit in bankruptcy 323 Outlasting a long, cold credit winter 325 Surviving and Reviving After a Credit Catastrophe 325 Understanding what happened 325 Rebuilding your credit ecosystem 327 Chapter 18: Safeguarding Your Credit with a Spending Plan 329 Appreciating the Benefits of a Solid Spending Plan 330 Deciding on Goals: Imagining Your Future as You Want It to Be 332 Setting the stage for planning 332 Categorizing your goals 333 Putting your goals in order 334 Building Your Vision of Your Future 334 Step 1: Counting up your income 335 Step 2: Tallying what you spend 336 Step 3: Making savings part of your spending plan 341 Step 4: Managing your credit to improve your spending plan 345 Step 5: Looking at your insurance options 346 Step 6: Planning for the IRS 348 Step 7: Planning for retirement 349 Using Cool Tools to Help You Build and Stick to a Spending Plan 351 Web-based financial calculators 352 Budgeting websites 352 Smartphone apps 353 Spending plan assistance 353 Adjusting Your Priorities and Your Plan 354 Chapter 19: Understanding Equity and Diversity in Credit 355 Benefitting from Financial Inclusion 357 Participating in the Financial System 358 Taking or Retaking Control of Your Credit 358 Educating Yourself on How the System Works 359 Tackling Debt 362 Student loans 363 Payday loans 363 Collections 364 Bankruptcy 364 Working Toward the Goal of Homeownership 364 Chapter 20: Knowing Your Rights to Protect Your Credit 367 Why You Have the Right to Credit Protections 368 The CARD Act: Shielding You from Credit Card Abuse 369 The Consumer Financial Protection Bureau: The New Cop on the Financial Beat 372 Safeguarding Your Credit Data through the FACT Act 372 The FDCPA: Providing Protection Against Debt Collectors 375 Controlling the contacts 375 Finding out about the debt 375 Stopping a collector from contacting you 376 Spotting prohibited behavior 376 Suing a collector 377 The CROA: Getting What You Pay For 378 Knowing what credit repair organizations must do 378 Understanding what credit repair companies can’t do 379 Exploring Other Protections 379 The ins and outs of payday loans 380 The details of debt settlement 382 The scoop on the statute of limitations 384 Chapter 21: Protecting Your Identity 387 Keeping Thieves at Bay 388 Getting on the technology train 388 Looking out for phishing scams 389 Safeguarding your computer data 391 Keeping passwords secret 392 Protecting your mail 393 Storing financial data in your home 393 Putting your credit information on ice 394 Shielding your credit card number 395 Catching Identity Thieves in the Act 397 Watching for early-warning notices 397 Early warnings from the IRS 399 Handling a collections call 400 Detecting unauthorized charges 400 Being denied credit or account access 401 Noticing missing account statements 401 Part 6: The Part of Tens 403 Chapter 22: Ten Consumer Protections Everyone Needs to Know 405 The Fair Debt Collection Practices Act 406 The Bankruptcy Abuse Prevention and Consumer Protection Act 406 Your Lawyer 407 Coronavirus Aid, Relief, and Economic Security (CARES) Act 408 Statute of Limitations Laws 409 Your State Attorney General 409 The Consumer Financial Protection Bureau 410 The Credit Card Accountability, Responsibility, and Disclosure Act 411 The Fair and Accurate Credit Transactions Act 412 The Federal Trade Commission 413 Chapter 23: Ten Strategies for Dealing with Student Loans 415 Knowing How Student Loans Are Reported Differently Than Other Loans 416 Dealing with the Collection Process 416 Identifying the Best Repayment Option for Your Situation 417 Taking Your Loans to Bankruptcy 418 Dealing with the Prospect of Default 418 Gaining Student Loan Forgiveness 419 Lowering Your Bill While You’re in School 421 Keeping Up with Your Loans After You’re Out 422 Setting Limits During the Planning and Application Process 423 Getting Help if You’re in the Military 423 Chapter 24: Ten Ways to Deal with a Mortgage Meltdown 425 Knowing When You’re in Trouble 426 Knowing How Your State’s Laws Treat Foreclosures 427 Nonrecourse or recourse 427 Judicial or nonjudicial 427 Deciding Whether to Stay or Go 428 Walking away 428 Working with the lender to exit 429 Staying the course 429 Tightening Your Spending to Stay in Your Home 430 Prioritizing Your Spending to Build Cash 431 Lessening the Damage to Your Credit 431 Knowing Who to Call 432 Beware of Scams 432 Beefing Up Your Credit 432 Consulting an Attorney 433 Index 435