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Your credit report may be one of the most important documents that you will come across in your lifetime. In my opinion, it is more important than your marriage license, driver’s license, social security card, paycheck or bank statements. Why? Because your credit report determines how much you are going to pay in interest when you want to buy something.

If you have a low credit score, and you don’t care enough to do anything about it — no problem! You will just keep shelling out thousands of extra dollars to pay for high interest rates.

What is a “good” credit score?

There is a lot of talk out there about credit scores, but very few people understand what these magic numbers actually mean.

You probably had a credit score of around 450 when you were born, and in my years of experience, the highest scores I have seen are over just over 800. But these numbers are meaningless unless you understand how they affect your ability to get a new loan.

In general, a credit score of 660 or higher will get you approved for a government-guaranteed mortgage. What if your credit score is lower than that? Well, you can still get approved, but guess what — your mortgage will have a much higher interest rate.

Are you ready to do the work it takes to improve your score? You may be shocked to know that there is one item that will do more damage to your credit score than just about anything else.

Late Payments Kill Your Credit Score

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The single most important item that will lower your credit score is a recent late payment. I have seen credit scores sink a hundred points in one day (from 690 to 590) because payment on one account showed up as being 30 days late.

And size does not matter! Even if you miss one measly $50 payment, your credit score will drop drastically. Your credit scores will be affected not by the dollar amount of the entry, but by your track record of making payments on time.

Take a look at your credit report. Next to each account, the report shows how often you were 30, 60 or 90 days late in making your payment.

Look For Common Errors In 30, 60 and 90 Day Reporting

It is important to remember that the data in your credit report was entered by humans, and humans do make mistakes. Review your credit report carefully, and double check any instances of making a late payment to be sure they are correct.

What if you look at your report and it shows you as being 90 days late (4) times yet 60 days late (2) times? Now, let’s use some common sense. How can you be 90 days late before you are 60 days late? Not possible. Sorry, you cannot get to third base without passing second base.

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Joe Lents has been living in his foreclosed Boca Raton, Florida home since 2002 — without making a single payment to his lender.

Is Joe a criminal? No – he is only following the law.

Get Foreclosure Thrown Out In Court

There is a secret strategy for defending your home that the banks don’t want you to know about.

When Washington Mutual took Joe to court to foreclose on his home, he asked them to produce the original note that he signed. But they had conveniently lost this note, which is his legal promise to pay the mortgage.  Without this original signed document, the lender could not prove the debt, and so the judge threw out the case.

According to LoanWorkout.org,

“If you’re going to take my house away from me, you better own the note,” said Joe Lents. The since-failed lender failed to prove that it owned Lents’ mortgage note and dropped attempts to take his house. Subsequent efforts to foreclose have stalled because no one has produced the paperwork.

More homeowners are becoming aware of this foreclosure defense. This CNN video on Mortgage Squatting shows Ohio Representative Marci Kaptur telling her constituents to stay in their homes by using what she calls the “Produce The Note” strategy.

In October 2007, Ohio Federal Judge Christopher Boykin dismissed a number of foreclosure cases and instructed the attorneys representing the lenders to “come back to my courtroom with the original mortgage note or a certified copy.”

In about 40% of foreclosure cases, the lender simply cannot provide the note.

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Why? Because the minute you finalized your mortgage, they sliced, diced and “securitized” it, and in many cases they secretly changed the terms of the loan. Since altering the loan without your knowledge is fraud, they want to hide the evidence — which means conveniently “losing” that little piece of paper with your signature on it.

A University of Iowa study describes how sloppy most foreclosure cases are:

“…of more than 1,700 bankruptcy cases stemming from home foreclosures, the original note was missing more than 40 percent of the time, and other pieces of required documentation also were routinely left out.”

Stay In Your Home

When a bank sues you for foreclosure without the original note, they are committing fraud on the court.

But it happens every day. Most people go into a panic the moment they receive a legal document, and assume that as the little guy, they will automatically lose.

Know your rights! Get more information about the lost note strategy in Chapter 12 of my book, Get Out Of Credit Prison.

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Have you disputed an item on your credit report, only to be ignored by the Credit Bureaus?

Credit Bureaus work hard to discourage you from attempting to restore your credit.  While the Fair Credit Reporting Act (FCRA) legally requires them to give you a chance to dispute an item on your credit report, Credit Bureaus do whatever they can to make it difficult for the average consumer to exercise their rights.

This may come as a shock to you, but the Credit Bureaus do not want you to have good credit because lenders — their customers — make far more profits from people who have low credit scores.

Who Handles Disputed Items On Credit Reports?

Under pressure from Washington, the Credit Bureaus now include a generic dispute form when they mail your credit report to you. In theory, if you see an item on your report that you do not believe is correct, you simply fill out the form and send it back so they can fix it.

Do these forms work? Well, sometimes they do.

But put your imagination to work here for a minute, and place yourself in an office building somewhere in Atlanta, Georgia where you along with another hundred workers do nothing else but respond to credit disputes.

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Now, this is not the highest paid job in the company, and the working conditions are not as plush as the executives on the top floor with a nice view of the Atlanta skyline. In your tiny cubicle, you get a telephone with speed dial and a place to put your purse. You report for work at 8 AM and wait for the guy from the mail room to drop off a big pile of dispute letters from irate consumers who are angry about their bad credit.

Most of these letters are pretty generic, the sort of thing you get from a “credit repair kit” sold at one of the leading discount stores for $19.95. Then there are the nasty letters, the ones that practically shout, “You are the reason for my bad credit”, “My brother-in-law says that by law you must help me” or “I am going to let the air out of your tires, unless you fix my credit.”

What a great job, right? These credit dispute staff come in to work every day to do the same mundane task.  The pay is terrible, and since people quit all the time, half of the workers are still “in training.” Do you really expect your dispute letter will be handled in a highly professional manner?

How Do They Handle Disputes?

Under the Federal Debt Collection Practices Act (FDCPA), you have the right to ask a collector or creditor to prove that the amount owed is accurate. The woman who reads your dispute letter is required by law to “verify the debt”.  She probably already has the phone number of the creditor or the collection agency in her automatic dialer, so she just calls them up and says, “Do you have so and so as a customer”? Then they answer, “Why, yes we do and they owe us $1,543.20.” So she makes a note on your credit report that the account has been verified.

She’s just taking their word over yours, and she never checked any further into the details. Why would she, when she just wants to get to the end of her work day and go to the movies with her boyfriend? This is how many errors end up on credit reports. Even though verification is mandated by law, Credit Bureaus simply do not provide 100% accuracy.

There Are No Credit Cops

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How can they get away with this? Well, on the surface, the Credit Bureau in this example has followed the law. The Federal Trade Commission is supposed to enforce these laws, but they often lean toward the side of the credit bureaus, and there are no “credit cops” on patrol to make sure that everything is done correctly.

And in all too many cases, the customer simply gives up and stops trying.  They are counting on you giving up.

You lose unless you fight for your own rights.

To learn more about how to make Credit Bureaus to sit up and take notice of your dispute, check out my e-book, Get Out Of Credit Prison.

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Think again! Signing that paper will not make your problems go away — in fact, it may make things worse.

Don’t Lose Your Home – AND Your Good Credit

In today’s world, many folks are confused about what to do when facing a foreclosure. There are a lot of “opportunists” who claim to have an angle on how to get your money figured out. I have seen it all. The most common scam is telling you that a short sale of your home will save your credit.

Do you honestly think that the bank is NOT going to put your late payments on your credit report? No one tells you the truth — that your credit is already on the rocks and going down. Why? Because, they will tell you anything to get your money.

Photo by miusam-ck

Don’t Trust “Foreclosure Saviors”

Be on the alert when a well-dressed shark tells you he is going to make your payments for you and save your credit if you just sign a deed in lieu of foreclosure. This is total BS. A rip-off. A scam.

Wake up, man! Do you think strangers walk around handing out money to people they don’t know? This is the real world, and everyone has an angle to get your hard-earned money.

Get It In Writing

The only way this short-sale strategy will work is if the lender agrees in writing:

1. to delete your prior mortgage payment history from your credit report, and
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2. that they will NOT proceed with the foreclosure action.

If you get this agreement in writing, you can avoid a “default judgment” and keep the whole thing out of public records.

But be alert, and do not accept personal assurances or promises over the telephone. People lie every day.

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Are you facing a foreclosure on your home?

Are you tired of getting scary legal documents and court summons in the mail?

It can be very tempting to just ignore it all.

Maybe you have said to yourself, “Aw, to hell with it — I am just going to walk away from this mess.”

Read this very carefully.

I’m going to share what you have not been told — not by an attorney, your friendly investor, your mortgage broker, and surely not by your real estate broker.

Do Not Pretend It Will All Go Away

If you play in a baseball league, and you don’t show up for a game, the other team wins by forfeit. It works the same way in the legal system.

If you fail to defend your foreclosure simply because you did not answer the complaint, then the judge will automatically give the plaintiff (lender) a “default judgment”.

Now read this a couple of times over. In most states, if you get a default judgment against you, it is entered into the public record and will remain there for many years. Here in Florida it can remain for twenty years.

What Does A Default Judgment Do To My Credit?

Let’s say it’s five years later, and things have straightened out for you. You have a decent job, and want to buy another house. You have been paying your bills on time.

But when you apply for a loan, the underwriter or title company always checks public records. And there it is, sticking out like a sore thumb — a judgment on your record.

You will not get a mortgage until that judgment goes away.

How Do I Answer A Foreclosure Complaint?

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How do you protect yourself from what is happening to you?

Summon your courage, and defend yourself against a foreclosure:

1. Answer the complaint even if you don’t have an attorney.

2. Do so before the deadline spelled out on your complaint.

Is it hard to answer a complaint?  Not at all! Just follow the instructions.

If it says to show up in court within twenty days — then show up in court within twenty days!

You may be nervous to appear in front of a judge and an attorney — but ask yourself why you are willing to just roll over and just accept a judgment without a fight.

In Get Out Of Credit Prison, I share several ways that you may actually be able to legally get your case thrown out by a judge.

Before you ignore that forclosure complaint, my friend, think ahead!

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