Credit fix report BEFORE applying for new credit! If you absolutely must pull the trigger and apply for new credit before cleaning up your credit reports, expect to overpay or to face rejection.
*IMPORTANT* Do NOT even think of applying for credit until you review & confirm your credit reports.
Recently, Marc emailed me the other day, asking the same kind of question I get at least once a day.
I’ll be the first to say that most parts of credit repair are a bit complicated when you’re standing on the outside looking in.
Other parts are flat-out easy and…well…common sense. This is one of those times when you’d think Marc should have known better.
In Marc’s defense, I only know what he’s shared with me. Maybe Marc had to move quickly and take what he could get when he got it.
Regardless, Marc’s decision to do what he did will end up costing him $1,000s in OVERAGE charges as you will see for yourself….
MARC’S DECISION
Question:
“I think I made a pretty big mistake. Nonetheless, I’d like to get your opinion of what I’ve done. I guess it won’t matter as I’ve already done it. I recently refinanced my home out of one of those adjustable-rate mortgages (ARM) with a line of equity (HELOC) into a fixed-rate 30-year mortgage at 6.5 percent. I could have gotten a better rate with a higher credit score, but my credit score was only 620 because of some late payments on the HELOC and some late payments on a few of my credit cards. I refinanced $485,000 and the house is worth around $833,000.”
“I’ve since paid off the credit cards and have had zero balances on six cards for over a month now. I am very unhappy with the 6.5 percent rate, given my zero debt on the credit cards. I didn’t close any of the accounts.
“How long will it take for my credit score to enter the 700s again? Would it do me any good to dispute these accounts which have dropped my scores to a 620 middle?”
Response:
Marc, what you’ve done is done! I don’t think you need me informing you of the mistake you’ve made. I presume you had to rush for some reason to get your house refinanced…or you wouldn’t have gone forward with a refi on a 620.
I have some suggestions for you, but mostly your question will aid those thinking of doing the same thing. For those who relate to Marc and are about to go for a refi with a 620, stop, look & reconsider.
Okay, you paid off your credit cards. Great.
- Keep your credit card debt as LOW as possible, especially when you’re wanting to apply for credit. This is called Debt-to-Credit Utilization (that is, $1,000 credit limit with a $500 balance = 50% D2C ratio). In other words, this is not good. 30% of your credit scores come from how much debt you have.
- Write “Goodwill Letters” (get this exact letter from my book at http://www.fixmyuglycredit.com/credit-repair-offer.html) to these Creditors reporting LATES.
- Confirm the Creditors are accurately reporting these accounts 100% accurately. If they are, “goodwill” them. If not, dispute (the right way).
The LATES are going to stay on your credit report for seven years unless you aggressively work to change the way they’re reported. Yes, Marc, you should work on these accounts, regardless of what you’ve done by refinancing. I suspect you’ll want credit in the next 7 years.
Bottom Line: credit fix report requires attention BEFORE applying for credit. Do not accept unpleasant surprises. Regularly pull & review your reports. The Goodwill Letter is incredibly powerful, beyond credit repair. In my book, I show the exact letter I used recently on Bank of America to grab almost $700.00.
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