Fix Your Own credit! Step 3

Step three is owning up to your debt. Now that you have disputed all the errors and removed any old or outdated information, you can now tackle what you really owe. Before we get into step three, I want to rehash step 1-2 and list in order the letters you may need to download and send.

Letters needed to fix your credit, in order

Other things to look for!

  • Statute of Limitations Expired – Send to Debt Collector: Check your state law, if you see a debt older than what the state allows Use this letter if you are being contacted about a debt that is no longer collectable because the statute of limitations has expired
  • Debt Already Settled – Send to Debt Collector: Sometimes long after you have settled a debt, a different debt collector will try to collect on it. That is another reason why you need to keep good records! Use this letter to explain to a new debt collector that you have already settled this debt. Most of the times it will be the remaining balance from the settled debt, they just failed to write off the remaining balance. They sometimes allow this lingering balance to collect interest ballooning your balance right back up keeping you in a never ending debt cycle.
  • Debt Paid in Full – Debt Collector With debt collectors you want to take every precaution to be sure that your account is recorded as paid in full. Use this letter when making the final payment

Actions You can Take!

  • Request Removal of Old Info – Credit Reporting Agency Use this letter to request that the credit reporting agency remove information from your credit report that is outdated. You may also use this in conjunction with “Statue of Limitations” letter. Review the FDCPA and FCRA they outline generally how long a debt can be reported, 7-10 years typically, but your state laws prevails in these matters.
  • Correction of Information – Credit Reporting Agency: Use this letter when there is information on your credit report that needs to be corrected. To be honest, this is a soft letter to let credit reporting agency items now need to be removed.
  • Correction Follow-Up – Credit Reporting Agency: This is a follow-up letter to the prior letter, and should be used when no action has been taken by the credit reporting agency on your first letter. Unlike the prior letter, this explains to Credit Reporting Agency , According to the Fair Credit Reporting Act, you have 30 days to address my dispute.

More Actions; Make them follow the Law.

  • Complaint about Collection Agency – State Attorney General Use this letter to make a complaint against the abusive practice of a collector
  • Notice to File FTC Complaint – Credit Reporting Agency This is a follow-up letter to the prior letter, and should be used when no action has been taken by the credit reporting agency on your first and second letters
  • Complaint Letter to FTC This is a follow-up letter to the prior letter, and should be used when no action has been taken by the credit reporting agency on your first and second letters, and third letter, the notice of intent to file a formal complaint
  • Notification of Lawsuit – Credit Reporting Agency Use this letter if all else fails. You cannot send this letter without actually having filed a lawsuit. You will need to send a copy with the letter ( State Attorney General
    Address at www.naag.org )

Notification of Identity Theft – Debt Collector

Use this letter if you have been the victim of identity theft and you are being contacted about debts that are not yours. I would send this letter along with dispute letter.

You are now done with the hard part of cleaning up your credit. The extensive review, letter writing, and follow-up can seem daunting. That just might be the easy part, getting them to respond in a timely manor is what makes the process long. With some luck you may get every one to respond with your first letter, but keep good records and be diligent in case they don’t. Now that is done, lets get to the part that really matters, paying the people you do owe.

Paying Your Debt;

Things to remember when paying your debt. There are two type of accounts, open and closed. Your open accounts are usually things like, car loan, house, and credit cards. These are the things you are probably using right now. These accounts are the most important, as they are the accounts that fluxuate your credit score based on how you pay monthly.

The closed accounts are usually accounts that were open but were closed due to late or non-payment. These accounts have already affected your score for them going bad, so paying them off carries a different weight. I will not say I know exactly how the algorythm for the Fico and beacon scores are produced, but I do know enough to say: ” Once an account goes bad it drops your score, the more bad accounts you have do this drops the score even lower. The more bad debts that show as paid increases your score, but not as much as the item made your score drop. That is why it is important to make sure your current and open accounts do not go bad. Below is a list of letters that will help you facilitate this with your current creditors , and stopping anymore accounts showing as charge offs.

  • Verification of Final Payment Amount – Debt Collector With debt collectors, you want to take every precaution to be sure that your account is recorded as paid in full. Use this letter prior to making the final payment
  • Offer to Settle Debt – Debt Collector If you want to offer to settle the debt instead of paying the full amount stated by the debt collector, use this letter
  • NOTE * Paying the debt in full always looks better than settling your account. The credit report will also show “account settled in full” this is still an adverse mark on your credit. Be sure to clarify with debt collector if your account is being paid in full.*

Next Best Thing

Most people would love to pay their accounts in full or settle them all out, but do not have the upfront cash to do so. I have provided some letters that will help the middle of the road consumer get back on track, and keeping their open accounts from becoming closed collection accounts.

Bad Times, Just make it stop!

If your in a tuff bind and can not do either of the prior options and simply not interested in fixing your credit right now, you still have options. There is no magic trick in fixing your credit, ultimately you need cash to pay. If your not currently in the position to do so, no need to be harassed. I have listed a few letters that pertain to the ones who want the collection activity to stop, or their creditors to be put on noticed of consumers current situation.

  • Stop Phone Calls – Debt Collector Use this letter to have debt collectors stop calling you. This is the simple Cease and Desist letter, * There is a $1,500 penalty on the collector for each violation of this, after you have sent this letter, so keep records of all calls.
  • Suspending Payments – Creditor If due to personal circumstances you cannot make your current payments, call and speak to someone and explain your situation. If the person you spoke with on the phone agreed to suspend payments temporarily, follow up the telephone call with this letter
  • Net Worth Letter (On Letterhead of Accountant ) Use this letter to show creditors/debt collectors that you have no means to pay the debt
  • Bankruptcy Discharge – Credit Reporting Agency Use this letter to have the credit reporting agency show debts as zero balance or deleted after being discharged in bankruptcy. If you choose this route, don’t view it as all is lost, many people have filed bankruptcy and have made a substantial rebound. In fact, many has view it as an alternate method in cleaning your credit. See your local attorney, if your considering filing bankruptcy.

The good news is, most debt have a statue of limitations, and at worse case you can sit it out 7-10 years and get a fresh start.

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