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The Story of Kenneth Baker

Kenneth Baker had a single financial objective from the early part of 2005 until March 2006 – he
wanted to move his family into a new home. The family home in Loudoun County, Virginia was too cramped for his wife, daughter, and wife’s children. In order to move, Kenneth needed approval for a mortgage. It shouldn’t have been too hard – after all, Kenneth had always paid his bills on time.

Unfortunately for Kenneth, his credit history had become “mixed” with that of another “Kenneth Baker” – a Kenneth Baker who was not so diligent about paying his bills. This other man had racked up numerous delinquencies, charge-offs, collections and judgments against him. These black marks showed up on Kenneth’s credit report, making it impossible for him to get a mortgage.

Kenneth made enormous efforts to fix these errors and get a mortgage. He sent multiple disputes to the credit bureaus. He hired lawyers to write dispute letters to the bureaus. His letters explained how the other man’s negative accounts had gotten mixed into his credit report, how he needed the problem fixed to get a mortgage, and even how the bureaus procedures had caused similar problems in other cases that resulted in successful lawsuits against the bureaus.

Kenneth applied unsuccessfully every month to get a mortgage, sometimes applying more than once in a month. Every time he tried, Kenneth had to explain to a mortgage broker how some other man’s negative accounts had gotten mixed into his credit history. Every time he had to explain this, Kenneth Baker became embarrassed and anxious. The constant rejections humiliated Kenneth, and he soon became depressed.

On March 24, 2006, Kenneth Baker committed suicide. In his last dispute letter to Experian, he wrote of how his battle to fix his credit report had “destroyed his life.” In his suicide note, Kenneth referred to his ordeal with the credit bureaus. In this case, inaccurate credit reporting literally cost a man his life.

6 Secrets to Better Credit

Good credit is necessary to get approval for a mortgage or other loan. The ability to borrow money is not the only thing that can be hampered by bad credit. More and more landlords and property management companies are checking the credit of prospective renters to judge if they are reliable. These 6 secrets to better credit can help consumers improve their credit scores so that their credit will help them achieve their goals rather than be an obstacle to overcome.

Paying bills on time is the most important activity to help increase a person’s credit score. Most people know that being late with payments will damage their credit. However, these secrets to better credit may surprise you.

1. Do not open too many accounts at one time.

Many people do not realize that the timing of payments on accounts is not the only factor that affects the appearance of a person’s credit. Another factor that affects credit decisions is the average age of accounts. If the person suddenly opens numerous new accounts such as credit cards, the average age of accounts can drop significantly. This can appear as a warning to new lenders. This is especially important for people who are rather new to building credit for the first time compared to those who have established credit.

2. Check the credit report by ordering the report directly from the credit reporting agency.

Consumers can order a copy of their credit reports from the credit reporting bureaus. Periodically checking credit reports can help guard against inaccuracies and identity theft. If there is something on the report that is inaccurate, the consumer can challenge this inaccuracy through the credit reporting bureau. If people have questions about an entry on the report, they can contact the company directly.

3. Fixing a credit score does not occur immediately.

Even if consumers pay off all their delinquent accounts as they appear on the report, the credit report is not immediately expunged. Accounts appear on credit reports for seven years. Therefore, it takes time to improve a score. Adopting a practice of clearing delinquent accounts and paying bills on time will gradually improve the credit score.

4. If the credit score has been damaged and the consumer is struggling to make payments on time, the person should consider seeking help from a credit counseling agency.

Legitimate credit counseling agencies assist people in setting up repayment plans with creditors and assist in raising credit scores though responsible payment practices. The credit agency works with creditors to lower the amount of payment that is due. Sometimes, they are successful in getting creditors to lower the fees or interest to make it easier for the consumer to fix their credit.

5. Do not apply for more than two credit cards at any given period.

If the credit reporting bureaus see that consumers have applied for three or more credit cards, they believe that either the person is desperate for cash or that their identity has been stolen. Each scenario has a negative effect on the person’s credit score.

6. Lower the amount owed to creditors.

When judging a person’s credit, the lender or landlord may consider the person’s total amount that is owed to creditors. If the person’s income is too low to cover the amount owed, chances are that they will not feel confident about the person’s ability to pay on time.

Understanding FICO

If you’ve ever applied for a mortgage loan to purchase property or refinance, you’re sure to have heard about your FICO score.

What is a FICO score?

A FICO score, or credit score, is like a grade given to you based on your purchasing on credit and how you pay back the amounts of credit you are loaned. The mathematical formulation of the FICO score was developed by Fair Isaac and Company. Note, the name FICO is for the name of the company Fair Isaac and Company. Lending institutions use your FICO score to determine whether they will give you a loan or not. If given a loan, most lenders offer different interest rates contingent upon how high or low your score is.

The Agencies:

There are three major national credit reporting Agencies in the United States. Experian (formerly TRW), Equifax and Trans Union, plus hundreds of smaller credit bureaus that are affiliated with one or more of the Big Three. Credit Bureaus are private (for profit) institutions that make their money by gathering your personal data and assigning

Credit Report:

If you have ever applied for mortgage, refinancing, housing rentals, auto financing, employment, insurance, or almost any type of credit, you have a credit report in your name (also called a credit file or credit history) at one or more of these credit bureaus. Creditors, banks, credit card companies, and finance companies supply credit bureaus with information they receive from applications and existing accounts.

Basically there are two types of credit reports: those provided to businesses and those provided to consumers. The credit reports have essentially the same type of information, though it is presented in different formats for each use.

Your Credit Score:

All FICO scores range from 300-850. The higher your score is, the more likely you are to get a loan. The lower your score is, the less likely you are to get a loan.

Your FICO score:

How is my FICO Score Calculated?  

There are five different categories credit bureaus look at when assigning your credit score. Here are those categories – and how much weight they have in determining your score.

35% of the score is based on your payment history. The reason more emphasis is placed on your payments being made on time is because lenders think if you are late with other payments you may be late with theirs. So the more late payments you have on record the worst your score will end up being.

30% of your score is based on your Debt Ratio, the amount of debt you currently have, compared to the amount of debt you’re allowed to have. If you have a couple car loans, a mortgage, and several maxed out credit cards, a lender may be concerned that you are on the threshold of bankruptcy. On the other hand if your balances are less than 50% of the available credit, lenders will see you as responsible and may be more willing to extend your credit.

15% of your credit score is based on the Age of Credit Line. If the score is based on the length of time you’ve had credit, the longer a line of credit has been opened, the better it is for you.

10% of your credit score is based on New Accounts.  Opening new credit accounts will hurt your overall score.  Inquiries are also included in this category.

10% is based on miscellaneous influences such as types of credit lines.

Interview With CEO

Bladimir Mercedes

CEO & Founder

Mercedes Enterprises INC

www.CreditMercedes.com

800-991-0914

Bladimir Mercedes is the CEO and Founder of Mercedes Enterprises INC, an Advanced Credit Repair Company based in New York. He has taught and helped thousands of people improve their credit since 1998. He is an acknowledged credit repair expert and industry leader, responsible for developing the most compliant and successful credit repair business model in the industry, known as Pay-Per-Delete. He’s also the co-author of the book “Improve Your Credit Score Now” which he wrote and published with attorney Kerry Lutz.

Question 1: Bladimir, first of all, thank you for coming to the show?

Answer 1: It’s a pleasure to be here, thanks for having me.

Question 2: Bladimir, what got you interested in credit repair and the business of helping people improve and restore their credit?

Answer 2: Well, as most great things usually are: It was a total accident. We’ve all heard that Identity theft is the fastest growing crime in the U.S. Right? Well, I was a victim of identity theft. In the process of trying to fix all the damage the perpetrator had done, I discovered what a nightmare it can be when dealing with the credit bureaus and creditors. I also discovered the real reason why identity theft is such an easy crime to commit in the first place and I must tell you….It is shocking: Did you know that if the credit bureaus and creditors put just a few minor restrictions in the way that consumer’s information is accessed they could significantly reduce identity theft almost over night? That’s not happening any time soon though.

Question 3: That is just amazing! And why do you think it is so easy for Identity thieves to commit these crimes?

Answer 3: I have to say it’s a combination of both: easy access to consumer data and how easy the credit bureaus make it for creditors to retrieve a credit file. When I was fighting to clean up my own credit from things that someone else had fraudulently taken out, I discovered that the perpetrator was able to open accounts without identification, using a different variation of my real name, a different date of birth and an address from a state that I’ve never lived in. This person, who never got arrested by the way, was able to get access to credit by just having a variation of my name and my full social security number. This raised some disturbing questions as you might imagine. The answer to those questions is what has lead to this incredible journey of educating and helping consumers fight back against this flawed system full of errors and inconsistencies.

Question 4: I can begin to see the big picture here Bladimir. How difficult would you say it is for an average American who has become a victim of Identity theft to regain control of their credit?

Answer 4: It’s extremely difficult in most cases. When I realized how difficult it was for me to gain my credibility again, I did not want to even think what a person with less experience and resources would have to go thru. I was familiar with the credit bureaus, I knew how to read a credit report, having been a finance manager for the auto industry in the past, and I had a very frustrating experience fixing that mess. The first thing an Identity theft victim should do is report the crime to the authorities followed by a series of interactions with the creditors and credit bureaus. This sounds easy but the problem is that the credit bureaus and creditors some times ignore these requests to correct the errors even when a police report and fraud affidavit are provided. In chapter 8 of my book I go into further detail about the things one should do when facing identity theft issues, including filing a complaint with the Federal Trade Commission.

Question 5: Let’s talk about your book for a second here. What made you write this book about improving your credit?

Answer 5: I want to educate consumers and provide them with a simple resource that can help if they face potential issues. Identity theft is just one issue out there that consumers are facing. A recent study conducted by the National Association of State Public Interest Research Groups discovered that 79 percent of all credit reports contain some type of error – and 25 percent contain such serious errors that those individuals could be denied credit.

54 percent contained inaccurate personal information such as misspelled names, wrong Social Security numbers, inaccurate birth dates, inaccurate information about a spouse and out of date address. For example, one credit report listed a man’s business partner as his spouse.

30 percent listed “closed” accounts as “open.” For example, listing a student loan that was paid off years ago as still outstanding. Another report listed several credit cards, a mortgage and an auto loan all as open.

22 percent of reports had the same mortgage or loan listed twice. This mistake often occurs when loans are serviced or sold.

8 percent of reports simply didn’t list major credit, loan, mortgage or other accounts that could be used to demonstrate the creditworthiness of a consumer.

Anyway you slice these statistics the results are devastating to the consumer.

Question 6: What is your suggestion to people who have credit challenges out there?

Answer 6: Fist of all, people need to identify the problems they are having with their credit. Once you identify what’s wrong, you’ll come closer to finding a solution. If you feel you cannot fix problems on your own, you should hire someone competent enough to help you.

Question 7: How can people obtain a copy of your book?

Answer 7: Just go to www.CreditMercedes.com and request a free copy, which you’ll receive in the form of a PDF. If you want a physical copy of the book, you can also order it for free, just pay for shipping and handling.

Question 8: Well Bladimir, thank you for coming to the show and for providing such valuable information.

Answer 8: It’s a pleasure to be here. Thanks for having me