A couple weeks ago I was speaking with Dave Alexander, a top real estate expert within Donald Trump’s Organization. He spends much of his time travelling the country coaching individuals on how to build wealth through real estate. He had the privilege of working with an individual earlier this year who works within the credit bureaus where they keep track of all our credit scores.
When asked how it really works, how are those credit scores:
Those scores that banks look at before they give you a loan,
Those scores that a landlord looks at before they approve you to rent an apartment,
Those scores that credit card companies look at before they give you a credit card,
And those scores that the car dealership looks at before they sell you a car,
When asked how those scores are calculated, this man who is a high ranking executive within the credit bureau said, “ We really don’t know how it works”.
He went on to say that the three bureaus are tied to other government agencies but that they don’t work in collaboration, but rather the data goes into the system and it spits out a number and no one really knows how the numbers are calculated. We do know it is based on:
The amount of credit you have available
The amount of credit you have extended,
The amount of defaults on any of that credit
And the length of time for any of this defaults.
But beyond those variables no one seems to know the actual formula. But we did learn this:
If you want to increase your credit score this is how to do it.
1. Get a copy of your credit report from one of the online resources such as FREECREDIT REPORT.com
a. Obtain a copy of your report from each of the three bureaus
i. Experian
ii. Equifax
iii. Trans Union
2. Review the three reports and look for any recorded history of your late payments or defaults in loans and circle them.
3. If you are still late on any payment you must pay up and get current. Then write to that creditor and ask them to remove the bad record from your credit report. They will write back and say
a. “We wish we could help but it is against Federal Law for us to remove it from the credit bureau.” And that is true, they cannot.
4. Then write to the creditor again and say you feel bad about the past situation and you have turned your finances around and are working to improve your credit score, say you understand they cannot remove it from the credit bureau, but if they really want to help as they said they do, then will they at least remove your bad record from the creditor’s own records. This they can do legally. They usually will do this as long as you are current on payments.
5. Then once that is done send a letter to each bureau including a copy of the report with circles around the late payments or defaults in payments shown on your reports. Make a hand written letter with only one sentence that says, “Please provide verification of the circled items”.
6. They know and now you know that the credit bureau can only keep something on your report if they are able to verify it through records with the creditors. And now when they call to verify the old defaults with the creditors, they will not be able to verify them because the creditors have removed it from their records as you asked them to do.
7. The bureau will now have to remove it from your credit report because Federal Law requires any record that cannot be verified to be removed from your credit report.
The average person who has an average credit score will be able to increase their score by 80 points within 45 days by taking these steps. This will give you more opportunities in all areas of your finances.
Paul McCormick is author of SECRETS OF THE MILLIONAIRE INSIDE: The 7-Step Formula For Becoming A Millionaire.
The book Releases in stores nation-wide in September and if you buy the book now you can receive two CD Series absolutely FREE by visit Paul’s website for details:
www.FormulaForMillionaires.com
