Debt Elimination Success Seminar
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Section 1
A Look at Debt
History of Debt
Credit Card History
Current State of Debt
How You Got Into Debt
Good Debt Bad Debt
Business vs. Personal Debt
Section 2 Dealing With Your Money
The Two Step Plan
Doing The Two-Step
Step One
Step Two
The Paths Out of Debt
1- Create a Debt Payment Plan
2- Neogtiate Better Rates & Terms
a.Consolidation Loans
b.Consumer Credit Counseling Services
3- Negotiate Lump-Sum Settlements
4- Bankruptcy
5- The Easy Way
6- Win $1,000,000
Living Debt-Free
Manage Your Money
Make More Money
Save Money
SameMoney-MoreFun
Stay Debt-Free
You as a Business
Section 3 Dealing With Your Creditors
Alerts/Scams
The Credit Industry
Credit Industry
The Fine Print
The Secondary Debt Market
The Debt Collection Process
Original Creditor
The Charge-Off
Collection Agency
Legal Problems
Dirty Creditor Tricks
Dealing with Debt Collectors
Dealing with Debt Collectors
Statute of Limitations
Cease and Desist Letter
Section 4
The Credit Report
The Credit Report
Credit Score
Credit Repair
Section 5
Dealing With Yourself
The Critical Factor
The Art of Prosperity
The End of Failure
Prosperity Coaching
Section 6
Kids and Money
Kids and Money
How to Pay for College
Section 7
Debt Information
Bookstore
Debt Facts
Radio Show
Resources
About Us
Privacy Policy
Site Map
If you find this information helpful I ask you to contribute to help me help more people. You can contribute through PayPal by clicking on this button Or you can mail in your contribution.
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Host: Tom Allen
Guest: Andrea Villarreal from Better Scores Better Rates
Segment 2
Tom: I’m Tom Allen and I’m speaking with Andrea Villarreal of Better Scores Better Rates. She helps people improve their credit score and therefore saves them money on refinancing and other loans. Andrea we’ve got an email that has come in.
Andrea: Okay.
Tom: From a couple that is going to be buying a home and they are doing something that’s very wise their taking a look at their credit report and their credit score before they start the purchase of their home.
Andrea: Okay.
Tom: Apparently they have what I think and you may be the better expert at this I think they’ve got a pretty good score almost seven hundred as it is. But as we know no matter where you are it always helps to have an even better score.
Andrea: Oh Absolutely. You want to create a little bit of padding because lenders are pulling your credit during you purchase and you would hate to be knocked down into a lesser category because of some credit pulls.
Tom: That’s interesting so the mere fact that you’re applying for credit is going to lower your credit score.
Andrea: It lowers it some.
Tom: A little bit.
Andrea: I want to talk about the number one mistake I have several other things I want to hit but I will send you my newsletter you can somehow take my facts and my tips and put them on your website so the average consumer can read it.
Tom: Okay.
Andrea: The number one mistake a consumer makes is they don’t realize that you can never miss a payment in your life and feel like you have good credit but your debt owed ratio can plummet your credit score. Meaning if you owe too close to the limit on a credit card or more than fifty percent at any given time during the month, I have more people have gas cards or a lower credit card with a two hundred fifty dollar limit they can owe $126 that’s one dollar over the limit but all score simulates know is that you’re one percent over the limit over the fifty percent limit on the card, you and I both know that its just a buck. It does not know the difference between one dollar and a thousand dollars.
Tom: Really there’s not a person looking at your credit report it’s all done by computers.
Andrea: It's all done by computer. It's cold calculated and they’re not looking at who you are as a person it's numbers and it's put into a computer. So I always tell people look at your credit report and see. You could have lower limit credit cards that you pay off every month. But at any given time during the month if you owe more than fifty percent of that limit its going to lower your score. And you have to realize that whenever your credit is being pulled you might have been pulled at the wrong time of the month. Because they’re not updating the bureaus every thirty days
Tom: Ah.
Andrea: So I always tell people look at your credit report. If you have a Capital One card where it’s a five hundred dollar limit, you owe two hundred fifty or three hundred by paying it down about sixty dollars you could actually improve your credit score just before a major purchase. Someone says I don’t have an extra sixty dollars, well if we didn’t go out on a Friday night, one night, put that money towards a credit card. You can find sixty dollars or eighty dollars or hundred dollars.
Tom: Especially if you’re looking at doing a refinancing or a home mortgage where having a higher credit score could save you hundreds or thousands of dollars. That sixty dollars paid to Capital One could save you hundreds of dollars.
Andrea: Oh absolutely If you buckle down just before, and I have more people come to me that who really don’t need me and I pick it up and I say look I’m not going to bill you. Do this, this, and this and they’re just stunned at how they get a pick-up on their credit score. And it’s just by paying down, if you have a department store card like I said with a low limit and you’re kind of close to that limit pay it down a little bit and that’s all you really need to find some points. Even though you pay it off every month make a point to pay it off and make sure it’s a solid thirty days before you make that major purchase or you’re going to refinance on a home. Pay off your department store cards or your smaller credit cards with a lower limit or pay those down to where you owe less than fifty percent of the credit limit. You’re going to find you’re going to have a big point boost.
Tom: Okay
Andrea: I always say do the smaller ones first. Because if you have a ten thousand dollar credit card and you owe nine thousand last I check the average person doesn’t have several thousand lying around their home.
Tom: Right. It’s better to get more than one card down below the fifty percent than one big card.
Andrea: Absolutely. I always say hit your smaller ones first and those tend to be the ones with the higher interest rates anyway.
Tom: Yes
Andrea: Hit your smaller ones first they’ve got the higher interest rates or even if the don’t from a sheer credit scoring standpoint if you pay down those smaller cards you’re going to find your points on your credit score.
Tom: Alright. M & J are looking to buy a house and they have a very good credit score, again of about seven hundred. But their concern was a judgment from a repossession that came back in 1998 so that was at least six years ago They’re wondering if they pay off this account will it improve their score because it shows recent activity or show that the judgment has been paid.
Andrea: Okay. Here’s the deal.
Tom: I think this is going to be a trick question. Go ahead.
Andrea: It varies from state to state. The judgment paying really isn’t going to do a whole…its really not affecting their credit that much. The further you get away from negative credit the less it affects your score.
Tom: So the older it is the less effect it has.
Andrea: The less it’s going to affect. Okay so that judgment not gong to come off until its paid, ten years from the date it’s been paid. Here’s the catch. When they go to purchase that home, I can’t think of any bank who’s going to let them purchase that home without paying off that judgment off first. It has to do with the home purchase their not gong to let them purchase a home with a judgment.
Tom Oh, okay.
Andrea: So the bank’s going to say what they need to do, and I always say, you’ve got to take care of this judgment because they could garnish your wages or they’re going to prevent you from a purchase or even if you get it off your credit report, which sometimes you can, they’re going to do what’s called a title search on these people and they’re going to do a search and find this so they’re going to think they’re getting the home of their dreams and they could just be crushed when it comes to closing.
Tom: Even if this was on an automobile that was repossessed?
Andrea: Even on an automobile. A lot of banks will not give you a loan with a judgment sitting on it. What I highly advise on judgments is to…people think that they can go in and do these themselves. If they contact a company that does nothing but debt negotiation and get them, and they sign up and do the POA’s (Power of Attorney’s) and get the debt negotiation company to contact the people with the judgment and get the judgment worked out to obviously a lesser amount to where the can afford it or its not as much because the debts so old that their probably settle for 50, 40 cents on the dollar. But you want to hire some one who’s professional to do this because you have an emotional attachment to the money. Typically a company that negotiates deals will get a much better rate than you would as a consumer off the street.
Tom: Okay.
Andrea: Cause that’s what they do everyday day in and day out. I don’t think the judgment is really affecting their credit score as much as the think it is because if it was affecting it, like a fresh judgment, yes, it’s going to plummet your score but because it’ so old its not really affecting their score.
Tom: Let me see if I have this right then. It’s the fact that the judgment itself isn’t affecting their score. But the judgment is going to affect their ability to buy a house.
Andrea: Absolutely.
Tom: Now it if were not a judgment if it were just a charge-off that was six years old.
Andrea: If it was a charge-off that was six years old I would never advise someone to pay something that’s six years old.
Tom: And why is that?
Andrea: Because the statute of limitations is over. It could actually hurt you because it’s going to re-calculate your date of last activity on the debt and you’re one year away from it coming off your credit report.
Tom: A lot of people don’t know this, but if you pay a debt that is six years old, again it re-calculates the date of last activity, and bad information can stay on your credit report for up to seven years.
Andrea: Another seven years.
Tom: So actually you’re buying yourself six more years worth of bad credit.
Andrea: Absolutely, and by that time they’ve added so much interest or fees and it’s probably been sold three or four times over and you know your original creditor sold it for three cents on the dollar.
Tom: Right
Andrea: And a lot of people say I feel bad I feel like I owe the money. Well if you feel like you owe the money donate what ever you felt like you owed to a charity and do some good for society
Tom: You know I like you because that’s advice I often give too. If you feel that you must pay you’re more than welcome to send in a check or a money order to the original creditor if you feel that you must. But if it’s just your emotions go ahead and send the money to a good cause.
Andrea: Yeah, send the money to your favorite charity or if someone enlightens you send a check to the organization that you felt really helped you.
Tom: Maybe even the I Hate Debt radio show.
Andrea: Exactly. I mean with money there’s such an emotional attachment to it, but when there’s an old debt I would never advise, I do come in at times and tell some of my clients your debts a year old, you’re back on your feet you need to contact a debt settlement company to work out deals with some of these creditors or these collectors while I’m working on your credit at the same time. And then there’s some I look and say you know if you were my mother I wouldn’t let you pay this because it’s so old, you’re past the statute of limitations and it’s only going to hurt you. Your original creditor already let it go for pennies on the dollar and they obviously felt that was all it was worth.
Tom: Yes.
Andrea: They have let it go and that’s what they felt it was worth.
Tom: What other misconceptions, or what other information that you feel that we really don’t know that we really need to know, cause this again, is like a foreign language to many us.
Andrea: I always say the FICO system it’s kind of a big mystery of what makes everything up. One thing about consumers that amuses me is that they get very distraught over is they’ll call me and they’ll go, “I have all these addresses on my credit report, I’ve never lived here, I’ve never lived there,” the addresses get put on for promotional purposes they absolutely do not affect your credit score. So don’t waste your time arguing with the credit bureaus over address or the way your name is spelled that really doesn’t matter. You might want to take it off for accuracy or potential identity theft but it’s not affecting your credit score.
Tom: And again how do those get on there? You said for promotional purposes.
Andrea: Promotional purposes and they misread how your name spelled there’s just so many ways they get on there. And sometimes it does have to do with identity theft or someone trying to steal your identity but normally it’s not affecting your credit score.
Tom: What else do we need to know?
Andrea: My favorite thing is people contact me and say, “Something doesn’t belong to me.”
Tom: Hold on one quick thing speaking of contacting you, why don’t you give us your website address.
Andrea: My website is www.bsbr.com.
Tom: That stands for Better Scores Better Rates. Sorry to interrupt but you said the magic word, contact, and I wanted to make sure everyone knew how to contact you.
Andrea: Another thing is accounts that are listing balances that should not be. It’s very common for your bank when you have a house note or mortgage for them to sell your note to another lender or for credit card companies to buy one another out and the name kind of changes on the credit bureau or your student loan to be switched to another servicing company it’s very common and perfectly legal perfectly for them to do this but sometimes somebody drops the ball at the company and they forget to zero out your balance.
Tom: Ah.
Andrea: And that happens to about two out of ten people so you might want to come to your credit report and look and see do I have any balances or you know that that note was sold and your listing a hundred thousand dollar house note here and then the old company is still listing a hundred thousand house note. Well now you look like you owe two hundred thousand dollars. That’s offsetting your debt ratio so you want to make sure that if an account got transferred or a balance got transferred or someone purchased a note or purchase a credit card like within the legal realms meaning that various credit card companies buy each other out.
Tom: Sure.
Andrea: Or that your house note gets moved or serviced by somebody else that the old debt is zeroed out because that’s going to drastically alter your debt owed ratio.
Tom: That’s just one of the reasons that you should regularly check your credit reports.
Andrea: Oh I’m a huge advocate about every six months. I’m on the fence about credit monitoring services that’s a personal decision if you need one or you don’t. I do know personally that Pre-Paid Legal does have a credit monitoring service associated with them that is one of the better ones to use.
Tom: Yes.
Andrea: I’m very very picky about where I’ll send people to. I always say I don’t get money from any of these companies I just want to send people to where I feel that they’re going to get the best service or as I always say the most bang for your buck.
Tom: Okay good good.
Andrea: And you want to monitor that cause often things go on there that, or they’re not zeroing out your balances or sometimes it takes a week or two to zero out the balance lets just say you walk in and you’re going to go buy a car and its not really your fault that your house note got moved to another company and now there’re looking like you owe two hundred thousand instead of a hundred thousand. You’re the innocent consumer because someone didn’t do what they were supposed to do now its offsetting your debt ratio and can cost you a lot of money on your automobile your auto insurance and it can kind of set off a chain reaction.
Tom: Andrea is the last minute or so we have here I’d like to know one or two simple things that most of us could do to easily improve our credit scores.
Andrea: Obviously keep a look on your credit report make sure that you keep the smaller credit card the balances down to less than fifty percent it is always best to owe less than thirty percent on these smaller credit cards even if you pay it off every month. And I always say be wary if you give your kid a credit card a gas card and they know the limit’s two fifty, lie to your kid and tell the limit is only a hundred dollars.
Tom Okay.
Andrea: That’s the number one mistake a consumer makes they put stuff on their credit card not realizing even though they pay it off every month not realizing that at any given time during the month if their credit is pulled it can create a score that’s false about them or cheat them out of any where to a hundred points its that drastic of what being to close to the limit on several credit cards will do to you so I always stress no matter what your limit is or even if you pay it off every month regardless at any time during the month make sure that you don’t owe more than fifty percent of the limit.
Tom: Now I think many people are just flat out intimidated by credit reports, credit scores and the credit bureaus. What would you say to encourage people to go ahead challenge inaccurate information?
Andrea: One, it’s your right as a consumer there’s a Federal law out there that protects you and you have the right even if feel like something is yours if they’re not reporting the date of last activity correctly but the most important reason why consumers should be educated on credit, credit reports what they’re saying about you is that you don’t realize it but your children take on the mentality that you do about money and the actions that you take and your children watch you take while they’re growing up is what they are going to take as a grown-up and you don’t want your mistakes to cost your children as well that‘s why we have kids with massive amounts of credit card debt in colleges because you didn’t teach them about credit..
Tom: Fabulous. Andrea Villarreal from Better Score Better Rates, thank you being on the show today, that’s bsbr.com. If you need to get advice from Andrea you can go there you can get some information on how to contact your credit bureaus and improve your credit score again thanks for being on the show. Information on I Hate Debt is not designed to substitute or qualified financial or legal advice but designed to motivate and inspire you to take control and get and stay out of debt. This is I Hate Debt on wsRadio.com.
The Credit Report
Credit Score
Credit Repair
Your Free Credit Report
The History of the Credit Report
Credit Report Tips
Credit Repair Scams
Credit and Your Career
Consumer Alerts for D.C. Credit Services and Camco
Some collection agencies has started reporting old debt as new. Find out more here and here's a letter that you can use to file a complaint if this has happened to you.
Read the transcript of Andrea Villarreal from Better Scores Better Rates’ "I Hate Debt" radio show interview.
Improving Your Credit Score 1
Improving Your Credit Score 2
Listen to Andrea R. Villarreal from Better Scores Better Rates’ “I Hate Debt” radio show interview.
Segment 1
Segment 2
