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Borrowing When You Have Bad Credit

Here’s how you can get on the right
track to borrow money even if your credit has been damaged.
Credit Repair
Credit repair is illegal the way most people present it. The only people
who can legally and ethically repair your credit are yourself, a credit
counseling service, and possibly your attorney. Credit repair is so
important because it affects what you pay for money—for your cars, for
your life insurance, for property. When you’re buying property, it affects

your ability to borrow. When you’re selling property, your buyers’ credit
affects you. Half of all real estate contracts fail because the people can’t
qualify for financing, and knowing about credit repair will help not only
you, but also your buyers.
I’ve had so many buyers who think they are unable buy a home because
their credit is awful and they have no down payment. Then, 60 days
later, they’re buying a home because we helped them qualify for the
down payment. We have also helped them increase their credit or use
some creative financing techniques to take possession of the property.
Let’s go over some of these. This will help you buy and sell.

About half of all credit reports have a mistake in them, so you need to
get a copy of all your credit reports. People can call credit companies
and request copies of their credit reports. They’re also available at
www.shemin.com. Get a copy of yours and look it over. If there are
mistakes, you need to write in and have those taken off. You can do that
yourself, or you can hire an attorney or someone to represent you.
Challenge whatever bad information is in the report, and keep challenging
it until it’s removed. Under federal law, the credit reporting agencies
have 30 days to respond, and sometimes they don’t have the workers or
the time to research and verify the information. If they can’t do that
within 30 days, they have to remove the offending words.

Understand that the law also says these companies don’t have to react to
frivolous claims, so there’s a little leeway for them, but what often happens
is that credit repair companies just keep challenging the facts (e.g.,
the date is wrong, the amount is wrong, this isn’t mine). Simply for lack
of people power, a bad rating may be softened. That’s what so-called

credit repair companies do—they keep challenging and challenging and
challenging.
If an incorrect report isn’t fixed, you have the right to request the original
loan documents. A lot of people don’t know that, and sometimes
they can’t produce them. That might also remove the credit problem.
Certain bankruptcies are not reported accurately, and sometimes the
bankruptcy courts don’t respond when the credit repair companies call
them to verify. Some people have told me that even bankruptcies may be
removed just by challenging them. Again, credit rating companies don’t
have the time to respond. However, the challenges can’t be frivolous.
But who decides what’s frivolous? A lot of people find that, just by challenging
a report in writing, items are taken off.
You can do this yourself or you can get a professional to help you. Lots
of credit repair companies say they can do it. Some of my buyers have
tested one service that’s actually run by attorneys. It’s called
www.CreditLawyer.com. I am not affiliated with them, but I’ve seen
people get real results because they work with real attorneys. They’re on
the Internet, they charge $50 a month, and they usually work with people
for three to five months. (Also, see the section about residual income
in Chapter 2, “Systems for Success.” It discusses a company called Pre-
Paid Legal Services, Inc., which provides its members with attorneys
who have achieved good results for some people because they know
how to write effective letters.)
Get a copy of your credit report, check it, and challenge anything that’s
incorrect. Challenge anything you don’t think should be on there and
keep challenging. Make sure you do it with all three of the major credit
bureaus, Equifax, Experian, and Trans Union.


Do things that improve your credit, and don’t do things that hurt it. Be
very careful about who checks your credit. When you lease or buy a car,
sometimes the dealership sends out requests to eight or nine finance
companies and checks your credit eight or nine times. All that activity
knocks down your credit score. Ask everyone how they check your
credit and how it will affect your credit score.
If you have a special situation that affects your ability to pay your bills
(e.g., divorce or illness), you can write a nonemotional explanation, up
to 100 words, and attach it to your credit report. Understand credit so
you can help your potential buyers.