Financial Urban Legends: The Credit Boogie Man

It's raining...Its thundering. The lightening is casting your shadow against the wall as it flashes in the night sky. You look under the bed...nothing. You cut the bathroom light on...nothing. You cut it back off. Only one other place left to look, and that's the closet. You begin to walk slowly to the closet. Oddly, you hear that eerie horror music in your mind, not remembering leaving the door cracked like it is.

Your heart starts racing. Your brow begins to perspire with beads of sweat. You reach to grab the door knob, with a twist and pull it open...nothing! Whew! Your pulse slows to its normal pace. You laugh to yourself, thinking how silly you were acting. Its a little chilly, so you grab your jacket from a hanger. Wait...something is wrong.

You feel the inside pocket and there are several envelops. Spreading the envelops over the bed, chill bumps begin to erupt all over your body. It can't be. Its not possible. The mortgage payment. The car note. All the utilities. Water, gas, and light bills...all there. How?! You know without a doubt that you put these in the mail weeks ago. A quick glance at the calender and your chill bumps double in number. All are now OVER 30 DAYS late!

"Ha...ha...ha!" Then again even louder, "HA...HA...HA!" As you run to the window, you catch a faint glimpse of something fading into the rainy night in the yard. Snow has more color to it than your skin does at this point. The night wind echoes one final message. "Your...(your...your) Score...(score..score) Shall...(shall...shall) FALL...(fall...fall).

This is what most likely happened.

You had that jacket on three or four weeks ago meaning to drop the bills in the mail, but forgot. Just like children have their 'my dog ate my homework' story, we adults have our 'Credit Boogie Man' urban legends. The 'Credit Boogie' man didn't damage your credit score, you did. But not to worry, there is always time to change your perception on the proper use of credit.

First you need to obtain a copy of all three of your credit scores and reports. MyFico(.com) handles scores and reports for Eqifax. CreditExpert(.com) handles reports and scores for Experian. TransUnion uses TrueCredit(.com) as their site to get your report and score. And yes, I'm aware that you can get a copy of each of your reports from each bureau free from AnnualCreditReport(.com), but most people don't know that your score is not free. You will still have to go through one of the sites I listed above to get your scores (did you really think it would be that easy).

What I suggest to my clients is a double sided attack. As you try to get negative marks removed from your file, you also should be taking steps to add positive marks to your file. This creates a synergy effect, boosting your score faster than what could be done by each tactic separately.

Start with the easy accounts. Look for entries that are not even yours, these should be very easy to remove from your file. Next, look for items that have been paid (or maybe still not paid) and they're seven years older or more. The seven year period begins 180 days after account goes into default (post 97 law changes) or last date of activity. This can be tricky.

This is 2006, so anything from 1999 and back would be good candidates to attack. But what if you made a payment (but not total amount) in 2004, and then stopped paying again. This would make your seven years begin over from 2004 instead of 1999

Now, lets start adding positive trade lines to your credit file. Don't have a lot of money, then you'll love this strategy. Get several loans from different lending institutions. Depending on the amount of funds you have access to use for this strategy, banks may be not be an available avenue. Here's the easiest way to handle this situation. Obtain a passbook savings account loan.

Here's where it gets interesting. Most banks won't do this unless you have $10k or more in your saving account. Wow! A better solution are credit unions. This is what I have done before and still do on occasion. Call your credit union (or one you'll join) and ask them about their savings account secured loans. Most will allow you to make yearly payments, meaning you don't have to make payments during the course of the loan. If that isn't good enough, you can renew the loan for another year by simply paying the INTEREST ONLY that's due.

This is what you can do to fund the loan. When you get paid, go by the credit union and place (or open an account) your cashed check money into the account. Then turn right around fill out the loan paperwork and have your funds back in you hands. Now, just rinse and repeat these steps with several credit unions. My credit report shows these accounts as 'paid as agreed'. What else could it show. I don't make any payments, therefore there's no way to be 30 (or more) days late.

You must prepare yourself. Who knows? Maybe next time the 'Credit Boogie Man' won't be able to cause so much drama in your life.

Copyright New Innovations
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