• Federal Trade Commission;
• State Attorney General's Office;
• State Department of Insurance;
• State Department of Finance;
• Federal Bureau of Investigation (FBI);
• Department of Housing & Urban Development (HUD);
• State Bar Association for Attorneys;
• Your Attorney.

If you have no credit lines open currently, we suggest you visit our credit card section and apply TODAY!   THREE applications for credit cards should suffice with regard to get you moving in the right direction and help you re-establish and improve your credit.  If you need your spouse's (or co-applicant's) income to qualify (and the co-applicant doesn't have any credit established) we suggest you make the application for the cards jointly.  By applying jointly, you both will have all THREE trade lines required and you both will have joint THREE accounts instead of  6 credit cards on a combined basis.

Can Derogatory Credit Re-Appear After It Has Been Deleted?

 

Most of the time, once disputed and erased from a credit report, negative credit information typically (in roughly 95% of all cases) stays off the credit report.

 

However, from time-to-time, derogatory credit may reappear.  In this case, it is best to settle the item for a fraction of the balance and as a part of the offer to settle demand a deletion from the credit report in full (as though it never existed).

Will Paying Off Collections Help Raise My Credit Score & Improve My Credit Report?

 

SURPRISINGLY NO. If you pay off a collection, this will HURT (LOWER) YOUR CREDIT SCORE by approximately 20 - 30 points because the collection account will be "updated" and marked "paid." This "updated status" has the effect as if a brand new collection reported on your credit report. The paid collection may remain on your credit for 7 years (or longer if not caught). You MUST have a deletion clause as part of a payoff agreement - which is smart for credit repair purposes. Paying items with the agreement of obtaining a permanent deletion is always a better strategy as compared to just paying off the derogatory account. This is a Smart Solutions trademark technique for credit repair and credit improvement. The credit repair competition does not (in the vast majority of cases) offer this as an effective credit repair tool. It is a remarkably powerful way to get results. Without the incorporation of a deletion clause in the offer to settle, the collection account usually stays on the credit report in a derogatory status for SEVEN (OR MORE) long, protracted years - marked as "Paid," "Settled-for-Less-Than-Full-Balance," etc., etc." Waiting for 7 years (OR MORE) for collections to "fall off," is not our idea of a good "settlement" technique. This is a TERRIBLE strategy and the only thing this poor planning will do is prolong the pain and agony of having bad credit report for SEVEN YEARS (OR LONGER). Settling collection accounts that are continuously re-verified and will not go away is a far better strategy - (again, so long as a deletion clause is incorporated into the offer to settle agreement). Then (AND ONLY THEN) will the collection account be deleted from the credit report upon acceptance of the offer. This is the kind of credit repair that gets RESULTS!

Why Are The Credit Bureaus Such A Pain-In-The-Neck?

 

The credit bureaus are in business to sell credit reports.  These organizations do not care about whether any or all of the information on the report is fair, accurate or current.  The credit bureau makes no money doing investigations.  In fact, investigations cost credit reporting agencies labor and money.  Therefore, credit bureaus will fight consumers on performing investigations claiming these disputes are "frivolous" and these bureaus will outright refuse to do an investigation.

 

However, if court documents are provided to the bureaus, these must be addressed and Smart Solutions' legal counsel has approved the use of many of the form documents used in the credit repair process.  Since some of the forms used are legal documents, they carry the weight of law.  Bureaus are much more inclined to address (and correct or delete) derogatory information from a person's credit report.

 

In the event the bureaus do not respond, neglect an action or simply refuse to investigate or correct information on the credit report, we highly recommend retaining legal counsel and getting legal advise as to what recourse may be taken against this type of financial terrorism carried out by credit reporting bureaus.  As a matter of fact, if a client requires legal counsel to rectify a credit reporting problem, we suggest calling Smart Solutions Financial Services to ask to speak to a Pre-Paid Legal Services Plan.

What Constitutes A Credit Report?

 

A credit report is really a "snapshot of your credit in time."  Your credit scores (also known as FICO scores) are calculated as follows - broken down in percentages according to the following categories and moreover how importantly they relate to your overall credit score:

 

-and-

 

Types of Credit Used accounts for the remaining 10% of your credit score.

It is important to know what a credit score takes into consideration - ALL the above categories and not just one or two considerations.  The importance of any single factor depends on the overall information in your credit report.  Your credit score only looks at information in your credit report and will not take into consideration anything external.  Your credit score also is calculated based on BOTH positive and negative information in your credit report.  And, most importantly, late payments lower scores while establishing or re-establishing and making payments on time will RAISE your score.  The formula for determining credit scoring is the proprietary property of the Fair Isaac Company and is kept a secret.

 

You will notice that having open, active trade lines accounts for roughly 65% of your credit score.  This is so critically important - that not doing so will depress your scores over time.  Responsible credit management is actually more important than repairing damaged credit (accounting for 35% of your FICO score).

 

Credit reports typically report all of the following: Bankruptcies (filed, discharged and dismissed), consumer credit counseling (scored as if a bankruptcy), collections; judgments; tax liens; profit and loss (charge off) accounts; late payments; personal information including residence history, names and aliases; social security numbers, etc.

How Long Can Derogatory Credit Remain On A Credit Report?

 

Derogatory credit items can stay on your credit report up to 7 years (or longer) from the date that the item was last reported or paid.  Bankruptcies will stay on credit for up to 7 to 10 years before they must "fall off."  If your creditor or the collection company who has bought the account keeps updating the derogatory information, it may stay on your credit report indefinitely.  However, the many items do "drop off" over time because updating negative information takes time and labor (which costs the account holder time and money).  This is the main reason as to why there usually is NO profit motive for a creditor, collection agency or credit reporting agency to keep updating derogatory information.

 

Of course, waiting years for collections and late payments to "fall off" the credit report is a painfully long experience.  In order to cut that time down as much as possible, an effective credit repair program should be employed by trained professionals.

How Bad Can A Bankruptcy Effect A Credit Report?

 

Bankruptcy Is To Credit What An Atomic Bomb Is To Military Warfare.

 

Bankruptcy should be the last resort for "dealing with" derogatory credit, judgments and collections.  Many times, credit can be repaired (sometimes significantly) just by using the types of different credit repair documents.  Secondly, credit can be repaired by settling collections, judgments and profit & loss accounts for a fraction of the balance owed and the item can be PERMANENTLY DELETED by incorporating a deletion clause in the offer to settle document.

 

There are a few cases where bankruptcy may make sense: such as lack of future income does not seem evident, an excessive number of accounts that cannot be settled and where financial matters have become so terribly pressing that the individual may lose their home or face criminal and civil suits.  If this is the case, the individual seek the guidance of a competent, licensed attorney for advice through the Legal Protection Plan offered through Smart Solutions.

 

Chapter 7 Bankruptcy allows a discharge of all debts (there are exceptions) and all assets are liquidated (there are exceptions here too). State Laws differ and attorney advice will need to be sought concerning the details.  From a lender's point of view, a Chapter 7 is much better than a Chapter 13 because the discharge of debts lowers the amount of debt a person has to pay as a percentage of their income.  This means that a person seeking to re-establish credit (ideally with a credit card online through our web site) has a better chance of attaining credit because the burden of debt is not as great as it previously was before the account was discharged through bankruptcy.

 

The Chapter 13 bankruptcy will discharge when you have met your payment agreement which may take several years.  The attorney fees are high and the repayment period is long.  Chapter 13 Bankruptcy demands that ALL disposable income (not necessary for living expenses) must be paid into the plan until some future date.  This means that the bankrupt individual pays 100% of his income to 100% of his debts and living expenses.  In other words, his debt-to-income (DTI) is 1:1 or 100%.  A good DTI is typically anywhere from 25-36%.  The individual may not be able to re-establish any new, good credit for years.  The only type of loan an individual maybe able to qualify for is an FHA or sub prime home loan.  The lender may be able to buyout the home buyer from the bankruptcy.  Typically, because all payments under the Chapter 13 repayment plan are made on the same date (at the same time), many accounts on a credit report can (and do) report late payments regularly.  In he case of discharged bankruptcies, collection accounts (that were supposed to be included in a bankruptcy) can show as open, outstanding collection accounts.

 

Many times the credit report is just as bad - if not worse - after you file a Chapter 13 bankruptcy.  Again this is due to the reporting of the payments not being done on time or accurately.  Collection accounts and many other derogatory accounts can report for YEARS on credit reports in error as outstanding accounts even though they have been discharged through bankruptcy.  This is a very common error and it happens on a regular basis hurting a credit seeking borrower unjustly for years without correction.

Also, if you have filed a Chapter 13 bankruptcy and did not follow through with the plan, this will usually state so in the credit report as "withdrawn" or "dismissed."  From a creditor's point of view, the withdrawn bankruptcy may still be counted as a "bankruptcy" in the credit underwriter's decision and this hurts could hurt a borrower's chances of getting loan approval.

All bankruptcies will haunt your credit report for at least 7 years (unless credit repair is employed).  Chapter 7 bankruptcies may report for an additional 3 years for a total of 10 years altogether.  In some cases, bankruptcies can haunt you for the rest of your life if you are asked the question on an employment application, "Have you EVER declared bankruptcy?  Bankruptcies may even effect an employment decision.  Bottom line: avoid a bankruptcy at all costs!

What Are "Profit & Loss" & "Charge Off" Accounts?

 

Profit & Loss or charge off accounts are accounts that have fallen into a "collection" status but are still held by the creditor.  Simply put, the creditor classifies these accounts as being charged off to bad debt expense or they are listed as P & L accounts and are placed on the company's Profit and Loss Statement as charged to bad debt expense.  Such accounts are placed on the debtor's credit report as a derogatory "incentive" to get the debtor to eventually pay the bad debt.

How Much Can I SAVE By Settling Collections & Charge Off Accounts?

 

Many times, our customers have settled accounts for just pennies on the dollar and had the disputed item DELETED from their credit files FOREVER!

 

CASE STUDY #1: As a matter of fact, one of our customers had two credit card accounts each totaling approximately $10,000 each.  With our program, he got both of them settled for just $500 EACH and he saved approximately $19,000 on both turning this into a 95% savings scenario!  Many times these accounts can be settled for 25, 33, 50 or 80% of the balance owed!  Of course, not every case will end up being a huge savings as individual cases will vary in results.

 

CASE STUDY #2:  In yet another case, a couple that owed nearly $80,000 in back IRS taxes and over $4,000 in back State Taxes.  Smart Solutions helped the couple settle the debts for a total of roughly $14,000.

 

CASE STUDY #3: One lady had over $20,000 of junk debt and derogatory items reporting on her credit report.  She informed us that we were able to save her approximately $17,000 on her settlements.  - J Mooring

 

CASE STUDY #4: One man was trying to buy a house.  We instructed him on making the settlements he needed to make prior to securing financing.  He saved well over $1,200.

 

CASE STUDY #5:  One client had an $11,000 car repossession reporting on his credit report.  Smart Solutions helped him settle for $2,300.

 

All the settlements made above also had a deletion clause inserted in the Offer To Settle saving these clients tens of thousands of dollars.

What About Consumer Credit Counseling Agencies?

 

When it comes to credit counseling, there are two words you need to know: CAVEAT EMPTOR (Buyer Beware).  Using "debt counseling" or credit counseling agency is very much like filing for a Chapter 13 Bankruptcy.  As a matter of fact, many loan underwriters at many mortgage companies will count consumer credit agency counseling as if it was a bankruptcy!  This is a very derogatory entry on any credit report and can stay on your credit for years.  Many times consumers with high credit ratings enter these programs thinking that they may help but, the sad truth of the matter is, they seldom do and accounts are paid out monthly causing many accounts to report delinquent payments.  These late payments will also report on a credit report for several years.

 

The best way to manage debts is to pay all of them 7 to 10 days PRIOR to the due date and never place over 1/2 of your income on debt INCLUDING your car and house bill.  Often the tactics used by these non profit organizations are terrible - especially with regard cutting up all your current existing credit cards.  In most cases, active trade lines are required in order to qualify for a mortgage loan!  By closing existing OLD lines of credit - this massively hurts credit scoring.  Smart Solutions offers Budget and Debt Planning as well as solid advice with regard to spending and does not report it to the credit bureaus.  We use sound principles to help educate you on how to stay out of financial trouble.

I Was Thinking Of Getting A "New Credit Identity."  Is This A GOOD Idea?

 

Although we are NOT attorneys, we suggest you seek legal advice regarding this matter (preferably through our legal protection program).  We always tell our customers and clients that this would not be a very good idea as the risks involved are huge - unless you victimized by an act of identity theft or violent crime (such as murder).  Also, a typical credit repair company may NOT disclose the risks to you!  If you are ever caught with a fake identity, you could be liable and suffer criminal prosecution and civil damages for committing credit card/bank fraud.  Unless you belong to the U.S. Federal Witness Protection Program or a victim of identity theft, this is just not a good idea at all.  Also, chances are significantly HIGH that you will probably waste your money because eventually, the new identity you have created will be linked back to the old one.  The money you will spend on this (especially if it smacks of SCAM) will probably cost you MORE than the Smart Financial Program or the Identity Theft Shield Smart Solutions promotes.  We recommend saving your good name (if at all possible) with the help of Smart Solutions credit repair program.

Can Settling A Debt Be A TAX Disadvantage?

 

If you settle an account for LESS than the FULL balance, some companies will issue a 1099 Income Tax Statement to you and you will be required by the IRS to pay taxes on the difference at your tax bracket.  The reason for this is that you have gained under a legal concept called "enrichment by way of adverse possession."  What this means is that you received items or services and only paid a portion of that bill as satisfaction.  The difference between the amount of the bill and the amount you settled for could qualify as "additional income" creating a new taxable kind of "wealth."  For example, if you had a $10,000 bill and settled that bill for $2,000, the difference would be $8,000 and the company holding the bill could send you a 1099 tax income statement for $8,000.  You will need to pay taxes on that $8,000.  If you are at the 28% tax bracket, your tax bill will come to $2,240.  You will need to pay to the I.RS (this will not include Local, State, Medicare, Social Security or Self Employment tax).  The only thing that can offset this new tax bill is to take MORE itemized deductions.  We suggest you consult with your tax advisor if this happens to you.

 

With proven credit repair services, Smart Solutions can provide you will the expertise to avoid any type of financial challenges such as this - and (as a part of the offer to settle terms and conditions, we have a 1099 avoidance clause).  This type of arrangement will allow you to avoid payment of the taxes - especially where the account is of a disputed nature.  A disputed nature can be established by a statement of dispute.

If I Place A 100 Word Explanation On My Credit Report, Will A Creditor Read It?

 

100 word explanations are read by creditors and typically address derogatory items - especially in the event that the account is of a disputed nature.  If you have a really good explanation for an item, then that can make a difference to a credit grantor or a loan underwriter.  Make sure you explain certain situations and extenuating circumstances that may otherwise look bad.  For example, if you were hospitalized with a severe sickness or a worker that lost a job (especially where the trend was nationwide as with the .Com Bust of 2000) and you had to go back to school for a new educational career change, such items may look better to a potential credit grantor.  Otherwise, the credit grantor may ask for a letter of explanation to explain why something bad happened to your credit.

 

Ideally, it would be in your best interest to invest in credit repair services so as to erase as much derogatory information from your credit report as is possible - even 100 word explanations.  Not having any 100 word explanation on a credit report nor anything else negative is actually best - obviously.  A general credit repair company may not know to do this.

 

Smart Solutions recommends settling the account and obtaining a deletion as a part of the settlement agreement as a far better alternative to a 100 Word Explanation regarding a derogatory credit account.