I read through your website and it has a tremendous amount of great information. I do have questions regarding what to do about some of my husband's old debt. He has accounts that aren't credit cards that were turned to collection agencies. Do we pay this so they appear as paid in full or should we just get the three credit cards and make sure we pay on-time?

Robin C

Hi Robin,

If those accounts are already turned over to the collection agencies you should tell those agencies that you will pay off the debt at 10% to 20% of their face value: what you can afford to pay, not what they will offer you. Emphasize that you will want a letter stating that you have satisfied the debt but you don't want the letter to state that the account was paid off at less than original value. Then you want to send a letter disputing the very existance of these debts, just say they never existed and were reported erroneously...since the agencies have been paid they will not be terribly motivated to respond to the credit bureaus inquiries. You want the bureaus to delete these files and replace them with the new credit cards, which will be always paid on time and will never be over 50% of their limit.

Loanlad

Loan Lad,
I've been talking to a guy about a credit counseling service where they negotiate down my payments and work on my credit. So why shouldn't I do that instead of what you say?
Vee, Stuebenville OH

Vee,

Great Question. You can't imagine what a scam so-called "non-profit" credit counselling is. I'm not going to waste my time debunking these frauds. Suffice it to say, they only serve as collection agents for the companies you owe money to and when they are done you will just have less money and worse credit. Read the opinion of the Federal Trade Commission mixed with a lot of facts that support my techniques here.

Federal Trade Commission On Credit Counseling Services

"To Loanlad,

I have been using your techniques to repair my bad credit for about 7 months and my credit score has gone from 493 to 575. Do you think I can qualify for a mortgage?I would like to buy a townhouse but I don't have much for a downpayment."

Martha K., Brookline MA

Martha,

I wish I could tell you that you are good to go but I doubt it. If you want to buy a house with no downpayment you will need at least a 580 credit score and more. The most important thing you will need at this point are tradelines. You will need at least one large account (over $2000) reporting for at least a year. If you want to buy a home with no money down you have two options and they will both take a while: You can continue to work on your credit scores, get them up in the 620 range by continuing to remove bad credit remarks and generating good credit payment history or...you can go out and buy a car, make your payments ontime for at least a year and you should be able to get that townhouse with 100% financing. In either case you should contact me directly to see what you can do today.

Hi Loanlad.
I've done what you said and had a lot of my bad credit accounts erased from my credit reports. My credit scores are all up a lot but I wonder if those bad credit accounts that I had will just get put back on when those companies realize they're gone?
Thanks, Just Worried,
Chet M. Roseland TX

No sweat Chet. By law, once a credit account has been removed from a credit report it can never be put back regardless of circumstances. If this seems unfair to lenders who may have an honest beef remember this: plenty of items are placed on good peoples credit reports every day in error and unless they are caught and disputed, they will stay there forever. I would rather err on the side of real, flesh and blood souls over corporations made out of money and contracts.

"Loanlad, I got three credit cards and charged them up to the max but now I got hit with a bunch of overlimit and late fees. Are you going to fix this for me?"
Ed H., Chattanoga TN

Ed, I cannot warrantee you from your own stupidity. Seriously, I never told you to go over the low limits that these cards have and what do I have to do with late fees. My recommendation is to always sign up for online banking which most banks and credit unions offer. You can then set up auto-payments well above the minimum payments so you will never be late. As for maxing out your cards: no, put a couple hundred dollar balance on the card, then cut it up or stick it in the back of your desk drawer.

Ed, you got yourself in trouble and I gave you a cure for what ailed you. That you went out and dug yourself in deeper at the first opportunity is strictly your fault. Have a nice day!

Dear Loanlad,
Are you sure that what you are suggesting isn't illegal? I don't want to end up in jail just to clean up my credit.
Jane M., Madison WI

Hi Jane,
I have relatives in Wisconsin. Love "The Dells" and cheese curds. Weird thing is that you can't find Italian food anywhere in the state, outside of Milwaukee. As for your ??? , No Jane, there is nothing illegal, immoral or fattening about my method of clearing your credit. I am certified in lending and credit laws and would be happy to write you a note for any doubting spouse or parents.

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