Winning the Credit Game! Copyright Reney and Marti DuBose

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2 Winning the Credit Game! Copyright 2009 Reney and Marti DuBose All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means electronic, mechanical, photocopying, recording, or otherwise without prior written permission of the publisher. The only exception is brief quotations in printed reviews. Published by DuBose Capital Group th Street, Suite 2800 S Denver, CO Printed in the United States of America. Scripture quotations identified as NIV are from the HOLY BIBLE, NEW INTERNATIONAL VERSION. Copyright 1973, 1978, 1984 by International Bible Society. Used by permission of Zondervan Publishing House. All rights reserved. Scripture quotations identified as KJV are from the King James Version of the Bible.

3 Contents Choose to Win: Our Credit Scores Are a Result of Our Choices.. 3 Why It s Important to Win: Your Score Matters Rules of the Game: Know the Law How to Win: Game Strategy Game Over: Conclusion END NOTES... 31

4 Choose to Win: Our Credit Scores Are a Result of Our Choices Many of the people that we assist with credit repair feel there is a direct correlation between their credit score and their character. Often, they ll call, and the first words out of their mouth will be about how they are not a bad person, they just got in a tough situation, and weren t able to pay their bills as planned. We make decisions everyday and there is a consumerism mindset that says, I want these things; they are important to me. You may want to be a successful businessman. Or you may feel it s important to travel and visit your family, or build financial security. We choose our actions based upon the things we value, and our credit score is a result of the choices we make. You may be operating just at the minimum credit standard, meaning you pay your bills on time and keep your financial commitments. Then life happens. Perhaps you lose your job, or someone in your family gets sick and you have to spend a month at home taking care of them for which you don t get paid. Because you didn t plan for the unexpected events in the future, and build a nest egg, you re trapped in this perpetual cycle of financial crisis. Credit Scores: It s about stewardship. Well, God doesn t want you trapped in the rat race of stress. He has provided a better way for us to live, and has given a blueprint for success through His Word, the Bible. If you study the parable of the shrewd manager (steward) in Luke 16:1-14, you will find many valuable principles to use in the handling your finances: 1Jesus told his disciples: "There was a rich man whose manager was accused of wasting his possessions. 2 So he called him in and asked him, 'What is this I hear about you? Give an account of your management, because you cannot be manager any longer.'

5 3"The manager said to himself, 'What shall I do now? My master is taking away my job. I'm not strong enough to dig, and I'm ashamed to beg 4 I know what I'll do so that, when I lose my job here, people will welcome me into their houses.' (Luke 16:1-4 NIV) The manager goes on to reduce the debt of some of his master s debtors. After which he is called in for a review with his master. 8"The master commended the dishonest manager because he had acted shrewdly. For the people of this world are more shrewd in dealing with their own kind than are the people of the light. 9 I tell you, use worldly wealth to gain friends for yourselves, so that when it is gone, you will be welcomed into eternal dwellings. 10"Whoever can be trusted with very little can also be trusted with much, and whoever is dishonest with very little will also be dishonest with much. 11 So if you have not been trustworthy in handling worldly wealth, who will trust you with true riches? 12And if you have not been trustworthy with someone else's property, who will give you property of your own? 13"No servant can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money."(Luke 16:8-13 NIV) Notice that the master calls his manager on the carpet because he s been wasting his resources. Yet, how many times have we made unwise choices in how we manage the finances, time, and other resources with which God has blessed us? So when we talk about money management from a Christian perspective, we should avoid wasteful spending. Where we spend our money, and the choices we make will vary according to our purpose and the things that we ve identified in our life as being important, as being guiding principles of how we want to live our life. However, one area that we can probably agree is wasteful spending is in

6 GAME STRATEGY 5 the finance charges and penalties assessed from late payments and nonpayments. So in a practical aspect, the work that we do to improve and protect our credit score, is a key to good financial stewardship. Another lesson this parable teaches us is that God cares more about the people than the bottom line. Notice that Jesus teaches that the people of this world are more clever in their dealings with people than Christians. We are admonished to use our wealth to win friends and influence people so that when this world has passed, we will be welcomed into eternal dwellings. God is looking at how we treat others. When we show compassion and love to others, it impacts our eternal future. Notice that the manager reaped from his master the same compassion he had sowed to others. This simple action of blessing others caused his master to pardon the dishonest manager. Sowing and reaping, giving first what it is that you d like to receive is a cornerstone principle for how God s system, the kingdom of God (the King s domain) operates. Ultimately, in the eyes of God, you are blessed with money for a divine mission to expand His kingdom. The heartbeat of the kingdom of God is not land, natural resources, or material possessions. No, the pulse of God s kingdom beats in the heart of His people. It s about people. It s about the souls. As Christians every action we take influences people either for good or bad towards God. Our actions can either be a sweet aroma that draws mankind to Him so that we become a light that shines in the darkness, pain, and adversity of this world; or our actions can become a stench that may drive people away from the Lord. A good steward understands that if you are not faithful over a few things, you can t be made a ruler of many. This is not necessarily about chasing after financial riches, but in growing and increasing in who you are. It s about becoming the best person that you can be. Money is an amplifier, so getting more money will only amplify who you are, both strengths and weaknesses. Whether you are managing $100 or $100,000, your basic ways of handling money will be the same. If you can take a $5,000 investment and produce a $100,000 return, then making more money

7 means that you will produce more wealth, and be able to turn $500,000 into $10,000,000. However, if you earn $5,000 but routinely spend $7,500, then when earning $500,000 you will continue along the same vein and spend $750,000. So instead of chasing after money, pursue transformation. You want to be transformed into the type of person that God can entrust with more resources. Your Prosperity is God s Delight Wholeness That is God s desire for your life. Every step you take towards wholeness is a delight to God. You may know this wholeness by another word: prosperity. Let them shout for joy, and be glad, that favour my righteous cause: yea, let them say continually, Let the LORD be magnified, which hath pleasure in the prosperity of his servant. (Psalm 35:27 KJV) The word translated prosperity is actually the Hebrew word, shalom. God delights in your shalom. That is God s heartfelt desire for you. The New International Version says that God delights in our well-being. God takes pleasure in your prosperity your completeness, soundness, welfare, safety, health, prosperity, peace, tranquility, and contentment in every area of your life including your finances. God not only rejoices in your prosperity, but He has a plan to ensure that you live a prosperous life A. So stewardship is kingdom living 101. God wants you to live a life of financial freedom, free from debt, and He has a plan to get you there. Do you believe it? Do you believe that God has a blueprint to show you how to do something as mundane as manage your money and achieve prosperity? He wants you to be successful. He s just waiting on you to seek His wisdom and guidance, and execute His plan.

8 GAME STRATEGY 7 God Wants to Teach You to Prosper Teach me your ways. Teach me to prosper, should be your sincere prayer. For not only does God tell us that He has a plan to ensure our prosperity, our wholeness, our completeness, but He also lets us know that He is the one that teaches us to profit B. God has invested gifting, talent, love, and untold treasure within us. He expects to make a profit. He expects us to produce a result that is greater than what He has put into us. We are created in His image, gifted with divine creativity. We should be like Him and produce fruit on this earth. The ideal, loving father teaches his child how to succeed in life. He teaches his little girl to ride a bike and is there to catch her in the training process when she might fall. He teaches his young son how to balance a checkbook, and provide for his family. While hunting, he shows his son the dangerous places to avoid, or the traps to shy away from. Well, God is the ultimate Father, and He is waiting to teach you how to be profitable C. But, Brother Reney, I m all messed up. Sister Marti, my credit is shot. I am overwhelmed! I was laid off last year. It takes money to make money. God is so busy with all of the tragedies in the world; surely, He doesn t have time to be worried about my little financial problem. Well, that s a lie. The truth is God has a plan for you. He has a strategy to teach you to be successful, and He wants to show you hidden secret treasures D. Perhaps that hidden treasure is a computer program to teach young kids how to read. Or that iphone application to show people how to organize their life. Or that little gadget you ve invented to make your life easier, which others would benefit from. Maybe it s the book that God has placed in your heart. Perhaps it s the cookie or cake recipe that you have that the whole town raves about. There could be any number of creative ideas that the world needs and is waiting on you to share. God wants you to

9 share that witty invention with others. And he wants to help you navigate the common pitfalls that others get tangled up in. He wants to lead and guide you through this process, going before you to make the crooked places straight E. Does that mean you ll never have adversity or never go through a season of lack, pain, or suffering? Am I trying to sell you a magic pill, and tell you that Jesus will make everything all better, you ll be a millionaire, and never experience grief or heartache? No! But knowing the Lord, having a real relationship with Him, and allowing Him to lead and guide you in every area of your life, including your finances, will bring you a peace in the midst of trial, comfort during heartache, and confidence to know that He s got you! Wisdom is the Key to Financial Freedom Exponential growth! Did you know that God wants to see you profit not just by a fraction of the whole, but He expects you to multiply the investment that He has placed in you. How? Now here s where God s system is different from the world system. You chase wisdom rather than the Benjamins (or francs, euros, yen, etc.) F. It s a key to financial success. Pursue wisdom, and don t worry about the rest because wisdom keeps a lot of good friends: honor, integrity, discretion, and riches to name just a few G. They follow wisdom wherever she goes. (Yes, the Bible calls wisdom a she!) Amazing, isn t it that many women enjoy being chased in the romantic arena, just as we are taught to pursue wisdom. So, in order to recognize wisdom, we have to understand what we re supposed to be seeking. Wisdom is the correct application of knowledge in a given circumstance and context. Wisdom is knowing when to act on the information you have, and knowing what action will bring about the benefit in a certain situation.

10 GAME STRATEGY 9 You may have enough knowledge to fill a hundred libraries with books, but it is of no practical use if you cannot apply what you know to bring about the desired outcome. Likewise, not having enough knowledge can hinder your efforts to resolve a particular issue.

11 Why It s Important to Win: Your Score Matters Let s expand our knowledge base regarding finances. What is a credit score? I m glad you asked. A credit score is a number lenders use to summarize your credit risk, and to estimate a best guess at the likelihood of you paying them back. Did you know that there are actually at least three types of credit scores (currently)? They are FICO, Vantage, and PLUS. They each use information from the three national credit reporting agency databases (Experian, Equifax, and Transunion). Initially, Fair Isaac Company developed the FICO scoring model. They designed a proprietary formula to "predict" the consumer's probability of repaying loans based upon data from the consumer's three credit reports. The credit bureaus initially cooperated with Fair Isaac Company and "resold" the FICO scores to their respective customers for a fee. As a consumer, you could get your FICO scores directly from Fair Isaac Company as well. Also, lenders could go directly to Fair Isaac Company for your FICO credit scores. Things went well until the three credit reporting agencies got smart and decided to get in on higher profits for themselves. They figured that since they had your credit information in their databases, they could develop their own scoring model to compete with Fair Isaac Company. So, they got together and each started marketing the Vantage Credit Scoring model. For a while they sold both the Vantage Scores and the FICO scores. By then, Fair Isaac felt it was unfair (i.e. violation of anti-trust laws) for the three credit bureaus to gang up and market their own scoring model, so it sued all three. Experian got upset about the suit and decided to

12 GAME STRATEGY 11 develop their own scoring model and branded it as the PLUS scoring model. Then in February 2009 Experian notified Fair Isaac Company they would no longer market the FICO scoring model to their consumer customers. Each scoring model uses data from all three credit reporting agencies but they each have their own proprietary formulas for calculating the scores. Also, they each have different scoring ranges which can change from time to time: FICO= Vantage= PLUS= So don t get caught up in the particular scoring system being used. Instead focus on the information reported to the credit agencies. No matter the system, that information is used to calculate the credit score. What is FICO? Let s take a more in-depth look at FICO. It s a computerized scoring system comprised of 5 different types of data, each having a different weight on your credit score: Payment history accounts for 35% of your credit score. Late payments impact your score negatively. How much you owe is the next biggest factor in your credit score. This is also known as your debt ratio. It is a calculation of how much money you

13 owe in relation to your credit limit. For example, if have a $700 balance on a credit card with a $1000 limit, then the resulting debt ratio is 70%. The length of credit history also impacts your credit score. Generally speaking, a longer history can be seen as more favorable. New credit, or credit inquires, account for 15% of your FICO credit score. Each time you apply for a new loan and a lender pulls your credit report, your credit score drops by 5 points. The FICO model does consider shopping for the best rate vs. trying to open multiple accounts. Lastly, the type or mix of credit that you have also impacts your score. Some examples of the kinds of credit available are credit cards, retailer accounts, installment loans, finance company accounts, and mortgage loans. Having multiple accounts of certain types of credit can negatively impact your score. Why do we need credit scores? Lenders often choose a certain number that they use as a measure of the amount of credit risk they think you represent. Therefore, someone with good credit can generally buy what they want, even if their income isn t necessarily high enough on its own merit to justify the lending. Whereas 60 years ago credit was hardly ever used, now it is a fact of everyday life. Businesses realized that you will buy more if you can get the product now, and pay later. So, credit has been indoctrinated into many areas of products purchase that just half a century ago would have been almost unheard of, and credit scores are the vehicle to accessing those new purchases. Why are credit scores important? Credit scores are often pulled for reasons that have nothing to do with your credit. Credit scores impact your ability to get a home mortgage loan. They also can determine the interest rate you are granted by the

14 GAME STRATEGY 13 lender. One or two interest rate percentage points can translate into $125,000+ extra interest paid over a 30 year loan for a $250,000 mortgage. When your car or truck is on its last leg, and you need to replace it, your credit score can determine whether you are approved for an auto loan. Poor credit scores can cost you thousands of dollars in higher interest rates for an auto loan. Those wonderful auto dealer promotions for 0% interest or that low $199 lease payment are often dependent upon being approved for financing by a particular lender. Therefore, if you don t have the scores, you don t reap the benefits of those slick ads. Insurance companies use your credit scores to determine your premium on your home, auto, and life insurance. What s next? Will we have to pay more for health care or employee benefits if we have a lower credit score? Well, most employers run credit checks on job applicants, and factor those scores into their hiring decisions. Credit scores are often considered when applying for utilities such as phone, cable, electricity, and wireless services. Lower scores or unfavorable credit history for utilities can lead to requirements of security deposits. This is their insurance that you pay your bill, but most of all it is a way of generating passive income to the companies as a reward for granting you service. Your ability to receive an advance line of credit (ALOC) can be hindered by a poor credit score. Why would you want an ALOC? Well, it could be one of the strategies you employ to accelerate your debt release and achieve financial freedom. ALOCs have simple interest rates and can be used to pay down loans with compound interest. Compound interest rates are created when the interest on a loan is added to the principal amount borrowed so that the interest itself also earns interest. For example a $100 loan that is compounded monthly, would begin with a starting principal of $100. If it had a 1% per month interest rate, then at the end of the first month, the principal would be $101, and

15 the end of the second month it would be $102.01, and so forth. The principal amount borrowed on the loan would continue to grow. In contrast simple interest is only calculated on the principal amount, or the amount of money borrowed that remains unpaid. The difference between simple and compound interest can be seen as follows: Loan Type Original Principal Loan Rate (%) Time Elapsed (years) Interest Earned Simple $ $50/yr = $150 total Compound $ $50 + $ $ =$ In the case of the simple interest rate loan compounded annually, the borrower pays an interest rate of $50 per year. The same amount borrowed at an annually compounded rate would generate $50 interest the first year, $52.50 the second year, and $ the third. If interest is the fee the lenders charge you to execute the loan, then in a compound interest loan, you are literally, paying interest on the fee that they are charging you to borrow the money! At first glance these numbers may look small, but as the loan gets bigger, and the interest gets compounded monthly or even daily, these figures become a gold mine to the lenders. Taking out an advanced line of credit to pay for your compounded interest loans, will consolidate your principal balance, generate lower interest rates, and allow you to pay off the debt faster. So whether it s your mortgage, car insurance, utilities, personal loan rates, or credit cards, simply put, you pay more when you have a lower credit score! Ironically, in the parable of the talents, Jesus tells us that this is how things operate: For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath. (Matthew 25:29 NIV)

16 GAME STRATEGY 15 This is a universal law that applies to everyone. You see, in this passage of scripture, a master gives 3 servants different measures of money, what was then called a talent. One servant received 5 talents, another 2 talents, and a final servant received 1 talent. Each servant doubled the investment that his master had given him, all except for the one who received 1 talent. This servant, instead, buried the talent in the ground. When the master returned, each servant returned to the master the original investment plus the profit they produced all, again, except for the one who hid his talent. The master praises those who produced a profit calling them faithful. But the one who hid his talent and returned to the master his original investment was called lazy and slothful In summary of this parable, Jesus warns us that we ll pay more if we are not a good steward of the resources God has given us, because we can get caught in the cycle of want always wanting what we don t have, and never having enough to get what we want. The good news is the Word of God tells us how to break this cycle: 1. Be a good steward 2. Do not waste your resources. 3. Do not hide what God has placed within you. 4. Produce a profit. 5. Get an understanding of the financial systems. I need an understanding of financial systems, Brother Reney? Sister Marti, why do I need to understand the world system if prosperity is about kingdom living? We re glad you asked that question. Check out this passage of scripture: 26His lord answered and said unto him, Thou wicked and slothful servant, thou knewest that I reap where I sowed not, and gather where I have not strawed: 27Thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with usury. (Matthew 25:26-27)

17 The minimum standard the master sets for the servant is to at least understand enough about banking and investment to turn a profit by earning interest. So, we too should have some understanding of the financial systems of the world. You may wonder what this has to do with credit scores? First of all, we are ambassadors for Christ. Like it or not our credit score can be a factor in how we are perceived in the financial world and business market place. Secondly, it is difficult to build wealth without an understanding of business and finances. Since credit scores are now so widely used throughout the market place, it behooves us to understand the credit game. Game On! When we made the decision to be debt free, we began to develop our own debt elimination plan. We soon realized that if we continued to make minimum payments on our credit cards, we would never pay off our credit card debt thanks to compounding interest. The more we talked with our friends and family, the more we realized we had all been taught to buy what we wanted on credit and continue to get further into debt. There didn't appear to be any realistic debt solution. Without knowing it, we were all being trained to spend most of our paychecks on interest payments (i.e. home mortgage loans, credit card debt, auto loans, etc.). As we learned more about the various types of credit scoring models and how credit scores are calculated, we realized they were designed to reward you for having credit, using it, and making your payments on time, but never paying the balances in full. The more you do this the more your credit scores increase. In other words, we discovered the real purpose for credit scores is to get you to use credit to buy more, to incur more debt, and to continue to pay more interest. This is what we call the credit game.

18 GAME STRATEGY 17 In order to get the best rates on services and loans, you typically need a higher score. However, you protect that high score by maintaining some form of debt. So lenders, in a sense, manipulate you into buying more so that they can benefit. Furthermore, the consumerism mindset is so pervasive in our society, that it has become a necessary part of our national economy. Did you know that 70% of the United States economy is driven by consumerspending? Is it any wonder the economy is in a recession? But you can prepare the best financial future possible by getting an understanding of the world system, and applying wisdom and Biblical principles to win the credit game!

19 Rules of the Game: Know the Law One strategy in your arsenal is to know the consumer laws, and understand how to apply them to increase and improve your credit scores. In other words, you either need a wise advocate, or you need to become your own shrewd counsel. People are struggling, their credit scores dying a slow death for lack of knowledge. My people are destroyed for lack of knowledge: because thou hast rejected knowledge, I will also reject thee, that thou shalt be no priest to me: seeing thou hast forgotten the law of thy God, I will also forget thy children. (Hosea 4:6 KJV) In this scripture God has said that His people have forgotten His law, and are destroyed because they don t know Him or His Word. Now we know this scriptural context applies to the Word of God, but previously we learned that we need an understanding of the financial systems. Also, we ve learned that wisdom is the key to living a truly successful Christian life. In Proverbs 4:7 we are encouraged seek wisdom, but also, to get an understanding. Well, a key factor in truly understanding how to increase your credit score, and win the credit game, is to get an understanding of the laws that govern credit reporting. As we share just a few, you will understand why it is such an essential vehicle on your road to successful living. Leverage the Law We ve already learned that you can t control the scoring algorithm, but you can focus on the reported credit information that is used to generate your scores. Increasing the positive data and reducing the negative data will positively impact your credit score.

20 GAME STRATEGY 19 There are numerous credit laws that govern the information that credit agencies can report from their databases. It is a little known secret of savvy credit repair companies that, whether a negative credit item belongs to you or not, any credit information reported in violation of consumer protection laws must be deleted. Have you ever tried to fix your own credit? Perhaps you applied for credit and were denied. After a few days you got a letter in the mail from one of the 3 national credit bureaus: Experian, Equifax, or Transunion. Following their instructions, you ordered a copy of your credit report. Once you reviewed the report, you contacted the credit bureau. After a never-ending wait, you finally talked to a live person, and initiated a dispute for a negative credit item. About two months later they sent you a reply stating the creditor has "verified the information as being reported correctly". So nothing got accomplished, right? This happens all the time. Here's why: first of all, Experian, Equifax and Transunion are not government agencies like most people think. They are private companies in business to sell your credit information for a profit. They collect information from your creditors and report it to businesses that pay them a fee for credit checks. Regardless of what information is on your credit report, they get paid. So the credit bureaus don't really care if your information gets corrected or not; although the Fair Credit Reporting Act does prohibit them from reporting inaccurate information. They hope to frustrate you enough to leave them alone and just let them continue to report whatever information is in their system. So what do you do when you get the brush off? Well, the best credit repair companies use credit restoration processes that include a useful tool called a compliance audit. During a compliance audit you require the credit reporting bureaus, collection agencies, and creditors to disclose the credit information they have on file for you. Then you audit their information for compliance

21 with the consumer protection laws. Any item on the report that is reported in a way that does not comply with the law must be removed whether it belongs to you or not. 100% Accuracy Required For instance, the Fair Credit Reporting Act states that agencies are required to report only information that is 100% accurate. Not 98% or 99.99%, not nearly, almost perfectly accurate. If it is not reported 100% accurately, then they have to delete it and cease reporting it. So if your lender posts an on-time payment to your account late, then they must cease reporting that item. Statute of Limitations The law also limits the time frame for reporting certain items, so by performing the compliance audit, check to make sure they are not reporting items that exceed the allowed time frame. For instance Chapter 7, 11, and 13 bankruptcies can be reported for up to 10 years, while collection accounts can only be legally reported for 7 years, and credit inquiries can only be displayed for 2 years. Although these items are supposed to drop off of your report, they might not do so automatically. Mortgage Loan Transfers Another example of leveraging the law in your favor is to request information related to your mortgage loan transfers. You might not realize it, but your mortgage loan can be sold from one lender to another many times before you manage to pay it off. When your mortgage loan is sold or transferred, mistakes in billing and service can often occur. Real estate laws have been passed to help you make sure that your loans are error-free. Mortgages actually have more protection than many other consumer loans. One such law, the Real Estate Settlement Procedures Act (RESPA), is active to protect consumers from illegal mortgage lending

22 GAME STRATEGY 21 practices. RESPA gives you the right to demand details about the origination and servicing of your loan. This information can include 30 or more documents including copies of the signed originals, a complete account history, interest payment calculations, copies of all monthly statements, copies of the lender s processes for payment processing, etc. You can demand this information by submitting a Qualified Written Request (QWR), to the mortgage servicer or lender. When they receive this request, they must stop reporting all negative information until they complete an investigation. Furthermore, they must acknowledge that they have received your QWR within 20 days, and present the findings of the investigation within 60 days. It is highly unlikely that a lender can present all of the documentation requested from an exhaustive list, and often, you can negotiate with them to delete negative information instead of trying to find all of the documents needed for compliance with RESPA. Vehicle Repossession When a vehicle is repossessed due to non-payment of the loan, the lien holder (lender) will sell the automobile to try to pay off the balance owed. Before the sale of the vehicle, the lien holder by law must send notices to you communicating certain rights, including the right to redeem or buy back your vehicle. Then they must wait a certain amount of time before they can sell the vehicle. Usually these vehicles are sold at auctions. If the lien holder sells your vehicle for less than the total amount you owe, they can charge you the difference between the amount owed on the loan, and the amount for which the car was sold. This difference is called a deficiency balance. The Motor Vehicle Installment Act and Uniform Commercial Code states that a deficiency balance cannot be claimed if the required notices were not given. So if the lien holder doesn t send you the required notices of your right to buy back your vehicle, and wait the specified amount of time, then the deficiency balance is usually deemed uncollectible!

23 If you have a repossession and deficiency balance on your credit report, you can send a written request to the lien holding asking for proof that the proper notice was sent telling you of the right to redeem your vehicle. Many times, especially after 2 years, the lien holder won t have certified copies of the required communications proving that you were given proper notice in compliance with the law. Consequently, they cannot collect the deficiency balance or continue any collection practices for a debt deemed not legally collectible. Debt Validation Creditors must produce information that verifies the debts as valid. So during a compliance audit, you can demand that they provide you with the processes used and the basis upon which they determined the debts to be valid. Credit Information Verification Is the credit information being reported verifiable? The law requires the credit reporting agencies to conduct a reasonable investigation to verify your credit information or it must be deleted. Some credit repair companies use a trade secret that forces the credit reporting agencies to disclose their method of verification for compliance. Because the credit reporting agencies use an automated verification process (e-oscar system) they are usually not in compliance with the Fair Credit Reporting Act. Why? Because when the credit reporting agency transmits your credit dispute to your creditor, they use the automated system and they don t actually forward your specific dispute information or any attached documentation you may provide with your dispute. Instead, they simply select one of several electronic codes that they feel represents the basis of your dispute. This can be considered a violation of the Fair Credit Reporting Act, which requires the credit reporting agency to forward all relevant information provided by the consumer, to the creditor, in disputing the negative credit information being reported.

24 GAME STRATEGY 23 As a result, you can use this process against the credit reporting agencies to force them to delete the negative credit item even if the debt actually belongs to you! Resurrect and Protect Your Credit Score As you can see, a savvy credit repair company uses the consumer laws to your advantage. So can you. Just remember, despite what the credit reporting agencies will tell you, the burden of proving compliance with the law is on the credit bureaus NOT on you! These are just a few of the laws that any reputable credit repair company should have in their arsenal to assist their clients, and that you, as a consumer, should be aware are available for your protection.

25 How to Win: Game Strategy In any game you have a set of rules that govern play and strategy you can use to win the game. We ve learned that whether we are aware or not, there are rules in play: the credit scoring system. The game is designed to reward you for using credit and paying on time, but never in full. Playing the game the traditional way benefits the lender, and an ignorance of the game rules makes them richer and you poorer. You have an opportunity to not just achieve an excellent credit score, but to achieve good stewardship and financial freedom altogether. How do you win? Apply game strategy, which, in this case should include knowledge of credit laws and other wise practices that can increase and protect your credit score. Credit Game Strategy 101 We now know that your payment history accounts for 35% of your FICO scores. Did you know that some lenders may post your payment 3 to 7 days after you ve submitted it? This can cause an on-time payment received 27 days into your cycle to be posted as 30 or more days late. It s no wonder that 70% of credit reports have reporting errors. Last chapter we discussed compliance audits in detail, and took a look at how understanding consumer laws can work to your advantage in executing the compliance audit. Non-compliance with the law on the part of the credit bureaus can cause a legitimate debt to be removed from your report. So you should examine your credit report, identify any incorrect information, and dispute it. However, beware of companies that advise you to dispute everything. Items may temporarily be dropped from your report for a short period only to be added back again because wise application of the law was not followed.

26 GAME STRATEGY 25 Pay On Time One immediate change you can make that will impact the factors with the highest weight is to pay your bills on time. Withhold not good from them to whom it is due, when it is in the power of thine hand to do it. (Proverbs 3:27 KJV) You can change your habits now. We are admonished in the Word of God to pay others on time. If you do pay late, identify why. Are you an entrepreneur who may make $20,000 one month, and $2,000 another, so you keep money in the bank to guarantee that you can get through the next month or several? Are you disorganized and just need to develop an orderly manner to track your finances? God respects order and encourages us to maintain order in our finances: Be thou diligent to know the state of thy flocks, and look well to thy herds. (Proverbs 27:23 KJV) Do you hate balancing the checkbook and keeping track of your account balance compounded even more with the ATM and debit card transactions? Look for money management tools to help you maintain order. There are several great financial software packages that integrate with online banking for major financial institutions. Using these tools you can reconcile your account, create financial statements, analyze and track your spending habits, and do online bill payment. Perhaps you are living paycheck to paycheck and need a certain amount of money in your account or pocket to feel reasonably secure. Beyond tithing and establishing a financial covenant with God, you can build an emergency fund so you will feel equipped to handle the unexpected. This should be an account that you don t touch unless it s absolutely an emergency. Let s define an emergency situation: illness (yours or a loved one), funeral expenses, a car breakdown, legal fees, or other unplanned,

27 legitimate emergencies that occur as we live life. Identify the number that will make you more comfortable. Start with a smaller amount, such as $1,000, and continue to build your emergency fund as you work your financial plan. We often say that you should ultimately want to build an emergency fund of six to twelve months living expenses depending on your comfort level. Look at any emotional triggers that may be keeping you from pursuing good stewardship and paying your bills on time. For instance, if you have experienced abuse or rejection, that emotional pain may make you feel like you don t deserve better. As a result, you may be a compulsive spender attempting to numb your pain. You should then examine those thoughts and feelings. Be real about them and take them to the Lord in prayer. Find out what the Word has to say about who you are in God, how He accepts you, loves you unconditionally, and wants to bless you. Then be transformed by the renewing of your mind. 1Therefore, I urge you, brothers, in view of God's mercy, to offer your bodies as living sacrifices, holy and pleasing to God this is your spiritual act of worship. 2 Do not conform any longer to the pattern of this world, but be transformed by the renewing of your mind. Then you will be able to test and approve what God's will is his good, pleasing and perfect will. (Romans 12:1-2 NIV) You are commanded to not follow the pattern of this world, but to allow God, through His Word, to renew your mind. Then through the conviction of your heart and commitment to allow Him to lead and guide you, you can change your thoughts, habits, and actions and demonstrate His will for your life. Use Debt to Your Advantage We ve mentioned that the credit game rewards you for paying on time, but never in full. By carrying 20-30% of your credit card balance, you can work the debt to your advantage.

28 GAME STRATEGY 27 Brother Reney, Sister Marti, if the Bible says don t withhold good to whom it is due, and that debt is bondage H, then why should we carry a balance? Debt gives you leverage, in some instances, to accomplish what you otherwise would not be able to do on your own. There are actually instances when people were advised to use debt in the Bible. Now in these cases, it was part of a divine debt elimination plan. Two instances when the people of God were instructed to borrow were in 2 Kings 4:1-7 and Exodus 3:22. In 2 Kings 4:1-7 a widow cried out to the prophet Elisha for help in freeing her sons from slavery that was a consequence of her late husband s debt. When Elisha asked what she had in her house, she replied that she had nothing at all except a little oil. Elisha instructed her to go to her neighbors and borrow all of the empty vessels that she could find, and borrow a lot. Then return home, shut the door, and pour the oil into all of those vessels. Not until the last vessel was full did the oil stay or stop multiplying (according to the Amplified Bible). Elisha then instructed her to go, sell the oil, pay her debt, and live on the rest. So there are instances when God used, as part of His divine strategy, debt to bring about a supernatural debt cancellation. In Exodus 3, God instructed the children of Israel to go borrow from their neighbors and guests (the Egyptians) silver and gold jewelry, and clothes. You see, here again, God was about to release his children from slavery, and he did it by bankrupting the slave masters. Should carrying debt be the rule of thumb? No. However, it can be a strategy that we use to win the credit game and ultimately opt out of the credit system. We want to reiterate how absolutely important it is to seek God for His plan for you, particularly when you seek to leverage debt to bring about debt release. Until we are able to master the credit game and opt out of the system, we can leverage good uses of credit to increase our credit score and set the strong foundation that will allow us to take

29 advantage of financial opportunities to build wealth and achieve financial freedom. Plan Your Credit Shopping When you apply for new credit and a lender pulls your credit report, your credit score may drop by about 5 to 10 points. However, the FICO credit scoring model does take into consideration the difference between "shopping" for the best rates for a loan versus trying to open multiple accounts. So if you make multiple applications within a few days, your scores may not drop as much in comparison to applying for several loans, waiting a month, and then applying for more loans. Inquiries can remain on your credit reports for two years, but the FICO scoring model only considers inquiries made during the last 12 months. Also, it only considers inquiries based upon your requests for new credit. This is an area you should carefully review. Many times there are inquiries that you did not generate. So don't assume the inquiries are accurate. You should dispute them and make the credit reporting agency prove their accuracy. Secure New Credit Another strategy you may want to use, after you've corrected as much negative history as you can, is to apply for new credit and build up a good payment history. If your FICO credit scores are too low, you can get a secured credit card. Once you get new credit, you can use your credit card for necessary purchases (e.g., gasoline, groceries, etc.), and then make timely payments.

30 Strategy is Key Our financial choices shape our credit scores. These scores impact far more than our ability to receive loan approval. Through the wise application of the game rules (the law) and the game strategy discussed in this chapter, you can win the credit game!

31 Game Over: Conclusion We want you to know that God expects you to be a good steward of the resources he has entrusted to you. You are called to multiply your resources for the advancement of His Kingdom. We have provided this ebook as an information guide to help you to better understand the credit game and to help you to become a better steward of all that God has invested in you. If you would like a credit consultation to evaluate your credit reports and scores, or help in developing your credit game strategy, please contact us at or call us toll free at However, if you prefer, we will be happy to use our understanding of the law to provide credit restoration services on your behalf. DuBose Credit Solutions th Street, Suite 2800 S Denver, CO Reney and Marti DuBose

32 GAME STRATEGY 31 END NOTES A Jeremiah 29:11 "For I know the plans I have for you," declares the LORD, "plans to prosper you and not to harm you, plans to give you hope and a future. (NIV) B Isaiah 48:17 Thus saith the LORD, thy Redeemer, the Holy One of Israel; I am the LORD thy God which teacheth thee to profit, which leadeth thee by the way that thou shouldest go. (KJV) C Matthew 7: Or what man is there of you, whom if his son ask bread, will he give him a stone? 10 Or if he ask a fish, will he give him a serpent? 11 If ye then, being evil, know how to give good gifts unto your children, how much more shall your Father which is in heaven give good things to them that ask him? (KJV) D Isaiah 45:3 And I will give thee the treasures of darkness, and hidden riches of secret places, that thou mayest know that I, the LORD, which call thee by thy name, am the God of Israel. (KJV) E Isaiah 45:2 I will go before thee, and make the crooked places straight : I will break in pieces the gates of brass, and cut in sunder the bars of iron: (KJV) F Proverbs 8: Receive my instruction, and not silver; and knowledge rather than choice gold. 11 For wisdom is better than rubies; and all the things that may be desired are not to be compared to it. (KJV) G Proverbs 8: I wisdom dwell with prudence, and find out knowledge of witty inventions. 13 The fear of the LORD is to hate evil: pride, and arrogancy, and the evil way, and the froward mouth, do I hate. 14 Counsel is mine, and sound wisdom: I am understanding; I have strength. 15 By me kings reign, and princes decree justice. 16 By me princes rule, and nobles, even all the judges of the earth. 17 I love them that love me; and those that seek me early shall find me. 18 Riches and honour are with me; yea, durable riches and righteousness. 19 My fruit is better than gold, yea, than fine gold; and my revenue than choice silver. 20 I lead in the way of righteousness, in the midst of the paths of judgment: 21 That I may cause those that love me to inherit substance; and I will fill their treasures. (KJV) H Proverbs 22:7 The rich rule over the poor, and the borrower is servant to the lender. (KJV)