Insight into restoring a credit report.

1. Sky High Credit
How to improve your credit profile and raise your scores.
David G. Clifton
President / CEO
N-2 Focus Solutions™
©Copyright 2013 | David G. Clifton | N-2 Focus Solutions™ | All Rights Reserved
1

2. Table of Contents
Acknowledgment - 3
Foreword - 4
Chapter 1: Components Of A Credit Score - 9
Chapter 2: The FCRA Is Not Pro-Active - 14
Chapter 3: Credit Bureaus Are Not Your Friends - 23
Chapter 4: Sixteen Tons Of Credit Card Debt - 31
Chapter 5: Debt Settlement – One Step Up From
Bankruptcy - 37
Chapter 6: Accounts In Dispute Will Stop Your Loan - 43
Chapter 7: Do Not Let Debt Collectors Violate
Your Rights - 49
Chapter 8: Credit Repair – Buyer Beware - 59
Chapter 9: N-2 Focus Business Model - 65
Chapter 10: Formulating An Action Plan - 73
Epilogue - 90
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3. Acknowledgment
I wish to express my gratitude to the person
whom I admire and respect above all others in
the world, who made this project possible.
Rose Marie Clifton
“…a noble woman is worth far more than rubies. She is clothed with
strength and dignity. Her children rise up and call her blessed.”
Proverbs Chapter 31
3

4. Foreword
I hope you like stories, because I love them. Stories
can teach, enlighten, motivate and inspire us. I want
to begin our time together by telling you a true story
about Wolfgang Amadeus Mozart. Mozart was just
thirty five years old when he died, and yet he is
recognized as one of the most prolific and influential
composers of all time. By the age of five he was
performing before the royalty of Europe. At his
death, he had written over six hundred symphonies,
concertos, and operas. Near the end of his life, he
was performing a piano concert in Vienna. After the
performance, a woman approached him and said,
“Mozart, I’d give my life to play piano like that.”
Mozart replied, “Madam, I have.”
Right now you may be asking yourself, “What does
Mozart have to do with restoring my credit?” Well,
here’s the connection: Mozart became who he was
because he practiced his craft every day of his life. He
didn’t sit down at a piano once a week or once a
month. He was at his piano every day. As we begin
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5. this journey together, it is critical for you to
understand that things we do every day matter much
more than things we do every once in a while. It is
important in our personal lives and equally important
in the financial areas of our lives. The things we do
with our finances day in and day out, in a disciplined,
consistent manner, are those things that will move us
from where we are to where we want to be.
You can hope and wish all day long that your credit
score will improve, but until you start doing the things
you must do to make that happen, your credit score is
not going to go up a single tick. Good intentions carry
no weight in this arena. I’d rather see one ounce of
“doing” rather than ten tons of “wishing.” You must
begin now to do the things necessary to clear up your
credit picture and, like Mozart, you must do these
things every day – from this day forward.
I wrote this E-booklet to help you lay out a road map
for your trip. It contains practical information that
you will need for the journey. The book has ten
chapters filled with information and insights that I’ve
learned about credit bureaus, credit reports, credit
scores and credit restoration over the past several
5

6. years. I hope this information will help you get your
credit score where it needs to be and then keep it
there for the rest of your life. You will need to be
committed to your credit restoration and determined
to see the process through. That can be a challenge,
particularly when credit bureaus or creditors seem to
be doing everything they can to stall, delay, and
frustrate you. Once a commitment is made, then
retreat or surrender is not an option. Decide now,
before the journey starts, that you are going all the
way.
Another thing you will need to do is to spell out
exactly why you want to make this journey. Identify
the most important goal you want to accomplish by
restoring your credit profile. Write that goal down on
paper and post it where you can see it every day.
Maybe you have never written your goals down on
paper before, but it is second nature to me. It is a
very important step in empowering you to reach your
goal.
You will need to formulate an action plan for making
sound financial decisions. This book will provide
critical information and tips on how to do that. One
other thing: DON’T WAIT - START NOW! This is a
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7. recurring theme that you are going to see time and
again throughout this E-Book. Tomorrow is a deep,
dark dungeon where 99% of all human achievement
is locked away. Don’t ever wait until tomorrow to
start anything important. Always start today.
I believe that you have the ability to raise your credit
score to 750 or higher. It doesn’t matter who you are,
what you’ve done, where you live, how much money
you make, or where your score is now. It will require
commitment, effort, and discipline. Do you have
what it takes to make this happen? Let me tell you
another story and we’ll see if we can answer that one
together:
A young boy, just 7 years old, was at the State Fair in
Mississippi, in the fall of 1961. He was black. He was
watching a balloon vendor selling balloons to other
children. The way the vendor attracted customers
was to fill up balloons with helium and then let them
go, where they would float over the fairgrounds for all
the crowd to see. The boy watched the vendor fill up
white balloons, and red balloons, and yellow balloons
and let them go. He watched them all float up high
into the clouds. The boy walked over to the balloon
7

8. vendor and in a low, quiet voice asked him, “Mister, if
you filled up a black balloon and let it go, would it go
up as high as the rest of them?” The old vendor knew
exactly what the young boy was really asking him. He
put his arm around the boy’s shoulders and said,
“Son, it’s not the color of the balloon. It’s the stuff
inside that makes it rise.” A good friend told me that
there are two kinds of people in the world: those
who think they can and those who think they can’t –
and they’re both right. I’ll ask you, “Can you or can’t
you? Do you have the will to put your financial house
in order? Do you have the stuff inside you that will
enable you to rise to this challenge?” I believe that
you do or you wouldn’t have come this far. So, let’s
begin our journey together – and let’s start RIGHT
NOW!
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9. CHAPTER ONE
Components Of A Credit Score
A good place to start is by learning exactly what makes
your credit score high or low. Your credit score is the
result of factoring different components of your
financial history and your borrowing and repayment
habits into a mathematical algorithm, or scoring model,
that was first developed in the 1950’s. It was originally
designed to predict the likelihood of you making a 60
day late payment sometime over the next 24 months. It
is also known as your “Risk Score”. There are different
scoring models that can be used to determine your
score but the only one that has been universally
embraced by lenders is FICO which stands for Fairman
Company. It is sometimes referred to as Fair Issac.
These names refer to Isaac Fairman, the man who
developed the first algorithm. FICO scores run between
350 and 800. Several different factors make up that
score. It may surprise you to learn that your salary has
no bearing on your credit score. I’ve worked with
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10. millionaires with credit scores in the low 500’s and then
worked with roughnecks from the oil field making
$50,000 a year who posted credit scores in the high
700‘s, Income is not important to your score. The
scoring model doesn’t care how much you make. It is
only concerned with how you manage what you make.
Here are the components that make up your credit
score:
Account History – 35%: This is a measurement of your
borrowing and repayment history. This is where
late payments, charge-offs, repossessions,
foreclosures, and collection accounts all come to
bear on you. This makes up such a significant
portion of your credit score that a single late
payment can drop your score by as much as 75
points in one month. If you’re serious about
raising your score, there can be no more late
payments, nor can you allow any new collection
accounts to begin reporting.
Credit Utilization – 30%: This measures how much of
your available revolving credit you are using. By
“revolving credit”, I mean credit cards. This is the
only thing that utilization looks at. Credit cards
10

11. and credit card companies pander to our
impulses and weaknesses.
They often
encourage us to spend money we don’t have
on things we don’t need in order to impress
people we don’t know. However, your credit
score will never be as high as it should be
unless you have at least two open credit card
accounts. The scoring model identifies the
combined credit limits of all of your credit
cards. The model also identifies the combined
balances of all of your credit cards. Your
utilization ratio is then determined by placing
your combined balances over your combined
limits. For example – if you had a credit card
with a $1000 limit and you carried over a
balance of $500 from month to month, your
ratio would be 50%. To receive the largest
benefit from your credit utilization, you need
to keep your ratio between 19 – 28%. Any
more than that will begin to lower your credit
score. I’ve seen ratios as high as 105%. I’ve
also seen credit scores jump as much as 75
points in a single month by just paying down
the credit card debt to an acceptable level.
This is the only area of your credit score that
you can impact immediately, either for the
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12. good or for the bad. I discuss how to properly
manage your credit card accounts in the
chapter, “Sixteen Tons Of Credit Card Debt,”
later in this book.
Inquiries – 10%:
This measures how many
companies are checking on your credit. When
you check on your own credit, it’s called a
“soft hit” and has no effect on your credit
picture. When a company checks on your
credit, it’s called a “hard hit”. Too many hard
hits are an indication to any potential lender
looking at your credit report that you may be
desperate for credit. More than six inquiries
per year begin to count against you. They will
affect your score for one year but will remain
in your credit report for two years. You need
to be very careful about allowing companies
to pull your credit.
Excessive inquiries,
particularly inquiries that you don’t remember
authorizing, can also be the first indication
that someone is trying to steal your identity.
Make a habit of keeping an eye on this section
of your credit report.
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13. Average Age of Accounts – 10%. This measures
the average age of all of your combined
accounts. Lenders like to see how you’ve
managed your credit over time. This is why it
is important to never cancel a credit card
account that you’ve had for years. Positive
accounts can continue to report for 10 years
from the last activity.
Mix of Accounts – 15%: Lenders looking at your
credit report like to see that different types of
credit have been extended to you over the
years. They like to see a mortgage, car
payment, credit cards, and even an
installment loan from a bank. This shows a
lender that different types of other lenders
have all looked at your credit profile in a very
positive light.
A good understanding of the different factors that
affect your score will be important a little later in
the process when you begin to put together an
action plan for permanently raising your credit
score.
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14. CHAPTER TWO
The FCRA Is Not Pro-Active
The Fair Credit Reporting Act was passed by Congress in
1970 in order to:
• Make sure that the reporting activities of the credit
bureaus are fair to the consumer.
• Protect the privacy rights of the consumer against
the informational demands of the credit bureaus.
The FCRA makes it a violation of Federal law for either
creditors or credit bureaus to knowingly report false or
misleading information in a consumer’s credit report.
But, it’s important for you to note that while these
things may be illegal, violations by creditors, debt
collectors, and sometimes even the credit bureaus still
occur on a regular basis. In fact, one of the so-called big
three credit bureaus, was just assessed an 18.6 million
dollar judgment for refusing to remove incorrect
information from a woman’s credit report for over 2½
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15. years. Too often, the Fair Credit Reporting Act is
not used to prevent your credit report from being
corrupted by false information, but is used as the
basis to repair your credit report after the damage
has already been done.
Companies that report to the credit bureaus are
called data furnishers. Whatever information the
data furnishers report about you to credit bureaus,
shows up in your credit report. If you disagree with
that information, it is assumed that you’re the liar.
The credit bureaus will accept the word of a data
furnisher over that of a consumer 100% of the
time. The law assumes that data furnishers always
report accurate information. And the fact is, most
of them do. But when one of them doesn’t, you
have an uphill battle getting that incorrect
information out of your credit report because
credit bureaus have already accepted it as gospel.
You should always remember that maintaining the
accuracy and integrity of your credit report is your
responsibility. If you think the credit bureaus are
looking out for you, you had better think again,
because they are not. That’s not their job.
Experian, Trans Union, and Equifax are billion dollar
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16. corporations who are in business to make money.
They make money by collecting some of the most
sensitive, personal information about private
citizens of the United States of America and then
sell that information to companies who want to
buy it. Do they break the law sometimes?
Absolutely! As a result they’ve paid millions of
dollars of fines over the years to the Federal Trade
Commission. Should we be suspicious of the
bureaus? You had better be!
You need to become an informed consumer. Here’s
how you do it - start a new ritual or tradition in
your household. Every January 2nd, you, or if
you’re married, you and your spouse, sit down in
front of your computer and go to the website
www.annualcreditreport.com. This is a website
hosted by Experian, Equifax, and Trans Union. They
are required by law to furnish you with one free
copy of your credit report every year. At that
website, you’ll be given the option of downloading
one or all three of your credit reports and there
will be no charge. It should take less than 10
minutes.
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17. Once you have received your credit reports, go
over them with a fine tooth comb. Pay close
attention to the “Personal Information Section” of
each report. Make note of every alias, every
address and every phone number listed that does
not belong to you. Make note of the social security
number that’s on file and date of birth listed.
Incorrect personal information can usually be
corrected in about four to six weeks.
Next, go to the accounts section of each report and
go through every account listed. Make sure you
recognize every account. Make a list of all negative
accounts. Trans Union divides their accounts into
“Adverse Accounts” and “Satisfactory Accounts”.
Experian uses, “Your Accounts That May Be
Considered Negative” and “Your Accounts In Good
Standing”. Equifax mixes all of their accounts
together so you will have to carefully wade through
the Equifax report.
If there are debt collectors reporting in your credit
report, make sure you look for the original creditor
of the debt and confirm that it is yours.
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18. Make sure that two debt collectors aren’t reporting
the same account. Sometimes the debt collector
will sell an account to another debt collector and
will not notify the bureaus to delete their
reporting. Also look to make sure that the same
account is not being duplicated and reported twice
in your credit report. It happens all the time and
when it does, you are being penalized twice for the
same credit transaction. This is against Federal
Trade Commission guidelines.
On credit card accounts reporting negative
information, check to see if you are listed as an
Authorized User for the account. If you are, then
you can have that account deleted from your credit
report usually in four to six weeks. It is against FTC
guidelines for creditors to report negative
information in the credit report of an Authorized
User.
On all negative accounts, look for the date of the
last activity. This is important in determining when
a negative account becomes obsolete. Accounts
can report negative information for seven years
from the date of last activity (when the last
payment was made). It is not unusual for obsolete
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19. accounts to continue to appear in a credit report,
so don’t get upset if you find one. They are usually
easy to fix. If an account is obsolete, it can
normally be removed in four to six weeks. Credit
reports do not state in black and white the date of
the last activity. Each account listed in your credit
report is called a trade line. Study each negative
trade line in your report. Look for a notation that
says, “This item can remain in your credit report
until Month / Year.” Look at the month and the
year listed. Deduct seven years from that date to
get to the date of last activity. As an example, if
ABC Collections is reporting, and the credit report
states the item can remain until June of 2015,
simply back up seven years to June of 2008. That
will be the date of the last activity for that account.
Another reason establishing the date of last activity
for negative accounts is so important is the Statute
of Limitations. Creditors and debt collectors have a
specific amount of time that they have to either
collect a debt or sue a consumer over a debt. The
Statute of Limitations in Texas for debt collection is
four years from the date of last activity. After that
time has passed, the creditor has lost the right to
take a consumer to court over the debt. They can
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20. still ask the consumer for the money, but they can
no longer sue the consumer over the debt. It is a
violation of the Fair Debt Collection Practices Act
and of Chapter 392 of the Texas Finance Code if
they even threaten a citizen with any action that
would require them going to court. Knowing this
can really take a lot of pressure off of you if you’re
dealing with an overly aggressive debt collector. It
can also give you a tremendous amount of leverage
when negotiating a settlement with a debt
collector. To determine the Statute of Limitations
for a negative trade line, you will again look for the
notation in the trade line that states, “Can remain
in your credit report until Month / Date”, deduct
seven years to establish the date of last activity,
and then add four years to the date of last activity
to arrive at the Statue of Limitations. We’ll use the
same example as before: ABC Collections is
reporting, and the credit report states the debt can
remain in your credit report until June of 2015.
Back up seven years to June of 2008 which would
be your date of last activity. You would then move
forward four years to June of 2012. That would be
the Statute of Limitations. That means that ABC
can no longer sue you over the debt. If they even
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21. threaten to do so (and most of the time they will),
you can sue them. Can you see how that might
come in handy when trying to restore a credit
report?
Another thing to do is to look at the inquiry section
of your report. Study it to see if any companies
have checked on your credit who weren’t
authorized do so, or, if you see any inquiries that
you were not aware of. That’s usually one of the
first indications that someone is trying to steal your
identity. Also check to see if you have multiple
inquiries reporting that are all the result of the
same credit transaction.
Example: You are
shopping for a vehicle. You visit four dealerships
within a ten day period and each dealership runs
your credit report. There should only be one
inquiry reporting in your credit report. FTC
guidelines state that all inquiries that are the result
of the same credit transaction occurring within the
same forty five day period should only count as a
single inquiry. If you’re going to shop around for
the best deal, make sure you do all your shopping
within the same forty -five day window.
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22. These are some of the things that you can do, and
should already be doing, to protect yourself and to
ensure that your credit report is accurate. If you
don’t, it could cost you thousands of dollars. Don’t
ever forget that while you can use the FCRA to
repair the damage that has been done to your
credit report by creditors and credit bureaus, the
law does not prevent your credit report from being
damaged in the first place. The responsibility for
maintaining the accuracy of your credit report and
safeguarding your rights as a consumer is yours.
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23. CHAPTER THREE
Credit Bureaus Are Not
Your Friends
There seems to be a belief in the minds of some people
that the credit bureaus a type of governmental agency
responsible for making sure everything that appears in
our credit reports is accurate and up-to-date. I hate to
be the one to tell you this but that’s just not the case.
The credit bureaus are nothing more than private
companies in business for one reason and one reason
only – to make money. They generate revenue by
gathering some of the most sensitive and personal
private information that exists about you and me. They
then sell that information to other companies who want
access to it in order to make decisions that can affect
the quality of our lives.
The bureaus will correct inaccurate information, but
only after you let them know that the information is
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24. incorrect, and only then, after you prove beyond all
doubt that the information is incorrect.
Here’s something else that I hate to tell you - in a
dispute between you and a company, the credit
bureaus will accept the company’s word over your
word – 100 % of the time. To the credit bureaus,
you’re the liar. The company doesn’t have to
produce evidence to back up their position. All
they have to say is, “Our information is correct”,
and the bureaus accept it. When you dispute the
credit bureaus’ information, the burden of proof is
entirely on you.
Here’s another bit of information you may not be
aware of: Credit bureaus make more money off of
people with low credit scores than they do off of
people with high credit scores. That’s because
those with lower scores have their credit reports
pulled more often than people with higher scores.
Every time a credit report is pulled, the bureaus
make money. So they’re not monetarily motivated
to aggressively look for, or correct mistakes in
credit reports. They’ll do it – but only if you make
them do it. So, these guys are not necessarily
guardians of truth, justice, and the American way.
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25. In fact, they’ve paid millions and millions of dollars
in fines and judgments over the years for violating
the rights of United States citizens. One of the
major bureaus just recently had a multi-million
dollar judgment levied against them for refusing to
correct mistakes that had been appearing in a
woman’s credit report for over two years.
Be aware that the agency responsible for making
sure your credit report is accurate and up-to-date is
you! Here are a few things that can help you:
• Get one free copy of your credit report every
year from Experian, Trans Union, and Equifax.
The easiest way is by going online to
www.annualcreditreport.com.
Go over the
reports and make note of any account that you
don’t recognize.
Go over the personal
information section and make note of any
address listed where you’ve never lived, any
phone number you’ve never had, and any alias
you’ve never used when applying for credit.
Check the inquiries section of the report and
make note of any credit inquiries that you did
not authorize. Excessive inquiries are the first
sign that someone may be trying to steal your
identity.
25

26. • If you find incorrect information, or even
information that you’re unsure of or don’t
recognize, then you’re ready to start the process
of trying to clean up your report. You’ll start
with the creditors first. The contact information
for every creditor is listed in your credit report.
If you feel the information that a creditor is
reporting is incorrect, write them a letter
explaining why it is wrong. Include your
personal information (name, address, birth year
and the last four numbers of your social security
number), the account number, and any
supporting documents you’re lucky enough to
have. DON’T INCLUDE YOUR PHONE NUMBER,
especially when writing a debt collector. If there
is an account that you don’t recall, or a late
payment that you don’t remember making,
include language in your letter stating that you
are not disputing the account information. You
simply have a question about it, and you are
asking the company to check its records for
accuracy and provide documentation that will
validate their reporting. Many times they
cannot do this and if they can’t, they are
required to delete. Sometimes when you
question a company’s reporting, they will notify
26

27. the credit bureaus that you are disputing the
account.
The bureaus will insert dispute
language into that account trade line. Once
your credit report shows a single account in
dispute, you are unbankable. A lender will not
give you a loan if you have even one dispute in
your credit report. Creditors, debt collectors,
and the bureaus all know this. Debt collectors
will sometimes use this in trying to force the
consumer to pay a debt, telling the consumer
that the dispute language will be removed once
the account is paid. That’s a violation of state
and Federal law. I believe that companies and
the credit bureaus use dispute language to
frighten consumers from writing so many
letters. So, it is very important that you
stipulate that you are not disputing the account
information in your letter. You are only asking
for information. Sometimes a company will
report the account in dispute anyway. You can
then use your letter to prove that the company
is violating state and Federal law. Much more
on this in Chapter Six including what you can do
about it.
• When you get ready to write the credit bureaus,
do not write them online. The bureaus are
27

28. trying to move the dispute process to the web,
not to make it easier for the consumer, but to
make it easier for themselves. We don’t care
about making it easier for them. Always contact
the bureaus with written correspondence and
establish a paper trail. Always submit clear,
crisp copies of identity documents with your
letter. I recommend a copy of your driver’s
license and a copy of a current utility bill
bearing the same address.
If you have
supporting documents that back up your side of
the story, submit clean, crisp copies of them as
well.
• Once you’ve sent a letter to the bureaus, be
prepared to wait. The bureaus seem to stall
every chance they get. I think they often do it in
hopes that the consumer will just go away and
leave them alone. One favorite trick is to wait
about forty-five days after receiving a
consumer’s letter and then send out a response
stating that the consumer’s letter is a
“Suspicious Request” which they have
determined was not written by you. How did
they make that determination? They don’t say
how or why. In most cases, it is nothing more
28

29. than stone-walling. I think they often do it to
frustrate the consumer and drag out the
process. Be prepared to wait on them.
• Many times the bureau’s response will state
that the incorrect information has been verified,
even when you know that it has not. This is a
red flag telling you that the credit bureaus have
ignored your letter and did not do their job. You
have the right to demand to know exactly how
the information was verified. This is referred to
as the method of verification or “MOV”. You
have the right to have your letter investigated
thoroughly and many times that absolutely does
not happen. The bureau will send an electronic
twix to the data furnisher who will send an
electronic twix back. The bureau will then send
the consumer a boiler plate response stating,
“Account Verified”. This may be their idea of an
investigation, but it is not mine. You have the
right to know how the information was verified
and who verified it. If you get a response like
this, go back to the bureaus and demand to
know their method of verification.
• The bureaus tell you that if you disagree with
29

30. their investigation, you have the right to file a
“100 Word Statement” in which you can explain
your side of the story. Never file a “100 Word
Statement”. If you have one in your credit
report now, get it removed. It may make you
feel better to vent on a company that you
disagree with, but it’s a red flag to any potential
lender looking at your credit report – a red flag
that says that either you’re slow in paying or
you don’t pay at all. They will see that a “100
Word Statement” was filed but they never read
it, so do not file one. Lenders, like the bureaus,
will always side with the creditors first.
These are just a few things to be aware of if you’re
getting ready to do battle with the credit bureaus.
Repairing your credit is like eating with chopsticks
or twirling a baton. It looks easy until you try to do
it. Trust me, it will be a battle. If you are feeling a
bit overwhelmed by all of this, and think that you
may need some professional assistance, feel free to
contact me at any time by emailing me at:
david@davidgclifton.com
or
david@n2focussolutions.com
30

31. CHAPTER FOUR
Sixteen Tons Of
Credit Card Debt
There was a very popular song many, many years ago
called “Sixteen Tons”. It was a song about a coal miner,
and sixteen tons of coal was what he had to produce
every day just to keep his job.
Coal mines were normally situated in remote areas.
The miners and their families would need to live nearby,
but there weren’t any stores or shops to provide the
basics of life needed to survive. Whenever a mine
opened, the mine owners would open a company store
to provide for the needs of their employees and their
families. The company store would extend credit to the
miners. When payday came, the company store got
their payment first (with interest) before the miner got
anything. If the miners weren’t careful, they would see
their entire paychecks go right back to the company and
they’d have nothing left over for themselves.
.
31

32. The chorus of the song tells the story:
“You load sixteen tons and what do you get?
Another day older and deeper in debt.
Saint Peter don’t call me ‘cause I can’t go.
I owe my soul to the company store.”
It was an unfair, brutal way of life. Let me suggest
to you that the “company store” business model is
still alive and well today. It’s not the coal mine
owners anymore. It’s credit card companies.
In my opinion, the goal of these companies is to
keep you in debt by making minimum payments to
them at exorbitant interest rates for the rest of
your natural life. Don’t believe me. Look at your
statement. Companies are now required by Federal
law to inform you that if you make minimum
payments, your bill will be paid off in 40 years or
so.
Credit cards are evil but they’re necessary. If you
don’t have them, your credit score is hammered.
Not having a credit card, or as the bureaus call
32

33. them, “revolving credit”, can lower your score by
as much as 30%. That means taking a credit score
of 750 down into the low to mid 500’s where you
couldn’t buy a stick of gum on credit. So we have
to have credit cards, but we need to be smart and
cautious about how we use them.
I want to give you a strategy that can raise your
credit score by as much as 50 or 60 points in a
month. You have to understand how credit cards
factor into your credit score and how the credit
card companies are using this information to
exploit you.
30% of your credit score is determined by what’s
called utilization. Utilization looks at the combined
sum of your revolving credit. Again, that means
credit cards. The scoring model combines the
limits of all of your credit cards, and then combines
the balances of all of your credit cards. The
combined balances are put over the combined
limits, and that forms your utilization ratio. If you
had a credit card with $1000 limit and you carried a
$500 balance this month, your ratio would be 50%.
The bureaus like to see the ratio at between
33

34. 19 – 28%. Exceed that and it starts counting
against you.
I want to explain how these credit companies can
use your utilization ratio to keep your credit scores
low, and what you can do to stop them.
Let’s say that you have a credit card with a $1000
limit. You and your spouse go on vacation this
month and you charge $1000 on the card. You get
back home and get your bill around the 10th or 15th
of the month. It’s due on the 30th, and on the 25th,
you send that company a check for $1000 and the
bill is paid in full. Question: What’s your utilization
ratio that month? You charged $1000 and then
paid the bill in full. There is no balance carried
over to the next month. Your utilization should be
0%. Right?
What if the credit card company reports account
information to the credit bureaus on the 25th
before they received your payment? When they
reported, you had $1000 in charges and $1000
limit so your ratio for the month is 100% and your
score goes in the tank.
34

35. Why would a credit card company do that to you?
Two reasons - the lower the credit scores, the
higher the interest rate they can charge you.
Reason #2, and to me the more insidious; the
lower your score, the fewer offers you’ll receive
from competing credit card companies. Other
credit card companies check on your credit all the
time. When they see your credit picture improve,
you get covered up with applications for preapproved credit cards. If your score stays low, you
don’t get them. Keeping your credit scores low is
how these companies keep you from leaving them
and going to another company. This is how they
maintain their market share. They don’t care if
your scores go in the tank. They don’t care if this
causes you to have to pay thousands and
thousands of dollars in additional interest over the
course of your lifetime. It’s like the Godfather nothing personal – just business.
Here’s a simple solution to defeat that business
model - start right now paying that bill as soon as it
comes in – the same day. Don’t wait for the due
date. Because of our payment habits, these
companies know when we pay our bills. They
35

36. know when our balances are highest, so they know
when to report to the bureaus. Once again, don’t
wait until the due date. That’s what these
companies are banking on. Pay the bill as soon as
it comes in. I’m not saying you have to pay it in full.
Make the minimum payment if you have to, but
pay the bill when it comes in. Over time, pay your
balances down and then keep those ratios no
higher than 28%, and you’ll see the results
immediately.
Utilization has no memory. There’s no negative
carry-over. You make a late payment and it can
haunt you for 7 years. But you can have 100%
utilization this month and 0% next month and
there’s no negative carry over. Your scores will
immediately bounce back and there is no negative
history associated with it. Use this little strategy to
stop credit card companies in their tracks
36

37. CHAPTER FIVE
Debt Settlement One Step Up From Bankruptcy
I see commercials on TV almost every day advertising
companies that can help you get out of debt and settle
all of your existing debts for “pennies on the dollar”. For
many people, this is almost like an answer to prayer.
They lay awake all night tossing and turning over the
crushing debt they’re under. They are desperate to
change their circumstances. The debt settlement
company is pictured as a knight in shining armor who
will slay that dragon of debt and put them back on the
road to financial stability.
I am not against debt settlement. I believe that there
are situations when it may be the best available option.
But consumers need to understand the effect that debt
settlement can have on their credit profile.
If bankruptcy is like dropping a nuclear bomb on your
credit report, then wholesale debt settlement would be
37

38. like using TNT. Here’s the way it works:
1. You employ a debt settlement company to
tackle your debt.
2. The company goes through your credit report
and totals all of your existing debt.
3. You decide how much of a monthly payment
you can make towards that debt.
4. You begin making payments into the debt
settlement company’s escrow account.
5. They negotiate a settlement amount and
payment terms with the creditors.
6. They make the payments to the creditors until
the debt is paid.
7. Once the debt is paid, your credit report is
updated to reflect that the account has been
settled for less than the full amount and the
account reports “Paid” with a $0 balance.
8. The account will continue to be reported for 7
years from the date the account first went into
arrears with the original creditor.
Here’s what the commercials don’t mention - an
account reporting “Settled For Less Than Full
38

39. Balance” is still highly derogatory. Every potential
lender looking at your credit report will see it and
will ask themselves, “What if he doesn’t pay me in
full either?” Lenders are really funny about that.
When they loan us money, they actually expect to
get re-paid.
If you’re seriously looking at debt settlement, here
are some other points to ponder:
• How old is the debt? What was the date you
made the last payment on the debt to the
original creditor? This is referred to as the date
of last activity. There are two reasons why this
is such a critical piece of information:
1. There is a Statute of Limitations for
the collection of most debt. In Texas, the
Statute of Limitations is four years from
the date of last activity. After four years
has passed, the creditor or debt collector
has lost the right to take you to court
over the debt. They can still ask you for
the money, but they cannot take legal
action against you if you refuse to pay.
39

40. They will continue to report the debt in
your credit report for another three years
after the Statute of Limitations has
passed, but that’s about all they can do.
After the SOL has come and gone, the
consumer has much more leverage over
the creditor or debt collector and can
usually negotiate a deeply discounted
settlement. Settlements of 50% are
common with some accounts settled for
10% of the original debt. In some cases,
creditors and debt collectors will agree to
waive reporting of the account in the
credit report if the account is paid. One
last important point is that the SOL on
an unpaid cellular phone bill is two years
from the date of last activity.
2. Derogatory accounts become obsolete
and are supposed to be deleted from the
credit report seven years after the date of
last activity. Once an account is deleted,
from the standpoint of the credit report,
it is as if the debt never existed. At that
point, it is up to the discretion of the
consumer whether the debt is paid. Even
if it remains unpaid, it
40

41. ceases to have any effect at all on the
credit report or credit score. One last
important point - the seven year rule
does not necessarily apply to
bankruptcies, judgments, Federally
insured student loans, or Federal tax
liens.
• What does a debt settlement company charge
for its services? It may be possible for you to
negotiate acceptable settlements
yourself
without paying a debt settlement company to
do it for you. At N-2 Focus Solutions™, we view
the settling of debt as part of the overall credit
restoration process. There is no additional
charge if we undertake debt settlement on
behalf of a client. It is already a part of our
business model. We advise settling a debt only
after all other processes have been exhausted.
It can be an important component in improving
a client’s credit picture. One final last important
point - if you choose to work with a debt
settlement company, be aware that some
creditors will insert language into their reporting
to the bureaus indicating that their debt is being
41

42. handled by a debt settlement company. This is
highly derogatory and has never occurred with
client of N-2 Focus Solutions™.
If you are seriously considering using a debt
settlement company, you need to realize that
wholesale debt settlement will have a profound
effect on your credit situation for years to come. It
should only be viewed as the last resort in avoiding
bankruptcy.
42

43. CHAPTER SIX
Accounts In Dispute
Will Stop Your Loan
Repairing your credit is like eating with chopsticks. It
looks easy until you try it, and then you learn that it may
be more complicated than you first thought. You don’t
need to be a rocket scientist to do it. However, there is
critical information that you will need to be aware of in
order to successfully contend with creditors or the
credit bureaus. Consider this:
•
Most people simply do not have the time to look for
that information.
• Some of the information that you will need is not
printed or posted on the internet. It can only be
gained through the experience of actually dealing
with creditors or credit bureaus.
If you are trying to repair your credit report, and you
don’t have the information needed to get the job done
43

44. right, you stand the chance of investing a year or
more of your life in the process and winding up
with a credit report in worse shape than when you
started.
Let me give you an example. You have a collection
account with ABC Debt Collection Company. The
original creditor of the debt was Citibank Visa. The
debt you owed to Citibank was $150 but you
received a collection letter from ABC stating you
owed them $650. You decide to write a letter to
Citibank asking for verification that they had sold
the debt to ABC. You write a second letter to ABC
asking them how much interest was added to the
debt when they acquired it. You also ask for the
rate at which that interest was calculated.
Citibank never responds to your letter. ABC sends
you a letter stating that after investigating your
dispute, they have verified that they are reporting
accurately and have notified the credit bureaus to
change the status of your account to “Disputed”.
44

45. You check your credit report and find that both
Citibank and ABC have added language to their
accounts stating “Account Information Disputed By
Consumer”. You may not realize it, but you’ve just
become un-bankable. There is not a single lender
in the United States willing to give you a loan. One
account reported to be in dispute is grounds for
stopping a loan application.
You may have been very clear in your letters that
you were not denying that the account was yours.
You were only asking for information in order to
decide how best to settle your debt. That doesn’t
matter. Your credit report is now more corrupted
than when you began.
You need to understand why these companies have
added the dispute language. They are keenly
aware that lenders do not grant loans when
accounts are in dispute. They have added the
dispute language in an effort to gain leverage over
you and force you to pay your debt. If you call
them and ask them what they’ve done, in most
cases, they will tell you that asking a question
about an account is considered a dispute. They will
45

46. offer to remove the dispute language once the
account is paid.
What these companies fail to tell you is that their
actions are violations of state and Federal law.
They are, in effect, holding you hostage in order to
force you to settle your account. This is illegal.
They are also reporting information to the credit
bureaus which they know to be untrue. If you
appeal to the credit bureaus, you will be informed
that you will need to take the issue of the dispute
up with the creditor. The bureaus just throw you
back to the wolves. So be aware! Sometimes
trying to repair your credit can have unintended
consequences that can make your situation much
worse.
An account in dispute is one of the main
complaints I have against most of the “so-called”
credit repair companies. Accounts in dispute are
actually by-products of their business models.
Most credit repair companies charge a client an upfront fee to organize the client’s file and to obtain
the client’s credit report. They then begin charging
the client so much a month to send letters to the
credit bureaus disputing every negative account in
46

47. the credit report. They simply state in their letters,
“This account is not mine. Please delete it”. In
most cases this is not true, but repair companies
do it in hopes that the creditor will not verify the
reporting with the bureaus. For a credit repair
company to do this is a violation of Federal law.
And it’s not just illegal. It is ineffective and
counter-productive to what you’re trying to do in
the first place. It doesn’t work. The long-term
effect of this approach is that the client’s credit
report fills up with accounts in dispute.
If you have accounts in dispute showing in your
credit report, I would advise you to immediately
contact the creditor or debt collector who entered
the dispute language and demand that the
language be removed. If they refuse, then you will
need to:
• Contact an attorney who is well versed in credit
law and consumer protection for specific
advice on how to proceed.
OR
• Contact me and N-2 Focus Solutions™ will take
over the restoration of your credit report. This
47

48. includes taking on the removal of any existing
disputes. In most cases, this can be done in 30 – 60
days. If an attorney is needed, we hand the file to
our corporate law team. Where clear violations of
the Fair Debt Collection Practices Act have
occurred, there are no attorney fees passed on to
the client. The attorney costs you nothing.
So a word to the wise: Use caution when dealing
with creditors or credit bureaus. Do not allow
them to make matters worse for you.
48

49. CHAPTER SEVEN
Do Not Let Debt Collectors
Violate Your Rights
It probably comes as no surprise to you that debt
collectors throughout the United States casually and
routinely violate state and Federal law in their
collection efforts. Let me begin by saying that I believe
if I have a legitimate debt, then I should pay it. But I
also believe that creditors and debt collectors should
obey state and Federal law in their collection efforts.
Many times they SIMPLY DO NOT. The Fair Debt
Collection Practices Act was passed by Congress in 1977
to prevent abusive debt collection practices and protect
citizens against invasion of their individual privacy.
Almost every day I get a call or an email from a client
telling me that they’ve been harassed or threatened by
a debt collector. Here are some of the most common
complaints and what the FDCPA has to say about it:
49

50. •
Repeatedly calling you at your place of
employment, or at early or late hours
demanding a decision on how you are going
to handle a debt - if a debt collector is calling
you at all hours of the night and day or
bothering you at work, you can tell him to
stop. If he doesn’t, then he’s violated state
and Federal law. The FDCPA states that debt
collectors can only call between the hours of
8am and 9pm (in your time zone) and are
barred from contacting you at work if you
notify the collector that you’re working and
cannot be disturbed during business hours.
Continually calling the consumer with the
intent to annoy or harass is a clear violation of
the law. A debt collector must cease all
communication with a consumer once the
consumer has notified the debt collector in
writing to do so with two exceptions:
A. To notify the consumer that collection
activities have ceased.
50

51. B. To notify the consumer that the debt
collector intends to pursue legal
remedies to collect the debt.
• Threatening to embarrass you by talking to
your neighbors or employer or threatening to
come to your place of employment –
threatening to tell your boss or your neighbors
that you’re refusing to pay a debt is against the
law. The collector can communicate with other
people but only for the purpose of acquiring
location information about you. The collector
can only contact the person once, cannot state
that his activity is related to the collection of a
debt, and can only identify his employer if
specifically requested. As a general rule, it is
forbidden by the FDCPA for the debt collector to
communicate with any person other than the
consumer in connection with the collection of
any debt. The debt collector cannot threaten to
damage or harm the reputation of a consumer.
• Calling to tell you that a deputy is on his way to
your home or place of business to either serve
51

52. you with civil papers or take you to jail, and
the only way to prevent this from happening is
an immediate payment made over the phone Debt collectors do not control deputies. The
court does. If a civil action is brought against a
consumer, the court will serve the consumer
with a summons, notifying the consumer that
an action has been filed and informing the
consumer where and when to appear. The
summons will also inform the consumer that
failure to appear may result in a summary
judgment against the consumer. The court
does not send a deputy to your home or place
of business to arrest you with that initial
notification or summons.
• Threatening to file a lien against your home,
garnish your wages, or seize your tax return A debt collector may not imply that nonpayment will result in arrest and imprisonment
or seizure and garnishment of any property or
wages unless such action is legal. There are
times when that may be legal, but the debt
collector doesn’t order that. The court does.
52

53. • Sending you a collection letter disguised to look
like a court summons - A debt collector may not
use any written communication which falsely
represents to be a document issued or
approved by a court of law. The document must
state that it is a communication from a debt
collector.
• Threatening any action that would require
court approval after the statute of limitation
for debt collection has passed - In Texas, a
creditor has four years from the date of your
last payment to take you to court. After that
time, they lose the right to take court action
against you. It is a violation of state and Federal
law if you are even threatened with court
action. It is a violation for a debt collector to
threaten any action that cannot legally be taken.
• Identifying themselves as attorneys and
threatening to sue you - A debt collector may
not represent himself as an attorney. It is a
violation of the law if the collector identifies
himself as anything other than a debt collector.
53

54. • Cursing or screaming at you over the phone –
It is a violation of the FDCPA for a debt collector
to use obscene or profane language to harass or
embarrass a consumer.
Every one of these examples are clear-cut
violations of the FDCPA. I hear stories like these all
the time. General Rule of Thumb: Don’t ever
make a payment to a debt collector when you’ve
been threatened. Tell them, “No.” Ask them to
send written communication to you so you will
know exactly who you’re dealing with. Let’s
consider what can happen to you if you don’t pay a
legitimate debt.
Let me begin by stating that I am not an attorney.
This information is not meant to be taken as legal
advice. I am relating real life situations that have
come up over the years when working with my
clients. This is how I have been advised by our
corporate attorney to respond. Our company is
well represented by attorneys who specialize in
consumer protection and credit laws. If you are
having serious problems with a debt collector, I
would advise you to seek legal advice. When I’m
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55. working with a client and I encounter a clear
violation of the FDCPA or Chapter 392 of the Texas
Finance Code, the first thing I do is notify our
attorney, who normally takes the case at no charge
to the client.
What can happen if you don’t pay a debt? Let’s
look at the most common situation - credit cards.
You fall behind on your bill and start making late
payments. Immediately your credit score takes a
hit and your credit report will begin to reflect 30,
60, 90, and 120 day late payments. While all of this
is going on, you are receiving letters from the
company notifying you that your account is in
arrears. Then the letters will become threatening
and demanding payment.
Your account is
cancelled and the account is charged-off and either
assigned or sold to a debt collector. If you don’t
pay that debt, the debt collector or the original
creditor has the option of going to court and
seeking a judgment against you. The court will
order you to make payment. An officer of the
court, usually a Deputy, will serve you with a notice
to appear in court. If the company prevails, and
they will, a judgment will be awarded to the
55

56. company. The judgment will be listed in your credit
report. It can be reported for up to seven years
after it is paid. Your credit report will be damaged
for years. If at all possible, avoid getting yourself
into this situation. Here is some advice to prevent
being dragged into court:
The first thing to do is to determine the likelihood
of being sued. A creditor can sue you over a nickel,
but as a practical matter normally when the debt is
less than $1000, the creditor will not take the case
to court. Now understand, there’s no law that
establishes minimums for filing court cases.
Creditors can take whatever action is legal against
you for whatever the amount. Generally, for debts
less than $1000, it is not worth the time or expense
for the creditor to pursue the case. If the debt is
over $1000, the likelihood of being sued begins to
increase exponentially. If the debt is over $2000, a
civil suit is almost a certainty.
Creditors and debt collectors do not like to file civil
cases against consumers. It is time consuming and
expensive.
Even being awarded a judgment
doesn’t guarantee that the debt will ever be
recovered. To them, the filing of a civil suit is a last
56

57. resort. I mentioned earlier that you have the right
to tell a debt collector to cease communicating
with you and by law, the collector must stop. But
understand, if you do that, you may be painting
that debt collector into a corner where the only
other option available is to sue. It may be wiser to
keep lines of communication open and try to
negotiate with the debt collector in an attempt to
settle the debt. As long as there’s a chance that
he’ll recover all or even part of that debt, it is
unlikely that the collector is going to sue you.
There are disreputable credit repair companies that
tell you credit repair is all about hiding or canceling
legitimate debt. They will lead you to believe that
a consumer can run up thousands of dollars in debt
and then decide not to pay it. The credit repair
company rides in on a white horse and has all
negative accounts deleted from the credit report.
This is not true. It is also illegal. The Fair Credit
Reporting Act states that once an account is
verified and validated, it cannot be legally deleted.
Honorably settling debt is an important part of
legitimate credit repair and will dramatically
improve your credit picture. Most of the time,
debts can be settled on terms more beneficial to
57

58. the consumer than you may think is possible. One
way to avoid going to court is to negotiate with the
creditor or debt collector to pay the debt.
Normally, you will be offered a payment plan that
will fit into your budget. That is much better than
having to appear before a judge to explain why you
haven’t paid a debt.
When companies loan us money, they expect to be
repaid. When they are not paid, they have the
right to try to recover their loss. This doesn’t mean
you have to allow yourself to be railroaded by an
aggressive debt collector. If you would like a copy
of the Fair Debt Collection Practices Act, go to
Google and enter “FDCPA”. For more specific
advice on how to deal with out-of-control debt
collectors, or how to negotiate a settlement with a
debt collector, please feel free to email me at
david@davidgclifton.com
or
david@n2focussolutions.com
58

59. CHAPTER EIGHT
Credit Repair – Buyer Beware
If you are considering using a credit repair company,
there is something you need to know. Most “so-called”
credit repair companies have business models that
violate state and Federal laws. These companies prey
off of the hopes and dreams of people who are
desperate to fix their credit in order to make a major
purchase - like a home or an automobile.
There are three kinds of credit repair companies:
1. Companies that know the law and want to help
people. This is the best kind of company and N-2 Focus
Solutions™ is this kind of company. Our business
model is driven by an understanding of laws that relate
to credit and the desire to use that knowledge to help
men and women reach their goals. I joined the Houston
Police Department in 1973 and spent the next several
years of my life in the uniform of a Houston Police
Officer. For five years I was in a police car carrying out
59

60. normal patrol duties. Then for nearly 10 years, I
was an investigator in the Hit and Run Division. My
brother and I started a part-time business in 1986.
Within a year, I was able to resign my commission
with HPD and devote myself to that business full
time. A mentor in our business taught us the
principle of “living by giving”. He taught us that the
more we gave – on a business and a personal level
– the more we would receive. The mentor taught
us that we could have anything in life we wanted –
if we helped enough other people get what they
wanted first. I had never heard that principle
before, but it resonated in my heart and I knew it
was true. That is the principle my brother and I
applied to our business efforts. As a result, we
were very, very successful. That same principle is
the bedrock upon which I built N-2 Focus
Solutions™. That’s the kind of company we are.
We know the law and we want to help people.
2. The second kind of credit repair company is a
company that may be weak on the law, but wants
to help people. That’s a good kind of company. If
they’re driven by the desire to help others, they
will not take advantage of their clients. They will
learn the law over time, and then be able to help
even more.
60

61. 3. The third kind of credit repair company is
unconcerned about the law. They do not care what
state and Federal laws say about how they are
supposed to conduct their business. They just
want to make money. This is the kind of company
that needs to be put out of business.
Unfortunately, most credit repair companies are in
this third category. The Federal Trade Commission
regulates this industry but they have more than
they can deal with. So it is up to the consumer to
put these companies out of business by not doing
business with them.
How can you tell if you’re dealing with a company
like this? Here are some red flags:
Red Flag # 1: If you are not given a form
entitled, “Credit File Rights Under State and Federal
Law,” and told to read and sign that form before
signing any other document – that is a violation of
Federal law.
Red Flag # 2: If a company’s contract does not
include a “Cancellation Form” explaining how to
61

62. cancel the contract, and appears twice on two
separate pages of the contract – that is a violation
of Federal law.
Red Flag # 3: If a company’s contract does not
spell out exactly how much, to the penny, their
services will cost and stipulate the length of the
contract – that is a violation of Federal law. Most
of these companies want to get a copy of your
credit report. They then begin writing letters to
the credit bureaus every month disputing every bit
of negative information in your credit report. Each
month you will be charged a certain amount of
money. The longer you’re in that letter writing
loop, the more money these companies make. This
is absolutely illegal and yet – most of them do it.
Red Flag # 4: If a company makes any kind of
guarantee to raise your credit score or delete any
specific negative item in your credit report – that is
a violation of Federal law. If I had a crystal ball that
was right 100% of the time, N-2 Focus Solutions™
would still not give a guarantee to a client. It is
against the law.
62

63. Red Flag # 5: If a company asks for money up
front in order to get started before performing any
services – that is a violation of Federal law. These
companies usually ask for a couple of hundred
dollars up front in order to organize your file and
get your credit report ordered. They then start the
letter writing campaign at so much a month. For
how long? Who knows? That is absolutely illegal
and yet most of them do it.
These are just a few of the red flags. Don’t take my
word for it. Go to Google and enter “CROA”, which
stands for Credit Repair Organization Act. This is a
Federal law most credit repair companies hope you
never read. If you are talking with a credit repair
company and any of these red flags pop up, get up
and run – don’t walk – run. If you don’t, the odds
are a year from now, you will have spent a
thousand dollars or so, and your credit report will
be more corrupted than it is today.
If you would like a complete explanation of N-2
Focus Solutions™ approach to credit restoration,
read the next chapter, “N-2 Focus Business Model”.
63

64. You will see why N-2 Focus Solutions™ is different
from other credit repair companies. My complete
contact information is on our website at
www.n2focussolutions.com . Feel free to contact
me by email or telephone at any time with any
credit-related question or concern. I will be glad to
personally help you in any way I can.
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65. CHAPTER NINE
N-2 Focus Business Model
The N-2 Focus business model is quite different from
most other credit repair companies. The goal of most
“so-called” credit repair companies is to get the client
into a letter writing loop. The company then begins
sending letters each month to credit bureaus disputing
the negative items in the client’s credit report. These
companies usually demand a couple of hundred dollars
up front to organize the file. They will then charge the
client a fee each month while letters are being sent to
the credit bureaus. The longer the client is in that loop,
the more money the company will make. This is a clear
cut violation of a Federal Law called the “Credit Repair
Organization Act.” Don’t just take my word for it. Go to
Google and enter “CROA”. Find out for yourself.
By contrast, we focus our efforts on three key areas:
1. We look for mistakes in the client’s credit
report. Odds are that right now, you have mistakes
in your credit report that you had nothing to do
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66. with. Even though you were not the reason for
these mistakes, they are affecting your credit
score. Most of these mistakes were caused by
the creditor or the credit bureaus when the
data was entered. A good portion of these
types of mistakes are significant enough to
warrant a loan rejection. Again, the consumer
had nothing to do with them. The good news is
that these mistakes are most often a quick fix.
They can normally be removed from the credit
report in about four to six weeks.
2. The second thing we do is look for
violations of the law. Would it surprise you to
learn that debt collectors, creditors, and even
the credit bureaus routinely violate state and
Federal laws? It happens every day. When we
find that a potential violation exists, or has
occurred, we have a procedure in place to
confirm the violation. Once confirmed, the
account is sent to our corporate attorney at no
charge to the client.
The attorney then
attempts to have that account deleted from
the client’s credit report. With clear violations,
there is usually no charge to the client.
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67. 3.
The third thing we do is request
information under the authority of state and
Federal law from every company reporting
negative information in a client’s credit report.
The most important word in the Fair Credit
Reporting Act is the word “verifiable”. The
accounts in your credit report are called trade
lines. The FCRA states that 100% of every
negative trade line in your credit report must
be verifiable. If only 99% is verifiable, the
negative information must be deleted. N-2
Focus Solutions™ uses various state and
Federal laws to request verification and
validation from every company reporting a
negative trade line in a client’s credit report.
If those companies no longer have the
account, if they’ve destroyed their records, if
they’ve closed the file or sold the account, or
if they just don’t want to respond, then N-2
Focus Solutions™ will appeal to the credit
bureaus for a deletion on the grounds that the
account is not verifiable.
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68. Most “so-called” credit repair companies send
a letter to the credit bureaus stating, “This
account is not mine. Delete it”. In most cases
this is not true. When a credit bureau receives
a dispute from a consumer, they are required
by law to contact the company reporting the
information and verify that information. About
25% of the time these companies will not
respond to the credit bureau inquiry. When
they don’t respond, the bureaus have to delete
the negative information. That’s a good thing,
but the problem is the other 75% of the time,
these companies will respond. When they do,
the bureaus insert language into the trade line
stating that the account information is being
disputed. Once that occurs, the consumer has
become un-bankable, because a lender will not
approve a loan if there is one dispute in the
consumer’s credit report.
When N-2 Focus Solutions™ appeals for a
deletion to the bureaus, we state in bold
letters that we are not disputing the account.
We further state that information was
requested from the original creditor who was
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69. unable or unwilling to verify the information
they are reporting. We then request that the
negative information be deleted under the
authority of the Fair Credit Reporting Act.
We try to settle the issue with the original creditor
first, then we go to the credit bureaus appealing
for a deletion. This keeps most of the dispute
language out of the trade lines.
The average restoration takes from four to six
months. Our term of service is 180 days - the
longest allowable by Federal law. We have a clause
in our contract stating that at the end of that
period, if there is work remaining, then the
contract will be extended 180 days and the
extension is free. So we’re committed to our
clients for a year.
We have a set fee for our services. For one person
the fee is $500, and $700 for a couple. This
represents the sum total of everything you will
ever pay to N-2 Focus Solutions™ for our services.
A client is not allowed to make any payment up
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70. front before any services are performed, and is not
allowed to make payment in full.
We do not
accept payment for work that has not been
performed.
Our business model works like this: If you accepted
our services, and we started working on your file
right now, we’d begin by obtaining a copy of your
credit report from the credit bureaus. We would
then organize our file notes by listing every
derogatory trade line appearing in the credit
report. We’d list the company, their address and
phone number, account number, type of
derogatory, balance, date of last activity, action we
are taking, and eventual outcome. The credit
report would be analyzed for mistakes or violations
of the law. We would then begin the first round of
debt validation and account verification by sending
letters to every company reporting negative data in
your credit report. This will be done within the
first 24 hours. Up to this point you have made no
payment. The creditors have, by law, 30 days to
respond. We’re in the position of waiting for the
creditor responses. Fourteen days after we’ve
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71. started, you would make an initial payment. For an
individual, the payment would be $200 and for a
couple, the initial payment would be $300. We
have a cancellation period of 14 days which
coincides with the date your initial payment would
be due. At that point, if you have changed your
mind about restoring your credit, then you do not
make that initial payment. Your contract will be
cancelled and you would owe nothing for the work
that we have already done. See if you can find
anything like that with any other company in this
industry.
If you make that initial payment, then four to six
weeks later, a second payment would be due. For
one person, the payment would be $150; for a
couple $200. Then four to six weeks after the
second payment is made, a final payment would be
due – same amounts. Your restoration would be
paid over a three to four month period. At every
step, the work will have already been performed
prior to the payment ever being made.
Our business model puts our clients in control of
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72. the process, and puts us above the crowd in the
industry of credit restoration. We hope you’ll allow
us the opportunity to be your credit advocate and
partner in the restoration of your credit report.
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73. CHAPTER TEN
Formulating An Action Plan
Your credit score is a number that is just as important to
your financial health as your blood pressure is to your
physical health. It can determine whether you rent or
own, what neighborhood you live in, what kind of job
you have, or the kind of car you drive. It can affect your
ability to start your own business. It can even lower or
raise your health insurance premiums. A high credit
score can open financial doors to you, while a low credit
score can slam those same doors shut in your face. Your
credit score can have a tremendous impact on your
pursuit of the American Dream. But, you must be
willing to make a commitment to do whatever is
necessary to raise your credit score. Here are twelve
suggestions to help you put together and then execute
your plan of action:
• Determine exactly where and why your credit score
is where it is. Log onto the internet and go to
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74. www.annualcreditreport.com to get a free copy
of your credit report. You will not be given your
credit score, but for just a few dollars, you can
buy it. The report is free but the score is not.
Go over the report and make a note of every
single negative item in it. Go over the personal
information section and make note of every
alias you’ve never used, every address where
you’ve never lived, and every phone number
that you’ve never had. Once you get a clear
picture of exactly where you are, then it is
easier to chart a course of action that will take
you to where you want to go.
• Take ownership of past mistakes and don’t
make them again. There can be circumstances
beyond your control that can cause your credit
score to drop: Identity theft, divorce,
unexpected loss of a job, or a medical
emergency. However, barring those, if your
credit score is low, then it’s probably because
you have not managed your money wisely. How
much money you make has no effect
whatsoever on your credit score. It is how you
manage the money you make over time that
determines whether your score is high or low. If
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75. you’re in a financial hole, and you put yourself
there, then the first step in improving your
credit picture is to admit that you have made
mistakes in managing your money.
• The second step in improving your credit
picture is to stop making those same mistakes.
If you are in a hole, then stop digging. Your
credit picture will not get better by luck or
chance. Your credit picture will change when
you change how you manage your finances. I
had been working on a client’s credit file for
about eight months when he called to complain
that he had just been turned down for a home
loan. He said that his credit scores were even
lower than when he started working with me.
He sent me a copy of the credit report that the
lender had pulled and, sure enough, the scores
were lower than when we had started. I went
through the credit report and discovered that
there were sixteen new negative accounts that
had been added to his credit report after he had
started working with me, some as recently as
within the last thirty days. The client was
continuing to make the same financial mistakes
he had always
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76. made, but he was hoping for a different
outcome. It’s like adding two and two and
hoping to come up with five. A four year old
can tell you that it just won’t happen.
• Changing our habits is the key to changing our
circumstances. If you want to change the
outside, you have to change the inside first.
The idea of change frightens many people, and
if you’re one of them, you need to shake that
idea out of your head right now. Change is
inevitable and believe me, you want to be on
the transition team when change occurs. Don’t
be afraid to be open-minded. Your brain is not
going to fall out of your head. Stretch and get
your arms around this: Change is good, change
is healthy, and change is what is going to allow
you to provide a better life for yourself and your
family. So about now you’re telling yourself,
“Okay, so I need to change. How do I do it?”
The real question you should be asking yourself
is, “Why will I do it?” Once your “Why” is clear
to you, then the “How” becomes clear to you as
well. Most of my clients are trying to improve
their credit in order to buy a home.
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77. Home ownership is not a right bestowed on us
by the Constitution or Declaration of
Independence. Unless you’re paying in cash,
home ownership is a privilege reserved for
those who have a history of repaying their debts
in full, and on time. How do you change your
credit profile so that that privilege will be
extended to you? I love history, so allow me to
use an example out of history to illustrate a
point.
Socrates was a Greek philosopher who lived
about 400 years before the birth of Christ. One
day he and a group of his students were walking
along the seashore and a student asked him,
“How can I attain knowledge like yours?”
Socrates quietly took his student’s hand and led
him out into the sea. Then he pushed the
student’s head under the water and held it
there. When the student was at the point of
drowning, Socrates let him up and he gulped
fresh air into his lungs. Then Socrates told him,
“When you want knowledge like you wanted
that breath of air, you will have it.” The lesson
here is that you need to make buying your new
home the most important goal in your life. That
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78. is your “Why”. If your “Why” is big enough,
then the “How” will take care of itself. You will
automatically start choosing what you want
most - over what you want now. It may be
something as simple as deciding to have that
first cup of coffee in the morning at home
instead of buying that $5.00 Mocha Grande at
Starbucks, or, deciding to eat in tonight rather
than taking the family out to dinner. Little
decisions like that can save you a couple of
hundred bucks over the course of a month.
That might mean you would be able to make
your car or credit card payment on time this
month before it’s due. It means that you won’t
have a late payment showing up in your credit
report next month. It means that your credit
score won’t drop 60 or 70 points. Whether you
realize it or not, the little decisions we make
every day have a big impact in our lives. Little
hinges swing big doors and if we start making
the right little decisions, it’s much more likely
that we will start making the right big decisions
as well. It’s all about doing today what most
people won’t, so you can live tomorrow like
most people can’t.
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79. • Identify exactly what you must do, or perhaps
more importantly, what you must stop doing,
in order to get your credit score where it needs
to be. It’s easy to sit up and take notice of the
things you need to do in order to change your
credit picture. The hard part is getting up and
taking action. What you must do now is
develop an action plan and then execute it
beginning right now. Remember that there are
seven days in a week and “Someday” is not one
of them.
George Patton was one of the finest combat
generals that the United States of America has
ever produced. He commanded troops fighting
the Germans in the Battle of the Bulge.
American troops of the 28th Infantry Division
were cut off by the Germans in the Belgium
town of Bastogne. The Americans refused to
surrender and were on the point of being overrun. All of the Allied Generals met in France to
discuss whether or not Bastogne could be
relieved in time. The general consensus was
that it would take two weeks to formulate a
plan of attack which meant that Bastogne would
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80. have to be sacrificed. General Patton stood up
cursing and screamed, “I’d rather have a good
plan violently executed right now, than a perfect
plan in two weeks. Hell, my troops will be killing
Germans around Bastogne in 48 hours.” True to
his word, his Third Army broke through the
German lines and relieved Bastogne on the day
after Christmas, 1944. As a result, the Germans
were defeated in the Battle of the Bulge. The
Americans continued advancing until they rolled
into Berlin in April, 1945 and the war in Europe
finally ended.
Patton understood the
importance of deciding what must be done and
then doing it “NOW”.
Many times I’ll contact clients to check on
whether or not they have received responses to
our correspondence from creditors or the credit
bureaus. It amazes me when one of them says,
“Yeah, I got something last week and I meant to
send it to you, but I haven’t gotten around to it
yet.” I hate to hear the words “haven’t gotten
around to it”. I hate it so much that I am going
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81. to make it impossible for you to ever utter those
words again. Here, I want you to have this:
You have now been given a Round 2 it. From now
on, for as long as you live, you will never again be
able to say that you haven’t gotten a Round 2 it.
Deciding what you need to do will not get you into
your new home, but doing what must be done
will. Start now!
• Sit down and formulate a household budget. Dave
Ramsey is a recognized expert in the field of personal
finances. Dave has basic budgeting forms that you
can use to prepare your household budget. You are
able to download them online at no charge by simply
going online to www.daveramsey.com/tools/budgetforms/. Concentrate first on the necessities that your
family must have each month. Take your time and
include all the things on which you normally spend
money. Identify what can be eliminated from your
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82. usual purchases and save that money. As Dave
says, “When you spend your money on paper
and on purpose each month with a written
budget, you’ll experience more freedom than
ever before”. Formulating a budget and then
sticking to it requires discipline. Remember
when I wrote earlier that discipline is choosing
what you want most rather than what you want
now. Living within your means is where those
words come into play and a budget will make it
possible for you to do just that. Once you see
where your money is actually going every
month, chances are you’ll realize that you have
more disposable income than you imagined. A
budget is not meant to cause pain but rather
freedom by putting you on the path to managing
your money responsibly. It will motivate you to
make small sacrifices today so that you can have
the desires of your heart tomorrow.
• No more late payments. Make it a habit to mail
all payments to your creditors a week to ten
days prior to the payment date. It’s even better
to set up Auto Bill Pay through your bank so that
you’ll have an electronic record of when
payments were made. Late payments are credit
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83. score killers and loan stoppers so be absolutely
certain that all payments are made on time.
• Pay down your revolving debt to between 19
and 28% of your credit limit. This will have an
immediate and incredibly positive impact on
your credit score. Keep debt to credit ratio on
all credit cards at between 19 and 28%.
• Calculate your total debt against your annual
income. Home loans are not simply score
driven. Just because your credit score is high
enough to qualify for a loan, doesn’t mean that
you’ll be approved. In addition to the score,
loans also have other conditions that must be
met in order to qualify for approval. One of
those conditions is your Debt To Income Ratio,
which now stands at 43%. What this means is
that your debt cannot exceed 43% of your
annual income. If it does, your loan application
will be rejected. If you exceed 43%, then you’ll
need to begin paying the debt down to an
acceptable level. This debt would also include
credit card debt. So by paying down your
revolving debt, you’d also be lowering your debt
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84. to income ratio as well. This number can
change, so it’s always a good idea to check with
your lender for current market and loan
conditions.
• Go through your credit report and make note
of every single negative account listed. This is
where you may want to use the services of N-2
Focus Solutions™.
There are tactics and
strategies for restoring a credit report that the
average consumer is just not familiar with or
even aware of. There are also things that a
consumer can unknowingly do when restoring
his or her credit report that can actually make
the situation worse. It’s possible for anyone to
restore his or her own credit. But the fact is
that most folks simply don’t have the time to
ferret out the information they’ll need to be
able to successfully contend with creditors or
credit bureaus. Your goal with these negative
accounts is to eliminate the ones that you can,
and then settle the ones that you can’t.
Let me repeat that last part – settle the ones
you can’t. There are a lot of these “so-called”
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85. credit repair companies who will tell you that
legitimate accounts will be deleted from your
credit report and you won’t have to pay the
debt. They’ll even guarantee it. Sounds like a
“Get Out Of Jail Free” card doesn’t it? Well, this
isn’t a game – it’s the real world. When
companies loan us money, they expect to be
repaid. When that doesn’t happen, they will
report the delinquency in a credit report for a
full seven years.
Even though honesty is considered a virtue, I
find that sometimes folks don’t want to hear the
truth. Well, ready or not, here it comes. If I
have a legitimate debt, I believe I should do
everything in my power to pay it. Racking up
debt and then believing that some “so-called”
credit repair company can magically erase it
from a credit report is nonsense. The Fair Credit
Reporting Act clearly states that verifiable
legitimate debt cannot be legally deleted.
Honorably settling past debts is an important
part of legitimate credit restoration. Most of the
time the debt can be taken care of at a reduced
settlement price. Once the debt is settled,
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86. some companies will waive the reporting
entirely, even though they don’t have to. Even if
the reporting is not waived, the account will be
updated to reflect that the account was
honorably settled, and that is very reassuring to
future potential lenders looking at the credit
report. There’s the hard truth – and don’t let
anybody tell you anything different. Paying our
debts in full and on time is not just the right
thing to do. It will also push your credit score
into the treetops.
• Be careful when applying for new credit. When
you apply for credit, an inquiry from the
company you applied with will post to your
credit report. Excessive inquiries can negatively
affect your credit score. If you’re trying to
restore your credit, you don’t want to retard or
off-set the progress you may be making by
having too many inquiries showing up in your
credit report. More than about six per year and
they can start counting against you. They can
affect your score for one year but will appear in
the report for two years.
Lenders view
excessive inquiries as a definite red flag
indicating that the consumer is desperate for
credit.
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87. • Contact a creditor before defaulting on an
account. If you fall behind on payments to a
creditor, ignoring the problem will not help.
Call the creditor and try to work out some
arrangement to keep the account from going
into collections and/or to prevent civil litigation.
When a creditor sells a debt to a collector, the
creditor loses money. When a debt collector
buys a debt from a creditor, both the debt
collector and the original creditor can report the
account in your credit report. Instead of one
derogatory account, you’d have two. That’s not
fair, but that’s the way it works. In today’s
economy, many creditors are much more
flexible in working with consumers than in years
past. If the creditor takes legal action against
you, the end result will be a judgment being
added to the Public Records section of your
credit report. If you don’t communicate with
the creditor, he has no other options available
to him in order to recover the debt. It’s best to
face the problem head-on and open a line of
communication with the creditor.
• Open a secured credit card with bank or credit
union. You will need revolving credit to
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88. maximize your credit score, and you may not be
able to qualify for a normal credit card just yet.
A good alternative would be a secured card.
Find a bank or credit union that offers them and
then apply. Here’s how it works - you make a
deposit with the bank for the amount of the
limit on the card. Your deposit secures the
balance on the card so the bank can’t lose.
Now, begin using the card every month for small
purchases you were going to pay cash for.
When the bill comes in, you will pay it as soon
as it arrives. You will not wait for the due date.
Now you have full benefit from your balance to
limit ratio, you’ve established a saving account
that is drawing interest every month, and every
month your credit report is reflecting an ontime payment being made.
• Execute your plan of action and begin
protecting your credit score like you protect
your own child. You’ve formulated your action
plan and you’ve gotten your Round 2 it. The
only thing left is to execute the plan and begin
doing those things in a methodical, consistent
manner that will build your credit– day in and
day out. Don’t be impatient. A bad credit
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89. report is sometimes years in the making. Start
now – today – this minute. It is unrealistic to
believe that all those derogatory accounts will
be swept under the rug in a month or so – I
don’t care what any of these so-called “credit
repair” companies have told you. It does not
happen like that and believe me, the credit
bureaus are not necessarily on your side. Stay
committed to your goal and things will begin to
change. It may be slowly at first, but then the
change will accelerate. You’ve got to stay in the
race if you want a chance at winning the gold
medal. And in this race, the medals aren’t really
made of gold. They’re made of sacrifice, hard
work, determination, and that very difficult to
find ingredient called courage.
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90. Epilogue
How High Will You Rise?
We started this little E-Book talking about Mozart. I
want to bring our time together to an end by telling you
a story about the greatest literary detective of all time –
Sherlock Holmes. I’m often asked by clients, “How high
will my score go?” You may be thinking that same thing
right now. Allow me to let Sherlock Holmes answer that
question.
Holmes didn’t just solve sensational murders and
robberies. He worked on all types of cases during his
career. One of my favorites involved the theft of an
exam paper at a private boy’s school in England. The
paper had been stolen from the professor’s office and
all signs pointed to a young man who maintained his
innocence. Holmes was called in to investigate and
within an hour, Holmes knew that the professor was
accusing the wrong boy. What bothered Holmes most
was the guilty boy. He had been an example of hard
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91. work, honesty and integrity and was loved and
respected by all the students and faculty of the
school. Holmes was in the professor’s office about
to explain that the accused boy was innocent
when the guilty boy walked in. Chocking back his
grief and with tears in his eyes, he admitted his
guilt and said that he just couldn’t stand by and
watch an innocent student punished for his
mistake. The professor explained that the school
had no choice but to permanently expel the boy
and Holmes was afraid that this would mark the
young boy for life.
Holmes tenderly put his hand on the young man’s
shoulder and said, “Son, we’ve seen how far you
can fall. Now let us see how high you can rise”.
The boy left the school, enlisted in the British Army,
fought in the Boer War in South Africa and was
awarded the Victoria’s Cross for bravery and valor
in battle. He went on to become the most
decorated soldier in the history of the British
Empire and was eventually knighted by the Queen
of England. What a wonderful and magnificent
example of error and redemption. And so I’ll end
this little treatise by repeating to you those words
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92. of Sherlock Holmes. “We’ve seen how far you can
fall – now let us see how high you can rise”. If
you’ll take these principles I’ve written about to
heart, then I believe that the sky is the limit. Good
luck and God bless you along the way.
Sincerely,
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93. David was a member of the Houston
Police Department from 1973 until
1987. In 1987, he went into business
with his brother, Dennis. Working
together, they built a sales network
of over 200,000 sales representatives
in over 30 countries world-wide that
has produced in excess of $400
Million in sales. Since 2007, David
has been President and CEO of
N-2 Focus Solutions™.
“Strive to live a good and honorable
life so that when you’re old,
you’ll be able to think
back through the years
and enjoy your life once again.”
©Copyright 2013 | David G. Clifton | N-2 Focus Solutions™ | All Rights Reserved
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