PsychDoc's seminar transcript #3

breeze · October 7, 2005

LESSON THREE TRANSCRIPT

CREDIT 103: Credit Reports & Credit Scores, 10/6/2005

PSYCHDOC'S CREDIT REPAIR SCHOOL FOR BEGINNERS

KickingMyself> thank goodness this doesn't interfere with ER ;o)

blackberry74> i don't have tivo - talked about it, haven't done it

PsychDoc> Hello!

-KC-> CSI is a rerun- sombody will die! lol

catchnrelease> hi

blackberry74> there's the man of the hour, too sweet to be sour.

KickingMyself> Good Evening Doc

tal> you sound like my sister in law

blackberry74> hi, doc

tomurphjr> Ii've gotten into Night Stalker, and its on right now,

but I figured thsi is a better place to be.

breeze> hey Doc!

tal> she will not miss ER for nothing or no one

PsychDoc> Hi, blackberry and breeze

breeze>

KickingMyself> lol tal

PsychDoc> somebody needs TiVO!

tal> my sister in law

lgarcia> Tivo has changed my life....

tomurphjr> Lgarica LOL

PsychDoc> TiVO is life changing.

razor635> dead people on csi again

PsychDoc> ok we'll start

lgarcia> always dead people on CSI

Fallon> hiya nic! forgot it'd be a full house tonite

thaita78> why you be haten razor and ruining it for everyone

PsychDoc> CREDIT 103: Credit Reports &

Credit Scores, 10/6/2005

PsychDoc> Hi, everybody, I'm Randy Padawer

(PsychDoc), and tonight's seminar, the third of eight, will focus upon

credit bureaus and credit scores.

PsychDoc> It's nice to see some new faces

and some returning ones too. And, let me do something we couldn't have done

before the internet: I'd like to welcome those who have discovered these

transcripts in future weeks, months, and years. I hope something here

proves helpful as you approach your own credit repair. This site,

Creditboards.com, is made possible by its owners (you know who you are, LOL), and I

would like to express my appreciation once again for their invitation. Ok, in

case you don't know who you are... breeze, Pam, LKH, and radi8... I've

interacted with each of them through the years, all of whom have poured a lot

of care and sweat (and have endured heaping helpings of what we call in

Yiddish "mishegoss" in return)...

PsychDoc> QUICK ASIDE... "mishegoss" is your

word of the week. You are all now honorary Jewish people. Ahem.

lgarcia> Oy

IDare> mazel tov!

PsychDoc> Oy!

LKH> mishegoss lol

blackberry74> that's an interesting mix for me

PsychDoc> Google "mishegoss" later.

blackberry74> chutzpah. that's all i know. lol

PsychDoc> But they have put up with a fair

amount of mishegoss...

LKH> no need to

PsychDoc> just to benefit others.

LKH> of course

IDare> meshugana, lol

PsychDoc> Their commitment to consumer

advocacy is astounding.

PsychDoc> Aha, IDare! Very good.

PsychDoc> I'll endeavor not to be a

meshugana tonight. Now I'll turn away from such comments with a much browner nose

and focus upon our task here.

PsychDoc> Once again, here is the structure

and process of the course: There will be 8 sessions every other Thursday

evening, including tonight's. Each session will begin at 9 p.m. Eastern

Time (or 8 p.m. Central, 7 p.m. Mountain, 6 p.m. Pacific) and will last about

an hour. We may finish early, or we may finish late. Some may want to stay

longer even after the session's done to chat. We'll have a mix of lecture,

group discussion, and Q&A. The 8 sessions are:

PsychDoc> CREDIT 101: The Ethics of Credit

Repair, 9/8/2005

PsychDoc> CREDIT 102: A Consumer Law

Overview, 9/22/2005

PsychDoc> CREDIT 103: Credit Reports &

Credit Scores, 10/6/2005 (tonight)

PsychDoc> CREDIT 104: Triaging Your Reports,

10/20/2005

PsychDoc> CREDIT 105: FCRA Street Fighting,

11/3/2005

PsychDoc> CREDIT 106: FCBA Street Fighting,

11/17/2005

PsychDoc> CREDIT 107: FDCPA Street Fighting,

12/1/2005

PsychDoc> and last but not least

PsychDoc> CREDIT 108: Yiddish Credit Repair

PsychDoc> er

catchnrelease> lol

PsychDoc> CREDIT 108: Small Claims Lawsuits,

12/15/2005

blackberry74> lol

tal> lol

IDare> oy gevalt

lgarcia> Love it!

nutty> hello al....l psyhdoc im a long time fan.

blondimom>

PsychDoc> (Tip: Send them a bagel and

request the deletion.)

KickingMyself> lol

nutty> lox

PsychDoc> For those who have just joined us,

I should mention that the 8 lessons are divided into two sections...

PsychDoc> (Yes, lox.)

Brantoinette> DId we just begin?

PsychDoc> the first three lessons (where

credit repair is framed as an ETHICAL enterprise in opposition to the many

UNETHICAL business practices which comprise the consumer credit industry)...

and the last five sessions (where we discuss the nitty-gritty of credit

repair -- interventions which leverage your RIGHTS as a citizen). Like last

session, I hope we'll all learn something new, but I especially hope that

those who are new to their credit repair campaigns come away from these

sessions with something which may contribute to their eventual success.

PsychDoc> Tonight's syllabus...

PsychDoc> -1-- Course overview and format

(which we've already done)

PsychDoc> -2-- Brief review of the previous

sessions

PsychDoc> -3-- Approaches to debt

PsychDoc> -4-- Two credit bureau myths

PsychDoc> -5-- Credit scores

PsychDoc> Any questions about the course

format or the syllabus before we continue?

PsychDoc>

blackberry74> nope

PsychDoc> k...

tal> no

PsychDoc> Here's a brief review of the

previous sessions in just a couple of sentences each...

PsychDoc> Session One... Credit repair

involves INTERVENTIONS which invoke one of three TRUTHFUL communication

tactics: a) polite requests, b} requests for information, and c) legal demands.

PsychDoc> Session Two... Toward that end, we

leverage several federal consumer protection laws, usually these: a) the

Fair Credit Reporting Act (FCRA), which regulates the credit bureaus, b}

the Fair Credit Billing Act (FCBA), which regulates original creditors, c)

the Fair Debt Collection Practices Act (FDCPA), which regulates third-party

debt collectors, and sometimes d) the Health Insurance Portability and

Accountability Act (HIPAA), which regulates health professionals.

PsychDoc> There are other laws of course.

Some states have their own credit reporting statutes. Most states maintain

requirements for how debt collectors should behave as well (whether they

should post a bond in the state, etc.). So I don't want to give the

impression that the FCRA, FCBA, FDCPA, and HIPAA are inclusive.

PsychDoc> But these are the statutes most

discussed on the board.

PsychDoc> Last week I suggested that you

attempt to become familiar with these (as a long-term goal... LOL) or at

least read ABOUT them on the boards.

PsychDoc> I'm tempted to ask, for the sake

of discussion, "did anybody do that?" LOL... but I won't... I hate putting

people on the spot...

blackberry74> lol

PsychDoc> Plus this is a long-term goal. I

really want to encourage you to learn more though.

PsychDoc> Also, in both sessions we reviewed

a philosophy for generating credit repair interventions which we'll

revisit when we turn to the triage session in two weeks and which will hopefully

prove helpful during the subsequent "street fighting" sessions. The

transcripts for those first two sessions appear in the Creditboards Credit Forum

area.

PsychDoc> Tonight's session could easily

have been the first one... except that I didn't want to set the wrong tone

for this. First, credit repair isn't primarily about the credit bureaus or

about credit scores. Rather, it's about conducting ethical and lawful

interventions in order to further your personal consumer credit goals --

whatever they may be. Second, so many credit repair interventions (and their

co-curricular consumer protection statutes) aren't directed toward the credit

bureaus at all. Rather, they're directed toward original creditors, debt

collectors, health professionals, and others. ("Others" may include the

Better Business Bureau, the Federal Trade Commission, the consumer advocacy

site PlanetFeedback.com, etc. We'll begin to talk about these ancillary

intervention opportunities in a few weeks, as they can interlace nicely with

FCRA, FCBA, and FDCPA based interventions.)

PsychDoc> Still, it doesn't make much sense

to conduct a credit repair course for beginners without at least wearing

out the usual yawn-inducing introduction you see just about everywhere,

which goes something like this:

PsychDoc> "There are three major consumer

reporting agencies, Equifax, Experian, and TransUnion, and they maintain

consumer records on hundreds of millions of Americans. It's their legal

responsibility to maintain accurate records, and it's your right as a consumer

to ensure that they follow through in that regard."

PsychDoc> Argh... I said it.

PsychDoc> I'd like to back up a bit from

that, though, and cut through to something more essential, and that has to do

with DEBT.

PsychDoc> Mention debt, and breeze leaves

the room.

PsychDoc> (Sorry, LOL!)

-KC-> lol!

PsychDoc> Generally, the credit bureaus

maintain records (or, perhaps more accurately stated, LISTS OF UNPROVEN

ALLEGATIONS, lol) regarding how you as a consumer have behaved when borrowing

and repaying money. Even most court records that appear on such reports

often have to do with debt. Critically, your GOALS regarding debt will dictate

how you go about tackling what appears on those reports.

PsychDoc> Moreover, HOW YOU BORROW and HOW

YOU REPAY debt are perhaps the two greatest influencers of credit scores.

Manipulating ones borrowing and repayment patterns is perhaps the quickest

way to raising a credit score -- even, in some cases, irrespective of what

actually appears on the credit report. More about that in a minute.

PsychDoc> For those reasons, it's important

to step back a bit from the credit repair task, especially at the

beginning, and take stock of ones own approach to DEBT. That's really what this is

about.

PsychDoc> Suffice to say, this isn't what

some folks want to hear. Nobody wants to be reminded to floss after

brushing. For that reason, I won't spend too much time on this, but I would be

completely remiss if I didn't at least acknowledge the obvious: DEBT is what

caused so many of our problems which necessitate credit repair in the

first place, so perhaps 5 or 10 minutes of this will be appreciated by someone

out there at some point.

PsychDoc> As an aside, I really like an

article which appears on Creditboards (LINK) called "The Problem

with Debt Settlement Companies" written by radi8. He discusses a widely

advertised -- by a seemingly limitless number of companies -- method for

dealing with debt. It's a must read.

PsychDoc> There are many approaches to debt,

but here are two wide categories:

PsychDoc> 1) Wealth accumulation.

PsychDoc> 2) Eternal indebtedness.

PsychDoc> Expanding these...

PsychDoc> 1) Is your long term goal to

accumulate wealth? It almost goes without saying that the wealthiest people

(and the wealthiest corporations, for that matter) have little debt and lots

of money. If becoming more financially stable is your goal, then reducing

outstanding balances low should be an objective. Interestingly, this

approach has a credit repair benefit: your credit scores will rise. Most

importantly, you'll be less susceptible to fiscal disaster if you have an

emergency fund of real cash in case something unexpected happens.

PsychDoc> OR...

PsychDoc> 2) Do you regard a brand new

credit card as INCOME? In other words, when the shiny new MasterCard arrives

with a $10,000 limit, are you already thinking about that home theater

system you can buy now? If so, then you may find yourself overextended (and for

most of us here, I should add the word "AGAIN" -- me included), unable to

repay everything in a timely manner, and perhaps right back where you

started.

PsychDoc> Obviously, I would encourage

anyone in the second category to at least begin to think about how they've

embraced and accumulated debt.

PsychDoc> Ok, let's assume that accumulating

wealth (the first category) -- and so, in other words, reducing debt -- is

your financial goal. How will you do it? There are three general

approaches:

PsychDoc> 1) Reducing debt as quickly as

possible.

PsychDoc> 2) Reducing debt the least

expensive way.

PsychDoc> 3) Reducing debt in a way that

will maximize your credit scores.

PsychDoc> While all three of these are

worthy objectives, they are very different.

PsychDoc> And by the way... If your goal is

to reduce debt as quickly as possible, then you may not be able to do it

the least expensive way... Likewise, if you goal is either of the first

two, then you may not be able to do it in ways that will maximize your

scores...

PsychDoc> So this is about making choices...

PsychDoc> The first approach -- reducing

debt as quickly as possible -- usually involves what Dave Ramsey and other

authors have termed the "debt snowball" approach. By the way, does anybody

here ever listen to Dave Ramsey?

diddledee> no

LKH> no

tal> no

Littlefishy> no

PsychDoc> two no's LOL

zappagal> no

angeleyeskkhr> Nope, never heard of him before CB

PsychDoc> three

nutty> are u kidding?

lgarcia> I have before

rhyno> great show... listen to him on XM

blackberry74> no...heard about him here, don't listen to him

DesertMountain> no

cadicae> No

mesanite> no

angeleyeskkhr> hey marv

ihatecras> no

PsychDoc> He's an anti-debt fanatic. That

isn't my approach.

KickingMyself> no

tomurphjr> Please explain him

vegas_biz> no

PsychDoc> But he represents a viewpoint.

angeleyeskkhr> ::tongue

PsychDoc> His is an extremely compelling

argument. Plus he's entertaining. I recommend at least listening to what he

has to say even if you (like me) aren't an anti-debt nut.

PsychDoc> (With apologies to "nutty" here,

ahem.)

angeleyeskkhr> isn't his basically no cc, cash all the way (except

maybe for mortgage, but put down at least 20%)?

breeze193> hehe

nutty> ahem

PsychDoc> Dave Ramsey's debt snowball

approach involves repaying the smallest debt first, then when that's taken care

of, taking that payment and applying it to the next largest one, and so on

until everything's paid for. This approach affords psychological

advantages relatively quickly because it's encouraging to repay something entirely

and then move to the next one in turn.

midd1502> hello

PsychDoc> The disadvantages of this first

approach are...

PsychDoc> a) Even if it's the most

encouraging way to tackle debt (which is perhaps the most critical factor for some

people), it's not the least expensive way since you're focusing on

repaying the SMALLEST DEBT first -- and not the one with the highest interest

rate...

blackberry74> no wonder i don't listen to him

PsychDoc> and b} It's not the most efficient

way to raise your credit score, since it may well be that the larger debts

are ones which involve maxxed-out revolving credit lines (a score killer).

PsychDoc> The second approach -- reducing

debt the least expensive way -- is the approach favored by people like Suze

Orman.

PsychDoc> Now Suze doesn't know much about

credit repair... LOL

blackberry74> got that right - lol

PsychDoc> yep... ha... but she does offer an

approach to debt reduction... Hers involves prioritizing debt according to

the actual cost of the money -- in other words, the interest rate -- and

paying off the most "expensive" debt first. The advantage of this approach

is obviously the cost savings. This is different from the first obviously.

ismism> STUPID STUPID STUPID

PsychDoc> The disadvantage is that you can

easily feel like less progress is being made especially if the most

expensive debts are also your largest ones. Also, like the first "debt snowball"

approach, the focus isn't on your credit score.

PsychDoc> ism... do tell

PsychDoc> or not, LOL

ismism> NO SHE SAYS THAT TO EVERY ONE

PsychDoc> Yep. What are your thoughts?

ismism> BE RESPONSIBLE

angeleyeskkhr> not to be off topic, but PsychDoc, you're VERY

popular, this is the most people I've seen in here EVER

PsychDoc> well

PsychDoc> LOL

ismism> my caps were stuck soryy guys

breeze193> When I pay off, I do it to maximize score

PsychDoc> two very different approaches

nutty> he's a legend

lgarcia> Doc Rocks

diddledee> agree with breeze

angeleyeskkhr> lol

PsychDoc> which brings us to Breeze

-KC-> pay off the highest intrest cards first?

tal> i agree

breeze193>

breeze193> nick collide

vegas_biz> interest rates, credit score before snowball

angeleyeskkhr> brb

PsychDoc> The third approach -- reducing

debt in ways that improve your credit score -- involves equalizing balances

so that no debt's "utilization ratio" (the amount owed divided by the

overall line of credit) is high and then paying down the various debts equally

so that all the ratios lower together. Again, this approach can result in

DRAMATIC differences to a credit score, but doesn't afford the

psychological advantage of Dave Ramsey's "debt snowball" nor the cost savings of

Orman's approach. So it all depends upon your goals once again.

PsychDoc> By the way... the use of the term

"utilization ratio" brings us squarely into the realm of credit bureaus

and credit scores... Does anybody now know what I mean by that? Just in

case...

midd1502> no

helpbad> no

JackJack> 30%

DesertMountain> no clue

PsychDoc> Your utilization ratio is the

amount you owe on a debt divided by that debt's line of credit

KickingMyself> credit available vs. credit used

vegas_biz> the balance to credit limit ratio

blackberry74> total credit utilized/total credit available

Littlefishy> how much you owe vs your avail credit

PsychDoc> exactly, vegas and bb74

PsychDoc> For those who are new to all of

this information... Keep in mind this heuristic...

breeze193> ?

PsychDoc> LOWER UTILIZATION RATIOS = HIGHER

CREDIT SCORES

ismism> aka as credit to debt ratio

PsychDoc> That's true whether we're

considering an individual debt...

DesertMountain> i have a question on that

midd1502> give example please

PsychDoc> and it's true when we're

considering all debt...

cled> whats the ideal utilization ratios, may i ask..?

PsychDoc> will give an example... but

DesertMountain, go ahead

DesertMountain> how does one lower utilazation if they have no

revolving credit and just 2 car payments

PsychDoc> aha

PsychDoc> You apply for revolving credit and

keep a low balance.

ismism> get some cc's

PsychDoc> ism, true that

PsychDoc>

DesertMountain> i tried

PsychDoc> That's the irritating thing about

credit.

ismism> secured if need be

DesertMountain> my DTI ratio is 9%

ismism> shark cards

PsychDoc> You've got to struggle to improve

your rating (your reports, your score)... and then you'll qualify for more

that will help further.

blackberry74> true indeed

PsychDoc> interestingly, DTI (debt to income

ratio) doesn't really matter much unless you're buying a house

DesertMountain> didnt mean to hijack sorry

PsychDoc> no problem

midd1502> ismism what is shark cards and where to get them

PsychDoc> I'll give an example... and then

tackle cred's question

PsychDoc> Example...

nutty> brb diaper change...no nutty is a MAN...lol

ismism> like those toy cards

PsychDoc> You've got a Chase MasterCard with

a $10,000 line of credit

ismism> with high rates

PsychDoc> And you've only spent $1,000 of

it.

cadicae> I wish!!

ismism> i got em

helpbad> me too

DesertMountain> me too

PsychDoc> That card has a 10% utilization

ratio.

ismism> but dont use em

cadicae> Oh - I don't wish for the high rates, though!

PsychDoc> That an example of a

tradeline-specific utilization ratio. Now, overall...

ismism> now i got a BOA

PsychDoc> Let's say you have three revolving

lines of credit...

ismism> 7%

PsychDoc> And the overall credit available

to you is, let's say... $20,000... If you've spent, say, $5,000 of that

then what's your overall utilization ratio?

PsychDoc> (simple math)

lgarcia> 25%

blackberry74> 25%

cadicae> 25%

PsychDoc> right on

khwiii> 25%

tomurphjr> 25%

helpbad> 25%

PsychDoc> Credit scores take into

consideration BOTH types of utilization ratios. SO... Any consideration of improving

your credit scores will ALWAYS factor in HOW your borrow and repay your

debt.

blackberry74> i have a question

lgarcia> So you could probably have a different utilization ratio

with each credit bureau, right?

PsychDoc> Interestingly, some people (me

included) believe that this is the LARGEST factor in credit scoring (aside

from having a bunch of negatives, LOL... but all things being equal...)

blackberry74> never mind...

PsychDoc> k, LOL

blackberry74> lol

DesertMountain> i do have a ??

PsychDoc> Debt is never a fun topic when

raised in a milieu of people who love credit cards (like me, ha)

DesertMountain> on one of my reports it shows a bunch of open

accoutns

PsychDoc> but it's a necessary topic... not

only in terms of fiscal health...

DesertMountain> 0 utilazation..how does that work...

PsychDoc> but also with regard to your

CREDIT SCORE which DOES interest everyone here I think.

PsychDoc> Desert, great question. OPEN

accounts contribute to the score. CLOSED ACCOUNTS don't help... and can hurt IF

there's an outstanding balance. That's why the most common advice you'll

hear is... "Don't start closing accounts willy-nilly." Even the erudite

Suze Orman says so, LOL. And she's right.

JackJack> What about Cards like the Citi Premier Pass which

supposedly does not report high credit so you always look maxed out even if you

are no where near the cards limit?

PsychDoc> Ok, so long as we've established

what we're really talking about here -- i.e., DEBT -- let's turn to busting

two common credit bureau myths. First, let me ask a trick question...

Which federal law establishes the credit bureaus as official

quasi-governmental entities?

PsychDoc> QUICK... type... (lol)

PsychDoc> MYTH 1: Credit bureaus are

officially recognized entities.

helpbad> no

PsychDoc> right, helpbad

PsychDoc> WRONG. Credit bureaus are private

companies (at least one is publicly traded, but it's still owned by its

shareholders) which are in the business of buying and selling financial

gossip about you. And what's gossip?

PsychDoc> er, right helpbad... and wrong,

myth... Gossip is, at best, a list of unproven allegations, and that's

all a credit report is. By the way, that's WHY the Fair Credit Reporting

Act became law in the early 1970s... in order to regulate what they CAN'T

do. (More about that two sessions from now.) A credit report doesn't even

enjoy the official legal status of, say, your driving record maintained at

your local statehouse. It is unfortunate, then, that these unofficial

credit reports sometimes impact our lives far more than most any official

document which exists.

tal> then why is it so crucial to lenders?

PsychDoc> Well, tal, that's the way the

lending industry has evolved. In the old days... like in our grandparents'

time... You'd go visit the banker. Who you probably went to church with. And

he (and in those days, it was always a he)

PsychDoc> he knew you.

cled> in other countries they dont use Credit bureaus.. life seems

better..

PsychDoc> There were credit bureaus. But

that wasn't the primary consideration. Unfortunately, other considerations

that AREN'T helpful intruded. Like, for example, a banker's social

preconceptions... whether he thought women were creditworthy...

cadicae> Like, say, gossip??

PsychDoc> or racial prejudice, etc. So life

wasn't rosy for everyone.

khwiii> yea... but it would've been easier to make friends with a

banker then these guys.

PsychDoc> Incidentally, that's the stated

rationale for credit scoring as well.

PsychDoc> So true, kh

PsychDoc> On to myth two

PsychDoc> MYTH 2: Items on your credit

report are required to remain for 7 years (in most states), except for

bankruptcy related items which are required to remain for 10 years.

helpbad> yes

breeze193> NO

helpbad> no correction no

ismism> no

PsychDoc> yep

helpbad> its not required

PsychDoc> myth... WRONG. When you speak with

the nice customer service person at Sears, and they say something like,

"Oh I'm sorry, Miss Jones, there's nothing we can do because those things

are supposed to stay on your report for seven years," you should know that

-- their niceness notwithstanding -- you're either speaking to someone who

is terribly misinformed (at best) or someone who is deliberately lying to

you (at worst).

midd1502> 7 years afterits paid i was told

PsychDoc> midd1502, you were told WRONG.

That may be a company's policy and the credit bureau's policy, but it's not

the law.

tal> if you know nothing about vredit repair and don't have access

to a computer it could be

PsychDoc> The FCRA simply places LIMITS upon

what can be reported. It doesn't MANDATE reporting though! This is one of

the most insidious lies related to credit reports which we have embraced

as a society for whatever reason.

cled> good point...

Littlefishy> very interesting

PsychDoc> There is no requirement, legal or

otherwise, that private companies must buy and sell information about you

to others.

breeze193> amen

PsychDoc> Confronting what appears on your

credit reports, especially if done using ethical means, is simply your way

of saying: "Hey, I don't appreciate corporate titans who choose to violate

my privacy."

helpbad> yes indeed

PsychDoc> Keep these two myths in mind as

you go about the task of confronting what appears on your credit reports.

midd1502> i read this on an credit report

PsychDoc> midd1502, someone should bring a

class action lawsuit against any consumer reporting agency that says

something like:

breeze193> lots of wrong things on credit reports

PsychDoc> "Negative items must remain on

your credit report for 7 years in your state." That is an oft-told lie, and I

can't wait for someone to challenge that kind of misleading information.

Of course, as long as we sheep believe, LOL...

midd1502> but i did my part paid it dispute it and they still wont

take it off

PsychDoc> their business is safeguarded.

angeleyeskkhr> oy it seems I missed a lot!

PsychDoc> midd1502, I can't get into the

specifics now... but we can talk about it following the session for sure

ismism> its funny used sears ad an ie cus I cant shake them off me

PsychDoc> Which brings us to credit

scoring... LOL

angeleyeskkhr> lol, well being as how I missed EVERYTHING, I didn't

catch it *cry*

PsychDoc> Here's what you see everywhere...

midd1502> come on down

PsychDoc> and it bears repeating for those

who are new to the material...

PsychDoc> 35% of your score is influenced by

account history (how timely you've paid), 30% to current account usage

(how much of your credit is being used, with greater amounts being negative)

which is the "utilization ratio" we discussed before, 15% to length of

credit history (the longer the better), 10% to new credit inquiries and

accounts (with fewer being better), and 10% to the "credit mix" or variety of

credit types present.

PsychDoc> Scores range from 350 to 850, with

the mean value score being right at 725. In real life, the most favorable

credit rates are typically extended to those with scores of 720 or above.

PsychDoc> That's what Fair Isaac Corporation

(the FICO company) wants us to know. They DON'T tell us something else,

though. And perhaps someone in this room will one day sue their pants off,

LOL... and it's this...

cled> this is what i still cant understand.. how do i get 750..

with these percentages... what the base, if there is any?...

PsychDoc> QUOTING MYSELF from another venue:

PsychDoc> "Your credit score isn't just

about you. If it was, providing it along with the rest of your credit

report might not violate federal law, which stipulates that your consumer file

must only (and obviously) be about you. Rather, it's about you and others.

More specifically, Fair Isaac makes use of what they call "Score Cards,"

which groups consumers according to whatever criteria they choose. Then,

they run what we statisticians call Pearson correlations between credit

report items and subsequent late-pays for each consumer grouping. Through that

continuous process, Fair Isaac stays on top of the variables du jour which

may diagnose bad future news. The final step happens when your credit

report is pulled and is analyzed through the use of those comparative

algorithms, and a credit score is then reported which purports to predict the

possibility that you are the type of person who may one day become seriously

delinquent."

PsychDoc> Now, I'm a statistics wonk... But

what that boils down to (for those who hate stats)...

tal> I want that algorithm as does everyone else here I'm sure

cled> if my score were 750 and 30% is for usage... then for usage i

have... 225 points.. is that it?

PsychDoc> is that basically a credit score

indicates the PROBABILITY that a consumer will DEFAULT

PsychDoc> cled... no... I'll clarify in a

sec

cled> thanks...

cadicae> So, it's geared for failure, it sounds like

kemi4u> basically...set up to fail

PsychDoc> Credit scores are about helping

lenders PREDICT who will default.

PsychDoc> Yes, cadicae and kemi

PsychDoc> It's all about helping banks

determine who is in the group of people who may not repay them. The problem

is...

ismism> a risk thing

moacsupreme> basically like risk management

PsychDoc> In any grouping like that... There

are the false positives... i.e., those people who will NEVER default. And,

interestingly, those people are in the majority... even among those who

have relatively low credit scores. So... we all pay for the mistakes of the

few.

helpbad> stero typing

PsychDoc> Right, helpbad.

kemi4u> what if the mistakes are not your fault...i.e identity

theft

PsychDoc> To quote myself one last time:

PsychDoc> "So does this sound kosher? Are

prediction and speculation and comparisons with other consumers fair items

to include in a credit report alongside the stuff that otherwise really is

about a single consumer? Undoubtedly, the judiciary will eventually

decide."

PsychDoc> This is why someone needs to

challenge the legitimacy of the credit reporting and scoring industry

generally. I don't believe that they are honorable enterprises.

cadicae> I see a correlation to our "friendly banker" from olden

days...

PsychDoc> Ok... to cled's question

nutty> money..strange bedfellows

PsychDoc> Try not to confuse the credit

score number with what I was talking about when I mentioned "utilization

ratio"

cled> i like that challenge..

PsychDoc> The actual FICO score is just an

INDEX OF PROBABLE DEFAULT

cadicae> Go cled!!

zappagal> yup yup

PsychDoc> That's not to say you didn't ask a

great question... People often ask things like...

ismism> cled you can balance my books thata challenge

PsychDoc> "If I apply for credit, how many

points will an inquiry take off."

cled> smiling..

PsychDoc> Now, even though the answer to

that is usually "2 or 3 or 4" LOL...

angeleyeskkhr> lol@ismism

PsychDoc> (I shouldn't fall victim to

answering, LOL)... The real answer is this... People who apply for LOTS of

credit are among that statistical grouping of people who are MORE likely to

default...

angeleyeskkhr> it depends on the "bracket" or indicator level

you're in?

c21> same excuss my insurance cop. gave me "people with bad credi

tend to have more claims/ i never had a claim in 17 years

PsychDoc> So the more inquiries you have,

the more you resemble that group of probable defaulters.

PsychDoc> right c21

DesertMountain> that sucks

PsychDoc> Yep.

cled> smiling... thats why get the inquiries off then..

cadicae> Yep

DesertMountain> well on mine i applied for a mortgage..had 24 hard

pulls...

angeleyeskkhr> c21--yeah my parents have bad credit, have VERY few

claims on auto insurance (like two in the past ten years?) and those are

both from my brothers LOL

tal> ouch

PsychDoc> Similarly... people who have

defaulted in the past are statistically MORE LIKELY to default again than

people who never have, so... the presence of R9's are poison.

angeleyeskkhr> r9?

helpbad> what about learning from mistakes. hello

Littlefishy> whats an r9

blackberry74> charge offs

angeleyeskkhr> oh, thanks

PsychDoc> (R9 is Equifax's designation for a

charged-off or collection revolving account.)

Littlefishy> thanks

PsychDoc> right, bb

cled> i learned a lot..

midd1502> what happen to that system

angeleyeskkhr> it's separate for just lates though right? (even a

60 day late)?

PsychDoc> Well... people who have 60 day

lates STATISTICALLY RESEMBLE probable defaulters MORE than say those people

who have only 30 day lates (or no lates)

vegas_biz> doc, back to utiliztion, is there a credit score jump

below 30%???

PsychDoc> It's poison. Again, it's about

comparing you to others.

blackberry74> i think 60 day lates are r5...it's in the newbie

section somewhere. it's still bad, but not as bad as an r9 of course

PsychDoc> And I (and some lawyers I've

spoken with) believe that when a credit bureau includes a credit score, they

may be breaking the law. Consumer credit reports cannot include information

about other consumers, and the credit score essentially does that. But

that's for tomorrow's litigation, LOL.

blackberry74> interesting!

PsychDoc> Vegas...

angeleyeskkhr> well, I knew it was bad, just wanted to make sure it

wasn't the same designation.

PsychDoc> Some people say that an ideal

utilization ratio is 10%. Others say 5%.

JackJack> Ihave a question about utilization...

PsychDoc> Still others say, "keep it below

30%." I think everyone agrees that anything above 50% is hellish on a

credit score.

ihatecras> g

PsychDoc> (Not to mention that it's hellish

on your fiscal health. But there I go talking about flossing again.)

breeze193> hehe

PsychDoc> The truth is this...

cled> my worry is if i only utilize 5%, then the creditors would

decrease the limit because they may think i dont need that much.. thoughts?

PsychDoc> Nope, cled, it NEVER works that

way.

angeleyeskkhr> JackJack, what was the question?

JackJack> Cards like the Citi Premier Pass, supposedly does not

report high credit limits, so you always look maxed out. Is this correct?

PsychDoc> People with LOW utilization scream

"responsibility" to them.

cled> good thing to know..

PsychDoc> Jack, if that's what they do, then

yes. Capital One does this too.

PsychDoc> Ok... Now... A few words about

raising your credit score. What follows is conventional wisdom you'll see

elsewhere, but I agree with it wholly.

cled> any charge card, i believe..

PsychDoc> 1) Eliminate negatives, but do so

using ethical means.

PsychDoc> 2) Pay down revolving credit.

PsychDoc> 3) Stop taking advantage of

installment loans (other than a mortgage and car payment)

tal> do you mean creditlines?

PsychDoc> 4) Don't close accounts.

PsychDoc> And, yes, tal, I mean open

revolving lines.

angeleyeskkhr> what about student loans PsychDoc?

PsychDoc> That's advice for beginners.

vegas_biz> jack jack, my mbna loc shows up as a revolving, looks

likes its maxed, i feel your pain

cled> open accounts not updated for about 6 months.. are they

better closed?

PsychDoc> When you become more comfortable

with your GOOD credit (after your credit repair succeeds)... then you'll

tweak things...

angeleyeskkhr> wouldn't those be one of the few installment loans

or whatever?

JackJack> Thanks vegas

PsychDoc> You'll apply for a super premium

MBNA card and close your Capital One card, etc. But a good rule of thumb

here at the beginning is... Don't start closing accounts here, there, and

everywhere. And when it doubt, post to the boards here and get advice.

c21> Doc whats the SOL in NY for paid CO

PsychDoc> c21, dunno... Does anybody know

that?

breeze193> 5 yrs

cled> i see... some not used cards are not being updated...

blackberry74> i'd suggest whychat's site to find out that kind of

stuff

tomurphjr> Check Whychats site

PsychDoc> very good

PsychDoc> Well, that's it for tonight!

c21> is it 5 from the CO date or pay off date?

khwiii> thanks doc

PsychDoc> In two weeks, we'll discuss some

overall strategies for taking a credit report, triaging it, and devising

your best game plan.

breeze193> great stuff

angeleyeskkhr> pysch doc..on your number three, you said ONLY open

mortgage, car loans

LKH> Doc, what is your opinion of disputing legitimate inq's

JackJack> Thanks Doc

cled> thanks. doc..

PsychDoc> Then we'll delve more deeply into

the down-and-dirty credit repair tactics we love the most. I hope

something here was useful for somebody tonight!

zappagal> love ya man thanks

midd1502> thats doc i be in touch

bandit32137> thanks for your time Doc

angeleyeskkhr> but aren't student loans ok?

blackberry74> wow...thanks, doc. i'm builidng my arsenal w/these

sessions

KickingMyself> That was extremely interesting! Thanks again!

moacsupreme> thanks doc

tal> thanks Doc

moacsupreme> learned a lot tonight

PsychDoc> LOL!

kemi4u> thanks

breeze193> Thanks Doc!! ")

PsychDoc> angel...

breeze193>

LKH> Doc

PsychDoc> student loans are ok when you need

them... but

helpbad> thanks doc I have learned alot

PsychDoc> interestingly, those student loans

will depress a score. Doesn't that suck?

PsychDoc> How do I know?

angeleyeskkhr> oh, so that's what my problem is?

PsychDoc> I've seen it myself.

breeze193> haha

angeleyeskkhr> I have like 4 or so on there (and my newest ones

aren't reporting)!

PsychDoc> Now, interestingly...

DesertMountain> so on a carloan on the credit report...how does

that effect the scores since there is no "limit"

PsychDoc> Now don't just go and dispute

something like that off just because... they may be your only positive items!

In which case...

ismism> if you got card you never used is that bad

PsychDoc> they'll add more than they take

away. Credit scoring is a dance.

LKH> doc

angeleyeskkhr> oh yeah, I am definately not gonna get rid of

them...they make up the bulk of my stuff (IMO)

PsychDoc> LKH, hi

LKH> hey, how is ya

PsychDoc> doing good... thanks!

LKH> did you see my ?

PsychDoc> did not

moacsupreme> psychdoc, how knowledgeable are you about Truth in

Lending?

ismism> im at a 651 now couild i get better cards now

PsychDoc> hate to make you retype it...

LKH> what is your opinion of disputing legit inq's

LKH> that's ok lol

JackJack> Doc is 0% utilization even better than 10%? Or not much

difference?

PsychDoc> Well... great question (as you

know, ha)

LKH> cled this is for both of us lol

PsychDoc> I would never advise people to

lie. But... There's no harm in using the approach we discussed in the first

two sessions... which is...

ismism> make them prove it

PsychDoc> "Please demonstrate that this

inquiry was included on my report as a result of the company's permissable

purpose... in accordance with my federal rights."

PsychDoc> Right, ism

LKH> but what if it is in relation to an acct opening

PsychDoc> You can still ask the bureau to

demonstrate that. It will be much tougher to remove, for sure.

ismism> im a nut shell kind of guy

PsychDoc> Inquiries that DON'T have an

attached active tradeline are termed "orphaned inquiries" by some attorneys I

associate with, and those are much easier to remove...

LKH> right

PsychDoc> Still, inquiries are tough period

as you know.

cled> interesting...

LKH> I have been advising those that are disputing valid inq's not

to do so as it could cost them an acct.

cled> i'm guilty of this...

PsychDoc> Yes, that's true.

IDare> do you see any ethical problem with disputing inquiries

after you applied for credit but were denied? then turn around and get mad and

want the inq's off because you were denied?

LKH> If the inq isn't yours, the acct must be fraud

PsychDoc> One risks having the report (and

the account) flagged.

Brandy_R> Doc if you have student loan debt and not alot of

revolving debt do you suggest paying down the sl debt first?

tal> flagged?

PsychDoc> That's true of almost all credit

repair interventions though.

c21> Breeze is it from CO date or payoff date?

-KC-> inqs are only 10% why bother?

PsychDoc> Flagged = noted as being an

identity theft victim... makes it tougher to get new credit

PsychDoc> Brandy...

JackJack> Question Doc...

-KC-> oh

cled> banks refuse CLI because of inquiries..

tal> ahhh..ok makes sense

PsychDoc> Brandy, about debt repayment...

once again it's about your goals (reference the section of tonight's session

regarding the three types of debt repayment)

PsychDoc> If your goal is to improve your

scores... then definitely pay down your revolving credit.

JackJack> Mr. doc

Brandy_R> I am trying to raise my score post bk7 to get a mortgage

next year

JackJack> question....

ismism> later guys

rhyno> re: fraud flags...sorry to backtrack, but how long do those

remain attached to one's report?

JackJack> How much better is 0% utilization than 10%?

PsychDoc> If it's about other things (ref.

earlier paragraphs) then pay the student loans.

breeze · October 7, 2005

breeze193> Doc, they're not gonna let you go, hehe

PsychDoc> Jack, we don't know...

because Fair Isaac Corporation doesn't release their "secret"

algorithms... LOL

zappagal> no no I want him he's mine LOL

JackJack> thanks doc

PsychDoc> But 10% isn't a bad ute ratio

at all... in fact it's great

PsychDoc> rhyno...

breeze193> he's taken, hahahaha

PsychDoc> rhyno... almost missed your

question...

zappagal> hummmmmm lol

PsychDoc> They can stay for YEARS.

There is nothing in the FCRA which limits those kinds of flags, if

you can believe that. Fortunately, they are easily disputed off... be

persistent.

tal> how do those get removed?

PsychDoc> Dispute.

tal> oh, ok

PsychDoc> "I never authorized that

remark."

PsychDoc> If that's the truth.

PsychDoc> Ok.

tal> can I ask ?

LKH> I think with TU you can just request it.

kemi4u> I had to write TU to have my flag removed...I couldn't

even pull my report online with the fraud flag present

LKH> the others you need to dispute

PsychDoc> very good to know, lkh

LKH> that's my .02 for tonight

PsychDoc> I apologize if the session

scrolled and I missed a question

tal> If hubby had neg tl which is for an ex-car he co-

signed ... If I find out it was reo'd how does that help or hurt?

rhyno> That is good info to know, Doc. So a legit fraud alert/

flag should be one authorized by the consumer, and can be disputed on

those grounds if inserted against our will. Helpful. Thank you!

c21> i called tu they removed it

JackJack> nightnight

PsychDoc> I have to run

-KC-> thanks psycodoc! peace

nutty> PsychDoc=Moxie........Thank You.

LKH> haha, thanks doc

IDare> thanks again Doc

breeze193> Thanks Doc

rhyno> I'll be reviewing the transcript once it's up, as

well. Thanks for your time, Doc!

PsychDoc> tal, I wish I could stay!

post that q to the board... you'll get a lot of answers

zappagal> thank you

PsychDoc> see you in two weeks

cadicae> Thanks

tal> ok

breeze193> Y'all let him go now, he's on overtime.

LKH> see ya

tal> night all

angeleyeskkhr> lol breeze

PsychDoc> I'll get the transcript to

the breeze tonight

cled> thanks again..

PsychDoc> nite!

tomurphjr> Thanks Again

TWO WEEKS FROM NOW @ 9 PM EASTERN TIME:

CREDIT 104: Triaging Your Reports, 10/20/2005

*KC* · October 12, 2005

I enjoyed my first seminar here & learned a lot thanks psychodoc!

I was always scared of my credit reports & thought they were like the I.R.S.

edna mode · October 15, 2005

I have thoroughly enjoyed reading the transcripts of the first three seminars! Thank you to PsychDoc for providing us all with such in depth and important information...in laymans terms that we can all understand. I think the reason so many people, myself included, aren't as aware of our rights as consumers is that the laws are intimidating. (And a very long read to boot...but worth it!) It's comforting to know that as the consumer, I have options and rights that protect me.

THANK YOU CB (and PscyhDoc) for providing such an amazing service to all of us...

Gryffindor · October 18, 2005

MY CLIFFNOTES FOR SEMINAR #3

CREDIT 103: Credit Reports & Credit Scores, 10/6/2005

Manipulating ones borrowing and repayment patterns is perhaps the quickest way to raising a credit score -- even, in some cases, irrespective of what actually appears on the credit report. For those reasons, it's important to step back a bit from the credit repair task, especially at the beginning, and take stock of ones own approach to DEBT. That's really what this is about.

Suffice to say, this isn't what some folks want to hear.. For that reason, I won't spend too much time on this, but I would be completely remiss if I didn't at least acknowledge the obvious: DEBT is what caused so many of our problems which necessitate credit repair in the first place, so perhaps 5 or 10 minutes of this will be appreciated by someone out there at some point.

There are many approaches to debt, but here are two wide categories:

1) Wealth accumulation.

Is your long-term goal to accumulate wealth? It almost goes without saying that the wealthiest people (and the wealthiest corporations, for that matter) have little debt and lots of money. If becoming more financially stable is your goal, then reducing outstanding balances should be an objective. Interestingly, this approach has a credit repair benefit: your credit scores will rise. Most importantly, you'll be less susceptible to fiscal disaster if you have an emergency fund of real cash in case something unexpected happens.

2) Eternal indebtedness.

Do you regard a brand new credit card as INCOME? In other words, when the shiny new MasterCard arrives with a $10,000 limit, are you already thinking about that home theater system you can buy now? If so, then you may find yourself overextended (and for most of us here, I should add the word "AGAIN" -- me included), unable to repay everything in a timely manner, and perhaps right back where you started. Obviously, I would encourage

anyone in the second category to at least begin to think about how they've embraced and accumulated debt.

WEALTH ACCUMULATION:

Ok, let's assume that accumulating wealth and so, in other words, reducing debt -- is your financial goal. How will you do it? There are three general approaches:

1) Reducing debt as quickly as possible.

2) Reducing debt the least expensive way.

3) Reducing debt in a way that will maximize your credit scores.

While all three of these are worthy objectives, they are very different. If your goal is to reduce debt as quickly as possible, then you may not be able to do it the least expensive way... Likewise, if you goal is either of the first two, then you may not be able to do it in ways that will maximize your scores. So this is about making choices.

The first approach -- reducing debt as quickly as possible -- usually involves what Dave Ramsey and other authors have termed the "debt snowball" approach. Dave Ramsey's debt snowball approach involves repaying the smallest debt first, then when that's taken care of, taking that payment and applying it to the next largest one, and so on until everything's paid for. This approach affords psychological advantages relatively quickly because it's encouraging to repay something entirely and then move to the next one in turn.

The disadvantages of this first approach are...

a) Even if it's the most encouraging way to tackle debt (which is perhaps the most critical factor for some people), it's not the least expensive way since you're focusing on repaying the SMALLEST DEBT first -- and not the one with the highest interest rate...

It's not the most efficient way to raise your credit score, since it may well be that the larger debts are ones which involve maxed-out revolving credit lines (a score killer).

The second approach -- reducing debt the least expensive way -- is the approach favored by people like Suze Orman. Now Suze doesn't know much about credit repair... LOL but she does offer an approach to debt reduction... Hers involves prioritizing debt according to the actual cost of the money -- in other words, the interest rate -- and paying off the most "expensive" debt first. The advantage of this approach is obviously the cost savings. This is different from the first obviously.

The disadvantage is that you can easily feel like less progress is being made especially if the most expensive debts are also your largest ones. Also, like the first "debt snowball" approach, the focus isn't on your credit score.

The third approach -- reducing debt in ways that improve your credit score -- involves equalizing balances so that no debt's "utilization ratio" (the amount owed divided by the overall line of credit) is high and then paying down the various debts equally so that all the ratios lower together. Again, this approach can result in DRAMATIC differences to a credit score, but doesn't afford the psychological advantage of Dave Ramsey's "debt snowball" nor the cost savings of Orman's approach. So it all depends upon your goals once again.

By the way... the use of the term "utilization ratio" brings us squarely into the realm of credit bureaus and credit scores. Your utilization ratio is the amount you owe on a debt divided by that debt's line of credit. For those who are new to all of this information... Keep in mind this heuristic...LOWER UTILIZATION RATIOS = HIGHER CREDIT SCORES. That's true whether we're considering an individual debt...and it's true when we're considering all debt.

DesertMountain> how does one lower utilazation if they have no revolving credit and just 2 car payments?

PsychDoc> You apply for revolving credit and keep a low balance. Interestingly, DTI (debt to income ratio) doesn't really matter much unless you're buying a house.

Example... You've got a Chase MasterCard with a $10,000 line of credit And you've only spent $1,000 of it. That card has a 10% utilization ratio. That an example of a tradeline-specific utilization ratio. Now, overall... Let's say you have three revolving lines of credit... And the overall credit available to you is, let's say... $20,000... If you've spent, say, $5,000 of that then what's your overall utilization ratio?

lgarcia> 25%

Credit scores take into consideration BOTH types of utilization ratios. SO... Any consideration of improving your credit scores will ALWAYS factor in HOW your borrow and repay your debt. Interestingly, some people (me included) believe that this is the LARGEST factor in credit scoring (aside from having a bunch of negatives, LOL... but all things being equal...)

OPEN accounts contribute to the score. CLOSED ACCOUNTS don't help... and can hurt IF there's an outstanding balance. That's why the most common advice you'll hear is... "Don't start closing accounts willy-nilly."

Ok, so long as we've established what we're really talking about here -- i.e., DEBT -- let's turn to busting two common credit bureau myths: First, let me ask a trick question... Which federal law establishes the credit bureaus as official quasi-governmental entities?

MYTH 1: Credit bureaus are officially recognized entities.

WRONG. Credit bureaus are private companies (at least one is publicly traded, but it's still owned by its shareholders) which are in the business of buying and selling financial gossip about you. And what's gossip? Gossip is, at best, a list of unproven allegations, and that's all a credit report is. By the way, that's WHY the Fair Credit Reporting Act became law in the early 1970s... in order to regulate what they CAN'T do. A credit report doesn't even enjoy the official legal status of, say, your driving record maintained at your local statehouse. It is unfortunate, then, that these unofficial credit reports sometimes impact our lives far more than most any official document which exists.

MYTH 2: Items on your credit report are required to remain for 7 years (in most states), except for bankruptcy related items which are required to remain for 10 years.

WRONG. When you speak with the nice customer service person at Sears, and they say something like, "Oh I'm sorry, Miss Jones, there's nothing we can do because those things

are supposed to stay on your report for seven years," you should know that -- their niceness notwithstanding -- you're either speaking to someone who is terribly misinformed (at best) or someone who is deliberately lying to you (at worst).

The FCRA simply places LIMITS upon what can be reported. It doesn't MANDATE reporting though! This is one of the most insidious lies related to credit reports which we have embraced as a society for whatever reason. There is no requirement, legal or otherwise, that private companies must buy and sell information about you to others. Confronting what appears on your credit reports, especially if done using ethical means, is simply your way of saying: "Hey, I don't appreciate corporate titans who choose to violate my privacy."

Which brings us to CREDIT SCORING: 35% of your score is influenced by account history (how timely you've paid), 30% to current account usage (how much of your credit is being used, with greater amounts being negative) which is the "utilization ratio" we discussed before, 15% to length of credit history (the longer the better), 10% to new credit inquiries and accounts (with fewer being better), and 10% to the "credit mix" or variety of credit types present.

Scores range from 350 to 850, with the mean value score being right at 725. In real life, the most favorable credit rates are typically extended to those with scores of 720 or above.

That's what Fair Isaac Corporation (the FICO company) wants us to know. They DON'T tell us something else, though. And perhaps someone in this room will one day sue their pants off, and it's this... "Your credit score isn't just about you. If it was, providing it along with the rest of your credit report might not violate federal law, which stipulates that your consumer file

must only (and obviously) be about you. Rather, it's about you and others. More specifically, Fair Isaac makes use of what they call "Score Cards," which groups consumers according to whatever criteria they choose. Then, they run what we statisticians call Pearson correlations between credit report items and subsequent late-pays for each consumer grouping. Through that continuous process, Fair Isaac stays on top of the variables du jour which may diagnose bad future news. The final step happens when your credit report is pulled and is analyzed through the use of those comparative algorithms, and a credit score is then reported which purports to predict the possibility that you are the type of person who may one day become seriously delinquent."

Now, I'm a statistics wonk... But what that boils down to (for those who hate stats)... is that basically a credit score indicates the PROBABILITY that a consumer will DEFAULT. Credit scores are about helping lenders PREDICT who will default. It's all about helping banks determine who is in the group of people who may not repay them. The problem is In any grouping like that... There are the false positives... i.e., those people who will NEVER default. And, interestingly, those people are in the majority... even among those who

have relatively low credit scores. So... we all pay for the mistakes of the few.

To quote myself one last time: "So does this sound kosher? Are prediction and speculation and comparisons with other consumers fair items to include in a credit report alongside the stuff that otherwise really is about a single consumer? Undoubtedly, the judiciary will eventually decide." This is why someone needs to challenge the legitimacy of the credit reporting and scoring industry generally. I don't believe that they are honorable enterprises. The actual FICO score is just an INDEX OF PROBABLE DEFAULT.

The more inquiries you have, the more you resemble that group of probable defaulters. Similarly... people who have defaulted in the past are statistically MORE LIKELY to default again than people who never have, so... the presence of R9's (charge-offs) are poison. People who have 60 day lates STATISTICALLY RESEMBLE probable defaulters MORE than say those people who have only 30 day lates (or no lates) People with LOW utilization scream "responsibility" to them.

A few words about RAISING YOUR CREDIT SCORE. What follows is conventional wisdom you'll see elsewhere, but I agree with it wholly.

1) Eliminate negatives, but do so using ethical means.

2) Pay down revolving credit.

3) Stop taking advantage of installment loans (other than a mortgage and car payment)

4) Don't close accounts.

Once again, this is just an abbreviated version of the full transcript above. I seriously suggest that everyone read the entire transcript and not rely solely on these notes.

jbrown_in_AZ · July 27, 2007

Reading these seminars are clarifying alot of misinformation I've collected over the years.

Thanks

Biscuit · March 7, 2008

MY CLIFFNOTES FOR SEMINAR #3
CREDIT 103: Credit Reports & Credit Scores, 10/6/2005

I realize this is a very old post, but THANK YOU for the cliff notes. I know I'm a newb and my opinion is going to P.O. the wrong people, but that "Seminar Transcript" reads far too much like an AOL chat room log. *rolls eyes*

LKH · March 7, 2008

MY CLIFFNOTES FOR SEMINAR #3
CREDIT 103: Credit Reports & Credit Scores, 10/6/2005

I realize this is a very old post, but THANK YOU for the cliff notes. I know I'm a newb and my opinion is going to P.O. the wrong people, but that "Seminar Transcript" reads far too much like an AOL chat room log. *rolls eyes*

Gee, sorry you don't like it. Sorry we put the time and effort into something to help out newbies like YOU. No one is forcing you to read it. And do me a favor, roll your eyes elsewhere.

And if you know it's going to PO the wrong people, why would you post it?

hurricanesfans27 · March 7, 2008

MY CLIFFNOTES FOR SEMINAR #3
CREDIT 103: Credit Reports & Credit Scores, 10/6/2005

I realize this is a very old post, but THANK YOU for the cliff notes. I know I'm a newb and my opinion is going to P.O. the wrong people, but that "Seminar Transcript" reads far too much like an AOL chat room log. *rolls eyes*

Gee, sorry you don't like it. Sorry we put the time and effort into something to help out newbies like YOU. No one is forcing you to read it. And do me a favor, roll your eyes elsewhere.

And if you know it's going to PO the wrong people, why would you post it?

im betting his/her momma did pay enough attention to him/her when they were a baby lol

reddragonz34 · April 16, 2008

Thanks for another great lesson! I can't wait to jump into the next one. I wish I had more time to sit and knock them all out at once.

game_on · April 23, 2008

Thank you all for this information. Very informative.

Sassinator · June 25, 2008

This site rocks! Ignore the salamander rolling their eyes.

NFK · July 9, 2008

I think this is an amazing site and these lessons are critical for a newbie like me. Thank you thank you thank you thank you thank you!

americancredit · July 17, 2008

THANKS A LOT TO CREDITBOARDS, PSYCHDOC, OWNERS AND EVERYBODY THAT HAS PARTICIPATED. THIS IS AWESOME EVEN NOW. I AM JUST READING ALL THE LESSONS AND AS MUCH INFO AS I CAN. CAN'T WAIT TO JUMP INTO FIXING MY CREDIT AND THOSE CLOSE TO ME. THANKS AGAIN

ArkBuck · July 17, 2008

THANKS A LOT TO CREDITBOARDS, PSYCHDOC, OWNERS AND EVERYBODY THAT HAS PARTICIPATED. THIS IS AWESOME EVEN NOW. I AM JUST READING ALL THE LESSONS AND AS MUCH INFO AS I CAN. CAN'T WAIT TO JUMP INTO FIXING MY CREDIT AND THOSE CLOSE TO ME. THANKS AGAIN

Congrats!

Once I studied PsyDoc's materials I achieved results quickly.

Arkbuck

Yung_Mogul · January 18, 2009

this is one of the best things i came across on this forum who knew that 3 years and change later it would help people map there way to success. Thanks alot

jess27 · August 18, 2009

I am feeling very empowered reading these transcripts. All this reading is tedious but that's the point. If this were an easy process then everyone would be willing to go through this and have good credit scores. The point is you have to be willing to listen, willing to learn, and willing to risk the chance of sounding stupid. I for one am grateful to have this board and to have been lucky enough to stumble across it. I know I have alot of work ahead of me and that it is not going to be easy. Nothing worthwhile ever is.

DadofThree · January 22, 2011

6 Years later and this seminar was awesome! I'm learning more and more everyday from reading. Thank you to PsychDoc and most of all CB forums for keeping this up the whole time. Great site... Off to read the next seminar

shelly3000 · January 23, 2012

It is 2012 and this post will still help me and dh out in repairing our credit.

kellyblue · March 12, 2013

It is 2013, and here I am immersing myself in all of this GREAT material. It truly is super helpful, ready to take on Seminar #4- notebook in hand!! Thanks so much PSYCHDOC and everyone on this site.. I feel so determined!

ShirleyB · January 24, 2014

Well 2013 has come and gone now as its January 2014 and I am embarking on fixing my credit. I am reading each of the lessons here and will continue to read the board before I do any disputing yet. I want to make sure I am doing it all correctly. ASKING questions, Taking notes and participation when I can. I want to also thank everyone that has taken this journey before me and left their foot prints behind so that I could follow. Great information thanks again.

SMay24 · March 3, 2015

2015 and still applies!! Thanks so much for all the help!!

The Krakken · October 13, 2015

Here we go again.

swaggerking741 · July 7, 2021

2021 !!!!!THANKS PSYCHDOC AND ALL THE CREATORS !!!

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PsychDoc's seminar transcript #3

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