Fixing Credit

I need help…

My house was about to be foreclosed on a year ago and an investor ended up purchasing it. I think I made a mistake by doing this because now my price to buy it back is a lot higher than what I actually purchased it at. If I don’t refinance it back within a year they will take half the equity from the house.

I need to fix my credit right away. I owe credit cards and I am having such a problem. Can anyone help me or lead me in the right direction please!

I’m trying to see where it is that you think you made a mistake. You still have the opportunity to have something, whereas if your house was foreclosed on, you’d have nothing.


If you don’t do anything it sounds like you lose half your equity. As unappealing as that may sound it’s better than having lost all of your equity a year ago in a foreclosure. But you do still have an opportunity to salvage the situation. It sounds like you are in over your head with cc debt and this is impacting your credit score. You can’t fix your credit right away, that is impossible but you can take steps to improve your credit and hopefully have sufficient fico score to get the property refinanced within a year. Not knowing the details of your situation my first suggestion would be to sit down and make out a realistic budget, cut out extraneous expenses and make sure you pay your cc’s on time. If you don’t do this you will have difficulty refinancing the house. Some might also suggest you get credit counseling which can help you achieve your goals.

Also, maybe an unpopular opinion on this website, but I would reccommend working a second job or working more hours in your current job to get back on track

Unpopular idea or not, respect is due to anyone hustling to get things done.

There are many mortgage brokers who work with people in your situation and they clean their credit to get them refinanced. I have a mortgage broker here in San Antonio and that is all she does. She gets people with bad credit, she cleans their credit then gets them loans.

Call the mortgage brokers in town and interview them to see who offers such services. Make sure they have track record and can deliver, and find the cheapest. Credit repair can cost from free to few hundred dollars. You still have to pay what you owe of course.

Indeed, nothing to do with credit repair happens overnight. But there is definitely more to it than simply paying your bills on time and waiting for negative comments on your credit report to disappear after 7-years.

There are things you can (and should) do to build your credit worthiness and improve your score at a much faster rate than paying, waiting and hoping. Typically, it takes multiple techniques to make major changes in a person’s credit/FICO score. Some of the methods people are using (that I don’t necessarily approve or disapprove of) are:

1)Yes, pay your current bills on time!
2)Diversify your credit account types (i.e., credit cards, auto loans, cash lines of credit, home loan, etc). Lenders like to see you can manage different credit properly.
3)Improve your credit to debt ratio on your credit cards. Ideally you want to use no more than 35% of your available credit card limit (i.e., If you have a $1000 credit limit, only use $350 of it.). One way to make your overall card account credit to debt ratio improve w/o paying it down (if money is still tight and you don’t already have too many cards) is to get another card(s) and only use a very small portion of the credit limit which leaves the rest of the available credit to decrease your over all credit to debt ratio. Example; You have one card with a $3000 limit and it’s maxed out. You can pay it down to $1000 and meet/exceed the 35% goal OR you can get three more $2000 limit cards which gives you $9000 worth the card credit ($3K + $2K + $2K + $2K = $9K) and a credit to debt ratio of 33%. They say you can even use those pesty “Pre-approved” (typically useless for any other purpose than to buy their products) merchandise only credit cards to do this IF you confirm first that they report to the credit bureaus (there are certain ones that work better for this than others – talk to an expert or do some research on it).
4)Contest the accuracy of your negative credit accounts (to get them removed) with the credit reporting bureaus (repeatedly and with method – if you’re unsure on how to do this, use an expert but don’t get roped into anything that costs more than $300 to $600). It can take anywhere from 45-days to 120-days (typ.) to get inaccurate, or unverifiable, negative/derogatory (closed) credit accounts removed (permanently) from your credit reports. That’s the short-n-sweet version of it.
5)Have the credit bureaus remove all inquiries on your account that are over 2-yrs old (some have to be removed after 1-yr). Excess credit report inquiries can dramatically affect your FICO score (5 to 10 pts/inquiry over 2 per year). If you’re applying for new credit, do the applications for the different companies at the same time so anyone evaluating the inquiries later can see that they were for a specific purpose.
6)If you don’t qualify for any cash loans/lines of credit use the infamous “Around the Money Tree” method to develop personal cash lines of credit that will improve your score and help diversify your credit portfolio.
7)Become an authorized user on someone else’s credit card or credit account – their good credit account then shows up on your credit report (obviously, they have to have excellent credit them selves, know you (I’ve heard of some people paying for this too though), and would not actually give you one of their credit cards to use, etc). Also, I hear they may put an end to this – some say the loophole will be to use a “Joint” account status instead of an “Authorized User” account status.
8)Make sure the creditors you plan on using report BOTH the good and bad to the bureaus (some only report negative incidences only – boycott the companies that don’t report your good payment practices and the ones that don’t report at all!).

A good friend of mine is doing the credit report repair thing and has already raised his mid score from 631 to 658 in 40-days and says he hopes to be over 680 in another 40 or 45-days. He’s using a credit repair guy that, I think, cost him $400.

There are truly more ways than I could ever possibly list here to improve your credit score (Internet is loaded with this stuff), but I hope this gives you some ideas, incentive, and direction on how to get your credit rating back on track and ready for financing. I asked the REIClub the other day to start a Credit Forum but I haven’t heard back from them yet. I think it would generate some very useful talk and ideas for people getting started in RE or having issues like yourself. It would also keep credit talk in an easy to find area.

Best wishes for you! I hope you get it worked out.

One other thing.

Instead of constantly fighting the battle of finances with your only weapon being a 9 to 5 job, why don’t you make a plan and become a real estate investor. You could be the one buying a pre-forecloser and picking up 50% or 100% of the equity in it. You could also become a part time Bird Dog or Wholesaler until you’ve built enough cash, credit, & net worth to do real estate investing full time.

Are you late on any credit card payments?
Have you stopped paying on any credit cards?

If either of these answers are yes, this shows negative on your credit report.

Credit Repair is allot of work but can be done. I know of many who have had FICO scores in the 300 and 400 who worked on their credit and scores are in the high 600 and low 700s in one year.

AU’s are no longer being scored. You no longer get anything out of being an AU on anyones card. They fixed that loophole.

Paying everything on time from right now, getting a copy of your report and looking it over to start and then attack the negatives and get the incorrect information off your report is the way to go.

I have yet to see a single credit report that does not have errors and I have looked at allot of them.

Simple things such as inquiries can tank your score from 5 pts to 25 pts and visa versa, get them removed and they add to your score.

Errors on your report can make or break your score, get them fixed and your score will move.

Being maxed out on CC’s is a huge hit on your scoring as well. Consolidation of those and leaving the cards with the limits open with little to no balances will boost your score tremedously.

Newbie is right, credit repair is a lot of work and you have to stay atop the details. From my personal experience you don’t just write one letter and magically all the negative or non-factual information is removed from your reports. More likely some items will be corrected and magically the bureaus will alter other parts of your credit report that were not part of your original request. For instance old paid off loans will reappear as active, or your personal data will change etc. It can be a real headache going back and forth with the bureaus and makes one question the competence of the folks keeping tabs on our payment histories. It is an important step to improving your fico score but be prepared for the task.


I had not heard of some creditors not reporting to the bureaus of good payment history. Could you elaborate on this some more? I’ve always seen the payment record of my credit on my reports. I’d assume that’d happen automatically. Are you saying that some creditors report you have an account with them to the bureaus but just show history of the negatives?


gary, what is "around the money tree ". there may not be any dumb
questions but right now i’m certainly not feeling smart :banghead

Sorry, for not answering earlier - I lost track of things due to recent knee surgery and being layed up.


Absolutely, there are many creditors who only report the bad and not the good or don’t report at all. It’s not automatic. The creditor must report the new account and on-going information about the account to the credit reporting companies. Some will report to all three bureaus and some to only one or two of them.

Sorry Harriet, I should have elaporated. “Around the Money Tree” is a technique for developing cash lines of credit. There are a couple different versions but it goes something like this:

You deposit $1000 in a bank account and then use it as security to borrow a $1000 from the same bank. You then take that $1000 to another bank and do it again. You do this with three banks but don’t spend the proceeds from the last loan. Instead, you use that money (in addition to more of your own cash to cover the interest charge) to pay off the 1st loan when it comes due. Then you take your $1000 out of the savings acct from the 1st bank and again add some interest money to it and pay off the second loan etc. etc… The bottom line is that you’ve established three separate cash lines of credit on your credit reports from three different banks. Those same three banks will typically give you unsecured lines afterwards and even if they don’t it still raises your FICO score. I’ve heard of the terms being anywhere from 1-month to 6-months and it only costs you the amount of the interest charges. Sometimes the minimum amount a bank will loan will be higher than the $1000 I mentioned. And no, the banks don’t mind doing it - you just tell them you’re trying to build up your credit rating.

I’ve also heard this same technique being done w/o having to bring your own money to set up the initial savings account (you borrow the money but have the bank deposit the proceeds directly in a security account - again, because you want to build up your credit). Doing it this way you don’t have to come up with any money until just prior to the first note coming due (be careful). Before doing this make sure the bank reports to the bureaus.

hey gary ,
thanks for the information & the explanation. i had heard
briefly of this method ,but it wasn’t given a name(or title)
soooo i didn’t know what it was until you clarified it . i was
beginning to wonder where you were . nice to hear you are ok. :bobble harriet(fl)

How Can You Fix Your Credit?

Get ur credit report from all 3 places.equifax, experion, and there is one more…can’t think of the name. Check it. Maybe there is things on there that should not be, if so, tell them and the credit place will have to place a rebutal on there and then you will have time to figure that out. Also place a FRAUDULENT ALERT ON THE REPORT. The agencies will have to contact you before anything is placed or bought. And if there is things on the report over 7 years, call them and explain to them, most of the time, they will take it off. In some cases, the place you had credit with probably doesnt exist anymore and when the credit ppl send a inquiry, it will come back unanswered and they will have to clear it off of the report. keep a check on ur credit every year. each agency will send you one report free yearly. hope it helps

Any type of credit I’ve had, was reported to all three bureaus with the good and bad payment history.

The third one is TransUnion.

I don’t post on here a lot, but it seems to me that depending on how bad your credit is, you may want to look at an entire restructure.

Sell the home, take your equity, pay all of your debt, make sure that when you pay your delinquent debt, you get letters that shows proof of payment.
Take the letters and send copies of them to the three major credit reporting agencies in order to update your credit report.
DO NOT CLOSE REVOLVING OPEN ACCOUNTS.These accounts when at "0"balances will actually help your fico scores.
Sometimes people will tell you to charge small amounts because making payments will trigger higher scores, but realistically, if you had issues in the past, you should not use credit cards at all.Its the payments that got you into the mess in the first place.

Realistically, if you were able to refinance any other way, you may not get acceptable terms, and end up in more trouble later.
Sorry to be blunt, but I am a lender, and have seen this WAY too may times.
Good luck, and hopefully i have helped.