After all the bullshit I’d already been through--denial after denial after denial--I was now looking down the barrel of another huge hit on my credit report. $3,000.00 that crashed landed directly on my credit score. I had to figure out where it came from and how to get rid of it.
Back in HBFB Part 3, you may remember that when I was in the process of sorting through my debt, I'd complied a list of extra stuff on my credit report that needed to be addressed. I kept thinking I'd "get around" to dealing with it. Six months later, I, um... still hadn't. But now that this $3,000.00 taunted me nightly in my dreams, the time had come. Seriously, I dreamed about my bad credit report. In one dream, Don Cheadle appeared as an old-timey Western sheriff, arrested me for being a debtor and tried to burn me at the stake in the town square. I was rescued by my middle school vice principal wearing a Lady Godiva wig.
So evasive action was in order. Though professional, paid credit repair was off the table (this time because I simply couldn't spend the money), there was an option that was free and readily available. GreenPath Debt Solutions.
Why I'd been avoiding it so long it anyone's guess, especially considering I work in the Human Services field and just about everyone I mentioned credit report problems to told me to go talk to them. I think I figured that it would be the financial equivalent of a pap smear: a terrifying and somewhat humiliating examination into an area that you really don't want a stranger poking into.
But I made the appointment for a credit counseling session, filled out the pre-meeting packet, and gathered all the materials they requested I bring with me. And though they didn't actually ask for it, I also packed a copy of my credit report and the list of stuff I wanted to look at.
I wasn't sure what I'd be walking into, but I was incredibly grateful that I went. The idea behind GreenPath and companies like it is to provide the public with information they need to accomplish specific financial goals. Counseling sessions are 100% free.
In my case, I asked what I needed to do to get rid lingering bad things on my credit report so I can get a pre-approval. Steve, the counselor at the Troy, Michigan branch of GreenPath I visited took all my info and together we went over everything home buying-related with a fine-tooth comb. I learned so much more during our 90-minute appointment than I ever thought I would. Here's just some of what we covered.
- Money management. We talked about my income, my debts and what I should be looking to spend on a monthly mortgage payment.
- Finding and working with lenders.
- Traditional vs. FHA mortgages.
- Working with a Realtor.
- The closing process and what I should expect to spend.
And of course, we talked extensively about my credit report. He looked at each one of the items I questioned, then offered advice on how to handle each one. He recommended I go ahead and pay off whatever small amounts I owed--even if I couldn't for sure prove it was actually mine. "In all honestly, these debts are probably yours anyway," he told me. He's most likely right. He also reminded me that disputing debts less than $200.00 is a waste of precious time. Especially if I wanted to get into a house quickly. Again, he's right. With the $3,000.00 charge, though, he did recommend filing a dispute letter immediately. He also confirmed what I suspected: This was the charge that would prevent me from getting a pre-approval. This had to be handled if I wanted to be taken seriously by the banks.
In the end, GreenPath was an incredibly helpful resource. Steve both reassured me that I was qualified to be a homeowner and helped me come up with a plan of action to get to the pre-approval stage. Thanks GreenPath!
Once I had a new game plan, it was time to execute. I quickly worked up a letter disputing the $3,000.00 charge. A dispute letter, if you're unfamiliar, is something you send to the debt holder and the credit bureaus (you know, Experian, Transunion and Equifax) when you want to correct what you feel is incorrect information.
The deal is that once a dispute letter is received, the credit bureau MUST respond to the claim within 30 days of receipt. If they can't verify the information you're disputing, they have to remove it from your report.
It sounds simple. And in truth, it kind of is. Especially once you know what to say. First, you have to write two different letters. One for the credit bureaus and one for the debt holder. I've linked to the letters I used (my personal info redacted, of course) to dispute.
The Debt Holder letter is a hybrid of several letters I found online, edited for questionable grammar and adapted to fit my needs exactly.
Admittedly, my version of the Debt Holder letter is pretty hardcore. There are versions that aren't as sternly worded, but I was so convinced I was on the right side of the argument that I thought sending a strong statement was the best way to make things happen quickly. I also included a "Don't call me anymore, bitch" section. This helps to stop collections calls. In this case, I wasn't getting any calls, but either way, it's never a bad idea to throw that in there.
The Credit Bureau letter is a lightly edited one I found online, again adjusted for my specific needs.
So I wrote them out, added the additional documents I referred to, and sent them off. Remember to send a different dispute letter to EACH ONE of the credit bureaus. You'll have to check each report to make sure the item in question is on there. If it's not, save yourself a stamp. Here's the addresses you'll need:
P.O. Box 4500
Allen, TX 75013
Consumer Dispute Center
P.O. Box 2000
Chester, PA 19022
Equifax Information Services LLC
P.O. Box 740256
Atlanta, GA 30374
It was recommended by Steve at GreenPath to always dispute by mail. I also believe that having everything ON PAPER can only ever be beneficial to you. But if you're so inclined, you can always dispute via the credit bureau's website and sometimes by phone. There is no charge (outside mailing costs) to dispute something. Keep in mind that some of the bureaus want an additional form added to dispute letters or request plenty of additional information so they can conduct their investigation. This is the list of stuff Transunion asks you to submit along with your dispute:
- Your TransUnion file number
- Social Security Number
- Date of birth
- Current address
- Company name of the disputed item (from your credit report)
- Account number of the disputed item (from your credit report)
- Reason for your dispute (such as, it is not your account; you have paid the account; etc.)
- Any corrections to your personal information (address, phone number, etc.)
Most of this information will be included already on the credit report I sent along. I didn't add a file number to mine, though.
This should go without saying, but remember to save copies of everything you send and to note dates sent. I also recommend sending the letter to the Debt Holder via Certified Mail. Make sure you go for the extra option to be notified when your letter is signed for. Then you have it on paper that someone on their end received it, and an official "start date" to your 30-day countdown to action.
I impatiently waited the 30 days, and checked my credit reports. Shockingly enough, the charge was gone. Just like that. Like it was never even there. Vanished on ALL THREE REPORTS like Keyser Söze.
Not long after this, I took one of the credit bureaus up on their offer for a free consultation with a "Credit Expert." I asked him how something can just disappear. He said that sometimes when a company sees their own error during an immediate investigation, they call the companies as quickly as they can and have their screwup corrected. Nine of out ten times this happens before an investigation on the credit bureau's side can even take place. Meaning, I was never sent notification because the credit bureau received my request after the item was already removed. And the debt holder isn't going to reach out to me either because they don't want to admit fault. They probably figure that it doesn't matter if they contact us or not as long as the item disappears. And in my case, they're right. I don't care how it happened. The fact that it DID is all that matters.
Now all I had to do was wait for the effect of the removal to show in my score. In the meantime, I ended up checking another goal off my old list:
Trade in my current vehicle and use it as a down payment on a loan for a newer, more reliable car.
Done. I love my new (used) car. Plus taking on an auto loan bumped my credit up all the more. It really was win-win for me. Within two months of purchasing my car, I was working with a Realtor, pre-approval in-hand. Finally.
I wish I could say it got less complicated after this, but it the complications were just beginning. Flash forward to today, August 14th, 2014. I've chosen my house and have gone through more hoops than you can imagine to secure a mortgage. Now, with a tentative closing date 16 days away, I'm very much aware that it could all fall apart at any time. No deal is ever for sure until your name is signed. There are still so many things up in the air.
In the next installment of Home Buying for Brokeasses, I'll let you in on what went down in the final days before the deal goes through... or doesn't. I'll either have a house or not. Those 16 days feel very far away.