Your credit report has information about your finances and your bill-paying history, so it’s important to make sure it’s accurate. The good news for consumers is that credit reports are free through annualcreditreport.com, and if you find an error, you can work with the credit reporting company to fix it. If you would rather not handle correcting credit report errors on your own, you can always enlist the help of a credit repair servicer.
In this episode, Chase and Felipe sit down with Jory McEachern, financial services and credit repair expert, to discuss the truths and myths of consumer credit and credit repair.
Specifically, Jory sheds some insight for us on what exactly credit repair organizations do to help consumers improve their credit score, as well as steps you should be taking at home to better your credit score.
About the Show
Comments, questions or suggestions for the show? Email us at talkwealthpodcast@gmail.com.
To learn more about DebtWave Credit Counseling, visit our website or connect with us on Facebook, Twitter, Instagram, and LinkedIn.
To learn more about the San Diego Financial Literacy Center, visit our website or connect with us on Facebook and Twitter.
Your credit report has information about your finances and your bill-paying history, so it’s important to make sure it’s accurate. The good news for consumers is that credit reports are free through annualcreditreport.com, and if you find an error, you can work with the credit reporting company to fix it. If you would rather not handle correcting credit report errors on your own, you can always enlist the help of a credit repair servicer.
In this episode, Chase and Felipe sit down with Jory McEachern, financial services and credit repair expert, to discuss the truths and myths of consumer credit and credit repair.
Specifically, Jory sheds some insight for us on what exactly credit repair organizations do to help consumers improve their credit score, as well as steps you should be taking at home to better your credit score.
About the Show
Comments, questions or suggestions for the show? Email us at talkwealthpodcast@gmail.com.
To learn more about DebtWave Credit Counseling, visit our website or connect with us on Facebook, Twitter, Instagram, and LinkedIn.
To learn more about the San Diego Financial Literacy Center, visit our website or connect with us on Facebook and Twitter.
[inaudible]
Introduction:Welcome to Talk Wealth to me, a safe space podcast where we chat about anything and everything related to personal finance.
Disclaimer:The information contained in this podcast is for educational and entertainment purposes only. It does not constitute as accounting, legal, tax or other professional advice.
Chase Peckham:Hello and welcome to another edition of Talk Wealth to Me. In today's episode, we sit down with Jory McEachern, an expert in the field of consumer credit and credit repair. We really dive deep into what you, the consumer can do, what options are open for you to help you rebuild your credit. Why do you need to, can you do it on your own? Are there companies that you can use? We talk about it all in today's episode. So stay with us. I'll try not to then. So we are here with Jory M cEachern, u h, who is an expert, been in the credit business, gosh, u h, financial services industry for about 15 years, 20 years now. And I don't think anybody I know is more of an expert when it comes to the world of credit repair. And Ph il, you know, all the time, we get people that come to us desperate to fix their credit last minute, especially being service members an d t hose kinds of, u h, i ndividuals who have their cl earances. You know, it's a necessity for the job that they do in t he service. And a lot of service members will panic when th eir, when their review is coming up and they know their cr edit's s hot, that they're go nna l ose their job, so to speak. And that th ey're n ot the only ones. I mean, there are people all over the place that are tr ying t o buy a home,
Felipe Arevalo:t hey just have something on their credit and that's keeping their credit score just below where they needed to be, u h, for whatever financing they're looking for. U h, it's very, it's not uncommon in, in talking to people to have something on their credit that they just, it's really bogging them down.
Chase Peckham:Absolutely. And Jory knows more about this than anybody. I know. Jory kind of give us a little bit of a background. People come and they talk about credit repair. What is it and what should people be looking for?
Jory McEachern:Uh, that's a good question. Um, when you're dealing with credit repair, me personally and professionally, uh, it's a very broad term. Um, well very financial, right? Uh, it's very similar to debt management. I mean, anything and everything you do to manage your debt, it would be falling under that umbrella of debt management. Uh, when I refer to credit repair, it's more of a credit restoration or credit rebuild because there's numerous factors that go in to improving your score. Um, albeit a lot of services out there that claim to do credit repair, a will assist you by disputing any type of negative, derogatory or inaccurate item that may be listed on the, on the credit report themselves. Um, and when you're dealing with that, you know, obviously the FICO scoring system, there's five major factors. Well, when you're dealing with derogatory and inaccurate items that could be negatively affecting your score, that's account that does account for 35% of the score, which is the largest factor. But what about the other 65%? Right? There's other factors that go into play where there's not, there's no services out there that can really assist a client. Really. It's, you know, it's up to the client. It's things that they can do on their own to also help improve the score along with, you know, removing of the derogatory or inaccurate items. Thus, you know, if you look at it in the grand scheme of things, by the time that person or the individual completes, whether it be the service or whether they try and do it on their own, um, it does take time. Um, but if all goes according to plan, um, you know, the individual, once everything is done, the individual should see, you know, the a credit score that has been restored and getting them right into fall, right into lines of what banks are normally looking for. I'm assuming they're looking for finance.
Chase Peckham:Get into those top two tiers is what really what they're looking for. Right. Those better. So when we talk about what's on their credit reports, um, and you mentioned the five factors, uh, that go into it. There's not just one credit report. There's the three credit bureaus. So they will put the disputes on to all three, correct?
Jory McEachern:Uh, yes for the most part. Um, a lot of your major banks obviously, um, it's very expensive to be what is referred to in the industry as a furnisher, which means that you can actually report things to the bureaus. Um, and for obvious reasons, you know, the, the, the larger the banks, the more money they have, the more likely they are to report on all three bureaus. Because if you think about it when they're trying to collect on a debt, the reporting aspect is literally the only leverage they really have. Right. Right. Uh, cause they can't physically come take something from you because it's considered an unsecured debt with no collateral. So in order to penalize the individual for not paying their bills, what did they do? They report to the bureaus. Um, now your smaller banks or your smaller collection agencies, they might only report to one or two.
Chase Peckham:And that's because it costs them right there. There is a cost every time they report information to any of those bureaus. Yup. So those bureaus are essentially marketing companies, right? They're collecting data on us, every single one of us for the purposes of the financial industry and distributing information that basically will tell somebody, an organization, whether they want to give this person, this family, whoever it might be a loan.
Jory McEachern:Absolutely.
Chase Peckham:That's a vehicle home. Absolutely. Credit cards, you name it, financing, anything.
Jory McEachern:Right. I, I, it's kinda funny, um, a lot of individuals think that Experian, Equifax and TransUnion are responsible for their score. No. They're responsible for the information that's being reported that gives them a score. Right. Um, they're nothing more than a data hub, a marketing engine, as you mentioned. Uh, and quite frankly, they make the worse your credit is, the more likely they're gonna make more money. Right. Um, subprime data is what they refer it to. Uh, because an individual with poor credit, if and when they do get alone, chances are it's going to be an outrageous interest rate, which is great for the banks. So the banks don't want to see people with perfect credit. Right. You know, cause then there's no that it's a lo wer interest rate, you know, Exactly.
Chase Peckham:And it's a catch 22. It's the chances with people that have better credit, they're looking at it like they're lower interest rates, but the chances of them paying on time every month are typically much better than those ones that are in the kind of the middle tier or where they're going. They could, you know, miss a payment here and there, but they're going to get their money back in the interest rates big time. So talk about, are these credit repaired? There's no instant like golden goose, right? It's not like anybody's going to walk in and go, we're gonna guarantee to fix this credit. No problem. Right.
Jory McEachern:Uh, it's funny you mentioned the word guarantee. That is the biggest no-no in this industry. So you want to be careful. If you're dealing with individuals that can offer a guarantee, realistically speaking, that means that they can speak on behalf of the bureaus. Well, we know that's not the case. Um, you're right, there is no magic wand that anyone can wave. Uh, on the other hand, a credit repair type of service or type of program that's offered by a third party, uh, oftentimes they do have a lot of success. Um, and it's a much quicker timeframe than a lot of your other debt management types of programs. Um, usually the individuals that are looking into credit repair, uh, they're kind of at their wits end, they, they really have run out of options. Um, whether they've even looked into them, most likely if they have, uh, it's something that's, you know, it's not affordable for them. Uh, so therefore, you know, the credit repair aspect, um, you know, those types of services, again, it's much cheaper and it's a much more timely fashion. But to your, to your point, by no means, I mean, if you think about it, the person's credit was not wrecked overnight, so we can't fix it overnight. Right. You know, it's a, it's a process and.
Felipe Arevalo:We, we talk to people all the time. It kind of goes with budgeting where people say, well, yeah, I set up a budget and I still have dead. Well, right. You built your debt over the last three years, you setting up a budget for one month, that is not how it works. It's a process that you have to go through. So it's kinda like the same thing?
Jory McEachern:Yeah, absolutely. Um, you know, I mean, let's, let's put it to you this way. If and when an individual, uh, files a dispute with the bureaus, that in and of itself, the bureaus are given 30 days to respond. That's a month. Um, a lot of people are inpatient. Um, but it, it, I mean, it is what it is. They have to wait 30 days for a response or in order for them to respond. Um, and oftentimes it doesn't happen just with one letter that is mailed or one, you know, dispute. Um,
Chase Peckham:is it, when they, so when you say response that that's the law, right? You have the right to dispute. If something, let's just say is on there, that's not yours or there's a mistake and it's, you know, which happened a lot. I mean, one in two credit reports have mistakes on them.
Jory McEachern:Absolutely.
Chase Peckham:Um, some larger than others. Uh, but you have the right to, to dispute it. Absolutely. And then what happens then? What's, what's the role?
Jory McEachern:Well, typically your basic dispute, which can be found on the credit karma, credit Sesame, they offer free dispute, so on and so forth. Um, it's kind of a generic way to make sure that the bureaus are verifying the debts. Well, there's a lot that goes into it. Um, and quite frankly, you, you know, when you, when in fact you do file for a dispute, the Bureau typically will contact whatever company or bank that it is that you're disputing. And they'll say, you know, John Smith for example, is stating that, you know, for whatever the reason may be, right, can you verify this account? And oftentimes, believe it or not, the collection agency will go, yep, he owes us money. And they followed, you know, they will fill out a generic template letter for correspondence, mail it back to the client. And oftentimes, unfortunately, um, with the average consumer being so uneducated to this, they just look at the letter and take it at face value and go, Oh, I guess I do owe it. Nevermind. And then they think it's gone and there's nothing they can do when, when in fact that is not the case. Um, so when you're dealing with credit repair, again, it goes back to the timing thing. You have to continuously pepper these guys. You have to stay on top of them. Um, and like I said, you know, it's, it's very successful, but it's very tedious as well.
Chase Peckham:Well, I mean the Bureau's can't necessarily just take it at face value that that's their debt, right? They have to show proof of the debt, which I guess brings us into another world of that called credit validation. Right? So they have to validate that debt. So when you mentioned just now that they take it at face value because it's a letter and it says that it's theirs, that's not the end of the road.
Jory McEachern:No, absolutely not.
Chase Peckham:There. At least you hope it's not the end of the road.
Jory McEachern:Right, right, right. Um, there's all kinds of consumer protection laws out there, uh, to do that are designed to do just that. Protect the consumer. The problem is, is it's up to the consumer to know their, rights. Right? So, uh, what you're alluding to Chase is, oftentimes it happens with third party collection agencies, um, without trying to go down a rabbit hole here. But oftentimes with a third party collection agency will do, is they will buy an entire portfolio of quote bad debt from the, uh, you know, the larger banks, right?
Felipe Arevalo:Or the previous collection agencies.
Jory McEachern:Exactly, exactly. And what I essentially think it's just a file or an Excel spreadsheet that has named date or excuse me, name, um, all the personal information, the debt load, so on and so forth. And they typically buy it for pennies on the dollar. What happens is there's a lot of legal documentation that should also exchange hands and it's a numbers game for them. So if you think about it, it's not as though a bank's going to go jump through hoops to find the original documentation that the client side, so on and so forth. Right?
Chase Peckham:You would need a whole department just to do that.
Jory McEachern:Right. So it's up to the consumer to know that, well, the banks aren't going to go, Hey, this is what you should do for obvious reasons. Right? Um, but when debt exchanges hands, there's a lot of information legally that falls through the cracks.
Chase Peckham:It's like a note.
Jory McEachern:Exactly. Right. And if a third party collection agency cannot provide the legal documentation stating that they can legally collect on the debt, then it has to be deemed o n c ollectible and therefore cannot be reported on the credit report.
Chase Peckham:So it has to come off by law?
Jory McEachern:Yes, exactly. Um, again, this isn't like something you can do in one month time and it's going to take it right off. Um, typically the validation is, um, it's a little more of a, I shouldn't say super aggressive, but it's definitely a more aggressive tactic of credit repair, if you will. Um, because now you're not necessarily dealing with just the bureaus. You're dealing with the actual collection agencies themselves. Right. Um, so when you're filing a dispute, oftentimes people just filed a dispute with the bureaus, right? When you're talking validation, not only should you file it with the bureaus, but you, you're, you're also now going directly to the collection agency, right?
Felipe Arevalo:So that's really getting down process, basically.
Chase Peckham:Yeah. At least. Yeah. Yeah. And it's not an easy process, especially if you're not accustomed to speaking with those. I mean, if anybody has ever been through just the phone calls that you get from a collection agency and them trying to retrieve the money, it can be pretty hairy harrowing experience. Y eah. U m, so those are two different things, but yet when you do with the, with the bureaus, they are trying to essentially validate that that d ebt is true. Right?
Jory McEachern:Right. And so the way that the law is written is the, uh, every consumer is entitled to a credit report that is 100% fair, accurate, verifiable, and substantiated. Right? So when you're, when you, when you're disputing with the bureaus and then the bureaus go to the, to whatever, a collector, and it may be that you're finally the dispute for, they just simply try and verify it. Um, because as you mentioned too earlier, there's so many people with, I believe CVS did a study about six years ago maybe, and they found that 79% of all consumers have errors or inaccurate information on the credit report.
Chase Peckham:It's that high.
Jory McEachern:Um, so with that being said, you can only imagine they're probably inundated with disputes on a daily basis. Right. Um, so with that being said, um, the reason why it might take a little bit longer than expected is because you really want to make sure that they are doing their job, if you will. Um, you don't want the generic template letter that just gets sent back saying,"Hey, you know, this person says they owe and they provided us a statement showing that you owe them." Okay. That might suffice for one of the laws, but what about all of the others? Right, right. So, um, yeah, I mean it's kind of a tricky situation, um, when you, when you really get down into it. Um, but again, it goes back to the, I mean, you have to stay on top...
Chase Peckham:And what if they don't? What if they don't, uh, get back to you? What if they can't validate that the debt is there? So what happens then?
Jory McEachern:Right. So that's another great question. So, so the biggest part of the credit repair industry is, again, there's a lot of success there. I mean, there's a reason why there are credit repair companies out there. There's a ton of success. But the biggest kicker in that industry is yes, you have success and an item may be removed or multiple items may be removed, but the bureaus aren't going to tell you why they were removed. There's all kinds of reasons it could have been inaccurate. It could have been, you know, to where they couldn't prove that they could collect on it. Uh, but more importantly, the collection agency or the bank, they may not get back to the bureaus within that 30 days. If they don't, it has to be, it has to be removed from the report right then and there. Now, I tend to think a lot of the success that people do have is because your banks and your third party collection agencies oftentimes don't get back. But we just don't know.
Chase Peckham:Right. You know, there's no data on that and.
Jory McEachern:There's not!
Felipe Arevalo:It just disappears. People's credit report. Right.
Chase Peckham:We've heard stories of, um, courthouses. Yeah. Not fun being able to because they just don't have the manpower, right. To validate like people are in bankruptcy. So they literally, that bankruptcies have fallen off of people's credit reports because the courts just aren't fast enough to get back the information.
Jory McEachern:Right.
Chase Peckham:Um, which is kinda crazy. Right? And that's even something that was legitimately right there. So even that, and I think that the, is that what some people are trying to do to do these companies just file disputes to a lot of different, even if they know they're not errors, they just hope that these bad accounts don't get back to them in time?
Jory McEachern:Yeah. Um, that's a, that's a good point. Um, a lot of the companies are designed to do just that...
Chase Peckham:Inundate them with paperwork right?
Jory McEachern:And keep in mind too, the type of individual that you are kind of referring to are clients that have a lot of collection items, old medical bills, things of that nature. You're not going to have a lot of success challenging bank of America, whether or not you owe the debt, they're going to have all the documentation that you signed. They have everything right. But if that debt leaves their hands and goes to somewhere else, now you got to cooking with greases, I say. Right. Right. Cause now you have something to kind of build on. Um, but, uh, more importantly chased to be honest, what I, what I would advise every consumer that's looking into that is when you're doing credit repair or doing credit restoration or whatever it is you refer it to as, um, it is not resolving the debt. Remember we're dealing with, we were strictly dealing with the reporting aspects of that debt. It does not necessarily mean you don't ever have to pay it or that you don't owe it. We're just stating basically, and I say we, the credit repair industry is stating, we're not stating that the individual doesn't owe you the money. We're stating we want you to prove that you can legally collect on it. Right, right. Um, and it's a number game, numbers game for those guys because if it was successfully, successfully removed multiple times, or maybe it been once, the likelihood of that collection agency and going back in there going, no, you know, I'm gonna put it back on there and I want to do this and that and I'm going to be able to collect on it. They'd rather just move on to where they go. Path of least resistance.
Felipe Arevalo:That was gonna be my next question. If it's once it's removed, uh, could it potentially, let's say call a different collection agency gets it as a part of a portfolio. They decide, Oh look, I found this piece of paper. This proves that they haven't, I'm going to slap it back on there.
Jory McEachern:Right. Yeah. That happens all the time. Um, especially when it goes from one collection agency to the next. Uh, but what we have found recently is they're kind of getting a little more tricky as well. I'm not throwing anybody under the bus here, but say for example, chase bank, they may report something on there for chase bank. You dispute it from an, you know, due to an inaccuracy or something along the lines, right? You had success removing it. Well then couple months later you see that same exact account pop back on there, only instead of it being reported as chase bank. It's a JD, JP MCB, JP Morgan chase. So they'll use an acronym. It's the same exact account, but it's just reporting differently. So they're, they're kind of getting a little tricky that way as well. But again, it goes back to it again. We, you have to stay on top of these guys.
Chase Peckham:So once, isn't it leaked and maybe I'm, I, I've misinterpreted the law, but once something falls from your credit report under that entity that, that can't, they can't repost it.
Jory McEachern:Um, yes and no. That's kind of a slippery slope because again, if in fact they kind of dot their I's, cross their T's and can provide legal proof, they can throw it right back on there if they choose to do so. But again, it goes back to my numbers game. Why are they continuously doing that? These are multi multibillion dollar companies. They're not going to chase after one particular, a thousand buck a variety. It's, what d id they say? Tripping over pennies when t he c hasing dollars.
Chase Peckham:Right. And they, and they essentially will write off the losses you're at. Right, right, right. So they would then make that back on whatever their tax breaks are. However they do that.
Jory McEachern:The bottom line is they just want it off their books. Right, right. Um, and once I get it off their books, that's why they're willing set it or let, excuse me, sell it or let it go for such a small amount because they've already gotten their breaks and the tax thing and it's off their books. And now that they got somebody coming up out of nowhere going, Hey, I, you know, I know you have about$50 million of bad debt that you need off your books. Tell you what I'll give you, you know, X. yeah, definitely come in and low ball and.
Chase Peckham:I'll give you 800,000 for your 50 million.
Jory McEachern:Right? Exactly. And again, that's, that's why I like all your collection agencies are willing to settle for, you know, 50 and 60% because they didn't buy it for 50 or 60%.
Chase Peckham:You think about it, if they got all that, if they got all their money back, like what the, the total debt that was on the note, they could make 80. That's like that could be an 80, 90% return for them.
Jory McEachern:Absolutely. Yeah, absolutely.
Chase Peckham:So when you mentioned earlier, and I think it's a really great thing that you put is, is your credit score can be great, but you could say you could have a great credit score and be in debt.
Jory McEachern:Oh, absolutely.
Chase Peckham:You can have a lot of debt and still have a very healthy credit score. So that doesn't mean just having a good credit score means that you're financially healthy, correct?
Jory McEachern:Absolutely. No, absolutely. Um, you know, there's so many people that have never missed a payment before. I hear it all the time, never missed a payment. Sometimes I pay more than the minimums. So on and so forth...
Chase Peckham:When you hear that, you go, right, you're, you're neck deep into debt.
Jory McEachern:Right? Exactly. And then, you know, like I, I tend to think like everyone, if I, if I, sometimes I'll speak in front of multiple people and I'll do a little drill and I'll say, give me your definition of good credit. And without fail I'll get 10 different answers of the definition of good credit. And they're not bad answers, but they're all factors of a good credit score. When you know, you, you guys know as well as I do, the definition of good credit is the ability to borrow more money, right? So if you're maxed out on credit cards, whether you've missed a payment or not, heaven forbid something were to happen, you got to put a large chunk of change on credit card debt and you don't...
Chase Peckham:and that's 30% of your score.
Jory McEachern:...necessarily have good credit, right?
Felipe Arevalo:If you can't go get a car loan because your car disappeared for whatever reason, you could be struggling financially and just have a good score.
Jory McEachern:Right? Absolutely. Absolutely.
Chase Peckham:Without question. And I think that that's something that people should learn is that it's amazing to me how many people will they, they'll, they'll not pay back debt when they can't because they're afraid of hurting their credit score. And it's amazing to me that, you know, what people may not understand is that credit score doesn't just sit there and you say, Oh, I looked at it and my credit score is 785 you can look at it tomorrow and it could be something different. Right. So what would you tell people[inaudible] when they're trying to pay back? Let's, let's go through a, an average person that you have dealt with, right? Let's just say somebody calls up and they're saying, I've, I've got a bad credit score I've gotten, it's usually they want to buy a car, they want to buy a home, or you mentioned it earlier, Felipe, or you know, again, they're going to lose their clearance in this service. They call up and they say, okay, I've got bad credit. I want it fixed. How do you go about, what i s it d id you look for and discuss with them?
Jory McEachern:Well, number one, we have to establish their goals. Green O, um, oftentimes by the time something, but the time an individual comes to us for help or assistance, I should say, um, something has happened that's triggered them to start looking for help. Right? Right. Most likely they went in to try and get a home, went in to try and get a loan, went in to try and get some type of financing and was told no. Right? Uh, that's very embarrassing. Everyone knows if you've ever gone through it. Uh, you definitely know it's kind of embarrassing. Um, I always make the adage people like to talk about religion and politics before they'd like to talk about debt and that's a faster as job. But, uh, yeah, but so what we try to do is we want to establish a goal. Okay. And then we want to take a more of a holistic approach to it. Okay. Again, as I mentioned too, at the beginning when we first started, you know, removing a derogatory or inaccurate item that's negatively affecting your score is only 35% of your score. What about that other 65%, as I mentioned. So what we try to do is we try and educate the consumer ways that they can go about on their own, tackling the debt that might be in good standing that they still have, um, you know, establishing new credit. Um, there's all kinds of different ways and little tricks of the trade that we try and provide the individual with is in terms of education to where not only is the credit repair service or whatever, you know, third party company is assisting them with on the negative items, but then they're also doing some things on their own because, um, I've, I've seen horror stories where, um, you know, individuals have disputed, you know, they, I've seen upwards of like at times upwards of like 60 items that are negatively affecting an individual score.
Felipe Arevalo:Right. Wow. That's a lot.
Jory McEachern:You know, it's a ton. And usually something like that usually is like medical related. Um, but then they will seek the assistance of a third party credit repair company and they will literally, after, you know, four or five, six months at time, next thing you know, a majority, maybe three quarters of those, those items have been removed from the report. But then that individual calls back in because they see their credit score might've gone up two points, or realistically it might've even gone down and they go, Whoa, how did that happen? Well, it's pretty easy to fix or pretty easy to find, I should say. We'll just simply pull up the credit report and every time without fail, you'll see three or four or five different credit cards that are in good standing that are maxed out, possibly over the limit. Maybe the person missed, uh, missed a payment on their car payment for a 30 day late notice. So it's negating, all of the different work that you've put into it, or that third party service had put into it by removing those items. And so...
Chase Peckham:So really they have to pay down the debt. Th at's where they're struggling.
Jory McEachern:For an individual in that case, yes. Uh, absolutely. Um, but again that goes back to like the holistic approach because what I like to do personally is I like to paint a picture of call it 12 months, right? Again, it goes back to, like I said, the credit didn't get ruined overnight so it's not going to get fixed overnight. But if you can hop on board with me and we go at this together and you can give me 12 months, give or take a couple of months, either way, I can assure you as long as we, you know, right the ship and everything that your credit will be able to reach its ultimate goal of whatever you've probably established when we first spoke.
Chase Peckham:As long as they do their part, which is they have to be consistent with it. It's a two way street...
Felipe Arevalo:...It's having discipline and, and the plan that you established together.
Jory McEachern:Exactly, exactly. Um, gosh that, that to me is probably the number one reason as to why individuals get into the situation they are, is the discipline discipline or lack of it...
Chase Peckham:...And a lot of it's just ignorance, right. Just didn't know that what they're doing is, is causing a terrible report, you know? Right. Wherever that's being reported, right. For somebody that is, I mean, they can do this on their own, right. I mean they, you can, but you shoot, you can file your own taxes, but a lot of people have tax preparers right?...
Jory McEachern:Turbo tax. Right. Right. Exactly. No, absolutely...
Chase Peckham:So what is one of the benefits of doing something like, like a credit repair, credit restoration.
Jory McEachern:Uh, well, the number one benefit is the cost, right? Because anytime you look to a third party service to assist you in that way, uh, they're not doing it for free. Right. I don't care who you talk to. Right. Um, but, um, the advantages again is the cost. Number one. Um, chances are the amount of information, as long as you do your due diligence during this process, you're gonna, um, you're gonna obtain so much information, so much knowledge that's going to be key so that you'll never get in that, i deally speaking, you would never get yourself into that situation again. R ight, right. U m, but, u m, again, the disadvantage, it's time consuming...
Chase Peckham:It is time consuming, but on the other hand, you're having professionals do work that you would have to do yourself. Right? Right. So there is that, that's taking that load and time of actually preparing paperwork and dealing with the bureaus, right? I mean you're having somebody who does it on a daily basis do those things. Right. And I'm not saying that you shouldn't do it yourself and a lot of times you absolutely can. But I can do my own taxes, but probably not very well. Right. I probably end up, speaking of penny wise and dollar foolish, I'd probably be costing myself more money cause I didn't file them correctly. Right. I didn't have a professional looking at them going, we can save here, we can do this, this shouldn't be filed that way. We should. We should have, you know, you guys, you and your wife file together. Oh wait, you've got this. You know, you've got a separate eyes that are professionally able to look at, diagnose your situation and say this is the best course of action. And that's basically what you're getting from a legitimate. credit repair restoration. Right?
Jory McEachern:Yeah, absolutely. Um, you, you, you hit the nail on the head. I mean, it can go, I mean, if you drill down into it, it can start with what type of verbiage are you using when you're creating these letters to be mailed to these, uh, you know, the three bureaus, right? Um, me personally, I give me the expert, give me the guy with 15 years of industry experience. I'm pretty sure he's going to know how to draft a letter a little bit better than I can. Um, granted you can hop on any search engine, Google, whatever it may be, um, and find all kinds of generic template letters that are used for disputing. Um, that's a good start. Uh, quite frankly, it's...
Chase Peckham:It's definitely better than doing nothing.
Jory McEachern:Exactly. Exactly. Um, but I think if, you know, and everybody's different, right? Um, everything's relative when it comes to finances. So if you do have the financial means to hire a company or you know, I've, we even have a software platform that we provide here that does everything. Uh, it's kind of a do it yourself model if you will, but if it's within your means, uh, I would highly advise seeking a third party, um, or seeking third-party assistance just because it's they're experts. Right. Um, I can assure you they're going to know a lot more than the average consumer. Um, because the average consumer, if they do have the same type of knowledge that we in the industry have, they're not, they're not going to us about help cause...
Chase Peckham:They're not needing help...
Jory McEachern:That's right.
Chase Peckham:Their credit is probably in pretty good standing are radically. Exactly. That's, that's, uh, I think that that's solid advice, uh, for, for people who are, I mean, a lot of times they're waiting too long and they're in panic mode and they don't have that one year. Right. So you need to look at, it's like anything else when you're looking at your budget, paying back debt, y ou g ot t o look out longterm and say, okay, before you're in a panic mode, before you have to, you're reaching a crisis situation on, you know, not being able to buy that home and now you've got to wait two years to rebuild it and then in that time home prices are going up. Whatever it might be, that car loan that you got rejected for, you're not going to be able to turn around a month later and it's not going to work that fast. So you need to take a look at your credit reports. Right?
Felipe Arevalo:Yeah. And this is why we tell people to check them all the time...
Jory McEachern:Absolutely.
Felipe Arevalo:Um, you need to catch the air right when it happens or you know, you can be proactive as opposed to being reactive, which we find that unfortunately happens...
Chase Peckham:...How often do you think people should be looking at their credit reports?
Jory McEachern:Um, realistically speaking, once a month. Um, and the reason why is, um, I hear so many people tell me, well, I just paid off this card, you know, so my credit score should go up, and that was two weeks ago and I just checked it and nothing's been reported. Well, they're, they're given 30 to 45 days to update any type of, uh, what's the word I'm looking for?
Chase Peckham:If they're going to do it, they're going to do it at the end of the billing cycle. Right,
Jory McEachern:Exactly. But you know, chase bank may report to Experian on the 15th and they might report the Wells Fargo on the 12th. You know, it's just a reporting type of mechanism. Um, but it's always to, it's good to keep a close eye on it. Um, I, like I said, I typically do it once a month and...
Chase Peckham:I think that's smart advice. Yeah, smart advice. And there are different sites that you can go to that like, Credit Sesame is a pretty decent one...
Jory McEachern:Credit Sesame, Credit Karma, freecreditscore.com...
Chase Peckham:Well not all credit scores are created equal. Right? You're not looking at a FICO score by going to credit karma and Credit Sesame.
Jory McEachern:No, you bring up a good point. Um, it's a very, very good tool. Um, I, I personally give you a great album and you know myself. Um, but if you dig a little bit deeper, it's free. Well, how they make money, right? So what a consumer always has to pay attention is when in fact they were with credit Sesame credit karma, whatever the case may be. There, there's the scores that are being reported from those, uh, services might not be 100% accurate compared to getting it straight from the horse's mouth directly from Experian directly from Equifax or TransUnion. It's going to be in the same ballpark, but it's not always going to be exactly the same. And the reason for that is for anyone who has one of those accounts set up, you get hammered and peppered with offers on, you know, via email and text all the time."Hey, congratulations. You might qualify for this. You might qualify for that." Those are all advertisers, right?
Chase Peckham:It's lead generation.
Jory McEachern:Exactly. That's all they're doing because credit Sesame credit, Carmen, all those guys, they're going to make money every time you click on that offer and they're going to make even more money every time you fill out a form and then they make even more money if you do qualify. So what? What are they? What are those guys behind the scenes do? Chances are they're creating their own type of algorithm within their company or corporation that's going to kind of fit the needs of...
Chase Peckham:It's definitely not a FICO score.
Jory McEachern:Right The highest, the highest bidder, if you will. Right. They want, they want your situation to curtail to the person that's paying the most money. Right. Whether it be a loan company, another, you know, credit card companies and things of that nature.
Chase Peckham:Yeah, it's pretty interesting that like credit karma for instance, uses a vantage score and the vantage score goes up to I believe 900 and you know, if I go, obviously the highest it goes is 850 and there's all, but it is a good tool to give you a general idea of where you are. But if you are...
Felipe Arevalo:you can't go to your bank, you can't go in...
Chase Peckham:Right! You can't go to the car dealership and go, Hey, I know I got an 862 credit score because credit karma said so. Well that's not the same score t hat they're g oing t o turn around and look at and pull up when you're going to apply for the loan on that car, t hat vehicle. Y up. So it's not apples for apples, but it is a good gauge.
Jory McEachern:Right? Absolutely. It's going to be, like I said, it's going to be ballpark. Right. Um, but uh, again, going back to what we talked about earlier, how some companies don't report to all three. That's why your typical lender is going to take all three scores and then take the median and the, they're going to use that. Right? Right. Um...
Chase Peckham:Well in homes it take out the high, they take out the low and they use the middle.
Jory McEachern:Exactly.
Chase Peckham:So vehicles are different. They might just pull right one and you get lucky. Like they do, they pull your FICO score from u m, Equifax and they, you know, the may not report to Equifax and they cou ld ha v e re ported to TransUnion and Exp erian. Y ou got lucky that day. Absolutely. But it happens.
Felipe Arevalo:or you can get unlucky...
Chase Peckham:Or you can get lucky, right! It can go the other way. Absolutely. So bottom line is people just need to be prepared and understand that this, if you're going to use, um, any kind of service like that, um, just be prepared to listen and learn. Uh, because there are so many different tools and factors that go into your credit score. They're not going to work miracles. It's just not, and a good company will literally lay it out for you and just say, this is what we're going to do. This is the game plan, this is, and you've got to jump on board and you do your part and you're going to be successful. And I think if you do that with any organization or financial entity, whether it be a debt management program that you're trying to pay back debt at a lower interest rate or you even work with, um, uh, uh, what is it? Uh, what's the other one? I'm settlement like debt settlement. I've haven't talked about debt settlement and so long. Um, but it's the same kind of thing. I mean, and usually they're much different entities for different folks, but, um, much different programs. But the fact is, is anytime you're going to need a service for something like that, it's never going to be overnight.
Jory McEachern:No.
Chase Peckham:And if you, if, if anybody sells you on it, then we're going to get this done taking really very quickly. Chances are you probably shouldn't...
Felipe Arevalo:Yeah, I liked that he mentioned, you know, beware of guarantees. Yeah. Yeah. Cause you know, who are they to speak that they're going to guarantee the credit bureaus are gonna do exactly what they want them to do. So, right. Absolutely. To keep in mind.
Chase Peckham:Yeah. Bottom line, just, Hey, there's the five factors. Right. And as you mentioned, you guys would help get rid of the, you know, the bad ones. So talking about, typically they're bad because they haven't been paid on, right? So if they haven't been paid on or they're late constantly, you're going to have derogatory marks on your credit report, which then is 35% of your score. But the other factors, you mentioned, 30% of your score is what?
Felipe Arevalo:It's debt utilization.
Chase Peckham:Yeah. debt utilization, which means you have so much available. That's why credit cards, it's so easy to read because you have maximums, right? You have any amount that you can have. And if you're filling those above, what does, I think if you, if you, let's say you have$1,000 worth of credit line and you're over 300 bucks of that, that's 30% utilization. You go above that, that's starting to bring down your score, right?
Jory McEachern:Absolutely.
Chase Peckham:And then you go into other factors that are your, your history length, right? How many, how long have you been with those credit cards? That's why you'll hear from people and those, and when don't close that car that you've had forever, because you're going to get rid of that long history, but that's what, 15% of your score, right? And then, uh, applying for credit is the other part and the types of credit people, people will come to me all the time like, Oh, I don't want to look up my credit cause, uh, it's going to dink my score...
Jory McEachern:That is the funniest thing. It's literally, it accounts for 5% of your score right now to the person that you speak up to their defense. If they go out there and they check 12 different loan companies and had hard polls, well let's say everyone accounts for maybe, I don't know, I'll call it two points, right? Right. We do 12 of them. That's 24 points. I can understand why they go, well, I had somebody looking at my credit and it dropped it by 20 points. Well, let's take a look. No, actually you had it looked at 12 times within 30 days. Right. Um, but realistically speaking, those are the, what were referred to Chase, uh, referred to as a hard inquiry. They can only affect or have an effect on your score for one year and it can only remain on your credit report for two. Right. So realistically speaking, if it's over a year old and it's still being listed on there, it's not having an effect on your score. Right. So the people that, and I know exactly what you're talking about, they come up to you and they say, well, I don't want you to pull up my credit It'll affect my score and all this kind of stuff. Look, trust me. The type of effect that it has on your score is so minimal compared to these other guys...
Chase Peckham:That don't compare to what you got going on over here. There's a lot of issues and, and an inquiry is not one of them.
Jory McEachern:Yeah. Yeah.
Chase Peckham:That's not something you should seriously worry about that much. Well, I tell you what, it's been very educational today. I think we covered for those who really didn't understand how the credit industry works. We had it, we covered it pretty well today. Jory, thank you so much.
Felipe Arevalo:Yeah, Thanks Jory.
Jory McEachern:was my pleasure. Thanks for having me!
Chase Peckham:And now a follow up with myself, Phil and Katie...
Music Bridge:[inaudible],
Chase Peckham:Phil, I don't know if there's anything in the world of finance that you and I work on that is more highly misunderstood than consumer credit.
Felipe Arevalo:I agree. We hear about it all the time. There's so many questions that you know, constituents we talked to have, and then you ask a group of students for example, and you have two, three people raise their hand and everyone has a different view on it because there's so much misconception. There's so many myths out there that it's kinda hard to figure out if you're not in the industry, what's real and what's not.
Chase Peckham:That's a fact. I mean, Jory mentioned it in, in the interview that you know, you sit down and you'd talk, ask five people what is good credit or how you rebuild credit. I you're going to get five different answers.
Felipe Arevalo:Right.
Chase Peckham:And to be honest with you, that's reality, Because there are many, many different ways that y ou can fix your credit depending on your situation, your personal situation...
Felipe Arevalo:...Right! Just because there's five different answers doesn't mean that they're wrong. They could all be right and... And still be five different answers cause everyone's situation is uniquely their own.
Chase Peckham:That's right. And I think that Jory did an incredibly great job in deconstructing what those myths were, what you can do to rebuild it, what those companies can do to rebuild your credit or even establish credit. And I think that's one thing that we didn't really talk about because we were talking about credit repair, but establishing credit, uh, is a, is a kind of an a different thing as well. And we've talked about that in these podcasts before, but they are similar.
Felipe Arevalo:Yeah. And it could be someone's starting out. You've never checked your credit. You turn 18 my best friend actually had a, when he first, we were about 18 and he went to go get his first credit card, which we shouldn't have at the time, gotten our first credit cards at 18. But that's for a different episode. Um, and he actually had negative reports already on his credit report as was before I knew anything about credit or he knew anything about credit, but he figured out a way, which now I've come to realize he disputed it, uh, to get it removed. Have you ever, uh, had to dispute anything on your credit report?
Chase Peckham:You know, out of all the years I have not had to dispute anything. I've never had anything on there that was a derogatory, that wasn't found out before it was put on there. And that's because we've been a part of a few different organizations that have been hacked and our information was stolen and then we were given, um, credit monitoring services for two or three years and we would have things that we would find very, you know, they alert us and we would go bang and they would get rid of them. But it was never, never anything that I would go find that I have to do it yourself. A mistake where I had to do it myself.
Felipe Arevalo:I've had it a couple times.
Chase Peckham:Uh, and I've done it for other people.
Felipe Arevalo:The time I've done it myself a couple times where it's a small medical debt that wasn't mine from Oregon as the last one in Oregon getting medical[inaudible] arguing once. But I successfully navigated there and back without, without needing medical attention. Um, but the, it was, it was small. It was about 80 something dollars and the most recent one anyways. And the dispute process for one, it was something manageable and I took it more as a, this is a cool little activity to try because I tell people how to do it all the time. At least I get to try it for myself. Um, it did take a few months if for just one account, I couldn't imagine taking it on if it was, you know, he mentioned there was someone was like 60. If I saw that I wouldn't even know where to start myself. Cause if you think about it, that's three credit reports that you're dealing with. I was dealing with one account for the three bureaus. It wasn't even on all three. It was only two on two. Um, I initiated the dispute online, you know, annual credit report and you're sitting there and okay, I'm going to dispute this one for each of the credit bureaus for each of the three, well two cause I found that it wasn't on the other. Um, and then it then just kind of monitoring your email over and over and one of them came back and said, yeah, it was validated. So it allowed me to re dispute it a second time. But now you're looking at two months worth of rec. And then that at that point I had to call the co, I didn't know, dunno if I had to, but I called the collection agency that had this alleged debt and um, spoke to them. And you, if you ever ever spoken to a collection agency, it could be an adventure and its own.
Chase Peckham:Um, how did that go?
Felipe Arevalo:They weren't that friendly. Um, they wanted payment, which I understand that's their job to collect payment. Um, but you know, he, after he tried to validate the account, like what's your date of birth? And I gave him my date of birth and it didn't match his date of birth on that account. And then at that point he said, you know, I can't talk to you about this account. So I just reminded him, okay, that's cool. Put right in there, but that's not mine. This day we spoke and you validated that in fact, it's not my debt, so I'm gonna dispute it again when they reach out to you. I don't want you to, you know, say that it is my debt because we just confirmed it's not. And I'm gonna make sure I add these notes into the dispute when I resubmit a dispute. Um, and then after that and went away. But that was, that's a little work. You had to do the leg work and, and that's, you know, we do this all the time and we help people with this all the time. So I'd like to think that little above average with my knowledge of how things work. Um, and, and, and it was still, I was like, gosh, this is a lot, still wasn't an easy process. No. And it, it took over two months to do it for just one account. I can't imagine doing like 60 or something like that. Yeah, that would be insane. I can't even imagine doing that many. Yeah, I mean that, yeah, that would, that would, if I saw that on, you know, one of my buddies, if my buddy asked me to help him on and I saw 60, I'm like, you need more hopeful than what I can do.
Chase Peckham:Yeah. I mean there's horror stories with, I mean, that's just one mistake, right, of that somehow that got on your credit report. I mean, there's people that have identity theft that, Oh, that's literally a whole other ballgame. That's, yeah. And that's a really difficult thing and I don't,
Felipe Arevalo:and that's where you got to get the FTC involved is illegal process, police report, it's and all that. And this was just one. I imagine someone had a similar name.
Chase Peckham:Um, Felipe Arevalo is not a common name...
Felipe Arevalo:but I always tell people, if you have a very common name, you should check your credit report. I mean everyone should, but if you have a common name, there's more possibilities of that kind of error.
Chase Peckham:You know, it's funny, my brother and my father and I all share the same initials and we, and my dad actually, his nickname is our initials and that really confuses some people. And on our credit reports, my brother and I'll find, he's like, I don't know who do you recognize this account? Like, Oh yeah, that's mine. And you'll say, Oh shoot. And we got put in it. He puts in a dispute to get rid of it and say, this is my brothers, not mine. And then it goes away and lucky. But you know, the three of us don't have bad credit, so nothing's derogatory. In fact, some could say that that account probably helped his credit a little bit, but I mean, you still don't want something that's not yours on your account.
Felipe Arevalo:Yeah. And it's, yeah. You mentioned people who have similar names, uh, to maybe a parent if you're a junior or a senior, the second, all that, you know, that could get really confusing. Um, you have the same exact name as your dad or your, your, I have the same name as my grandpa. Uh, my grandpa, not much of a credit user, so I haven't had that situation or any of his accounts. Um, so, you know, I don't know if he's had any of mine on his butt. Um, so it's, it's if you have a family name that could potentially result in having your siblings if you're a junior or a named after someone. Exactly. Absolutely. It can be very confusing. My whole side of my dad's side of the family, there's like five generations of John and it doesn't get more compound. Right? Yeah. So I would imagine it gets very confusing for all of them as well. I think what jewelry really did a good job of, of breaking down is what those companies, you know, those quote unquote credit, credit repair, credit restoration, uh, those companies that will say that they can fix your credit. And, and I think fixing credit is not the right terminology. I don't think so. Basically what they can do is, is do the leg work for you of something you can already do yourself. Um, and, and that's fine. And like you mentioned, you do one and you can, all right, I can handle that. And you're doing it from a place of, I kind of understanding how the deal works. Yes. Lash kind of a fun side project. Right. And I think that a lot of these organizations or these companies can be a great attribute if you understand exactly what you're getting into that it's not a miracle. Oh, and I also liked that they provide the educational component to assist you. Cause like he mentioned during the thing, it's not just about removing one thing off your credit report, your credit score is going to go up. Um, you know, there, it may increase because of removing a derogatory account, but that's not the end of the story. And there's so much that goes, you know, as you and I know in, in, in our listeners, if they've listened to a bunch of her, there's so much more to credit than just one aspect. So providing that educational component, uh, is, is key to increasing credit in a much more efficient way.
Chase Peckham:Yeah. And what it comes down to is, is creating that budget in that plan to pay down debt, which is not something that they can get rid of, right? They're not going to get rid of your debt. Your debt is your debt. What they can do is get rid of what is possibly on your credit report. Um, and typically they're only going to get rid of it if it's something that's either too old, right? Shouldn't be there because it's old. Maybe it's just a very small debt and it's not worth, collection agency doesn't follow up with it. But if it's legit, those things are gonna help make your credit a little bit better. Build that score. But you have to do the leg work yourself. And that comes down to plan. It comes down to paying your bills on time. The ones that are still current, the ones that you are paying, pay them on time. Pay that debt down. Come up with a plan, create that budget that will allow you to make those payments. And hopefully be able to add to them to help bring that debt down even more. And as that goes and as the old debt gets older and your new way of paying things on time and paying down debt is the newer information on your credit report, your credits going to increase, right? It's going to get better because the older that information gets, the less wait it carry's.
Felipe Arevalo:Yeah. And I think that's, it's great. And it's a thing with, with companies that offer these services, personal finances can be incredibly frustrating. Um, and if you're someone who doesn't do personal finances regularly and then all of a sudden you have an error on your report, uh, you know, I've had constituents or friends or say, you know what, I just need this gone. Like, it's affecting my ability to go buy a house, buy a car, whatever they're trying to do with their credit, I just need it gone. And, and so here's how you do it. No, I really, I just, I just don't want to deal with it anymore. Who can do it for me? Um, and I think that's, there's a a point where maybe it just becomes too much or the individual has been dealing with this for, they've been trying and now they're just kind of over it. And this isn't the ability to just not just brush it under the rug, but have someone else do it for you. Um, you know, it's a, it's a useful service for, for some people.
Chase Peckham:It really is. And I think that even they're coming up with software softwares now where you can look your stuff up and it can populate these letters for you... Right(Felipe). It can make your world and so much easier and educate you at the same time. That's a realistic way. I mean, people will say, well, why would you do that if you can do it yourself? Well, you honestly can do your, your taxes yourself, right? You can take care of your money. You can invest in the stock market, right. Yourself. You can, you can. What is that? You can do your own plumbing.
Felipe Arevalo:Yeah. But I'd recommend...
Chase Peckham:...you might cost yourself a lot more in the long run, by trying to do it yourself, right? Then if you had somebody that really knows what they're doing, uh, helping you along the way. And I think that that, depending on your situation, maybe you can do it yourself. Other than that, there it might be worth it to you to just find the right company that will help you dispute the things that you want to dispute. And it'll raise your credit a few points, but there is no miracle. There is no golden egg. There's no, there's no pot at the end of the rainbow. Right?
Felipe Arevalo:There's one thing Jory said, there's no guarantees. Right(Chase). And if someone's guaranteeing you something, you want to be a little bit, a little bit hesitant.
Chase Peckham:Yes. Yeah, absolutely. Uh, I think more than anything, people just have to be aware. Just take ownership, check your credit report, look at your scores every once. We'll credit karma and Credit Sesame, those, those are good sites to get a gauge on where you're at. Is it going to be apples for apples? No. No. But it is a good learning tool...
Felipe Arevalo:...Moving in the right direction, then you can assume that for the most part, all your other credit scores are moving in that same direction.
Chase Peckham:Yes. I mean if you, if you are doing the right things and that's what you need to find out, if you are doing the right things, then ultimately your credit's going to be pretty good. But two biggest things is make your payments on time. Pay your bills and pay down the debt. Dude, you can't carry a ton of debt and think you're going to have great credit, um, unless...
Felipe Arevalo:...Or you could, but great credit score, but not necessarily a great credit profile...
Chase Peckham:...I should reframe that. You can carry a ton of debt, but if you also have a huge amount of available credit to you, right? Right. Do you mean if you're, if you're somebody who's a really high earner and you have unlimited credit card, right, and you're carrying a lot of debt, you still are going to have a decent ratio, right? That doesn't mean you're healthy. That doesn't mean you're financially healthy.
Felipe Arevalo:Just said she'd be living paycheck to paycheck or even living above their means and have great credit.
Chase Peckham:That's right.
Felipe Arevalo:But there's not a healthy financial situation to be in.
Chase Peckham:Absolutely not. Because eventually it'll catch up, catch up, it'll eventually catch up, and that's something that we want to avoid. Well, that's a great episode. It really was a good episode. And, uh, stay tuned for next year to do it. And Katie, you'll get to listen to Kenny. You'll get to listen to it again. We do have miss Katie. Yeah, absolutely. Katie, we'll see you next week.