Tag Archives: required reading

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Lessons from 5 Years of Credit Repair

One of my companies is getting ready to make a big push at expanding nationwide. In order to finance this, I will once again be applying for a business loan. Because of my efforts at credit repair over the past few years, I am now in the top tier of credit scores, and I expect to be approved easily at a low interest rate.

I thought I would take this opportunity to reflect on the past 5 years of credit repair for myself, my friends, and my clients. And really, when I say “credit repair,” I mean the entire process of climbing up the credit ladder from the worst possible situation (my scores were 500 at Experian, 463 at Equifax, and 466 at TransUnion), getting negative entries removed from my credit report, getting a credit card again, getting an installment loan, being diligent and disciplined about those loans, building positive credit, and eventually arriving at the top tier (760-850 range; any score in this range will get you the lowest interest rates).

I have succeeded at repairing my credit and climbing to the highest rung of the credit ladder, where I have the possibility of using my excellent credit to build my businesses and buy real estate, thereby growing lasting wealth for my family for years–even generations–to come.

I’ve also helped other people do the same. I’ve met with a lot of people at a financial low point in their lives. And while I’d like to say that every single one of them has followed my example and made a complete turnaround, that’s not the case. Some have listened to me and read about my system, but after experiencing an initial surge of inspiration and enthusiasm, fallen back into their old habits of missing payments, and soon it’s as if they had never even attempted credit repair. It’s like ballooning back up to your old weight after losing a few pounds on a crash diet.

So I’ve been reflecting back on the past 5 years with the goal of committing to paper exactly what separates the winners from the losers. Above all else, I’m convinced that it is a few character traits, and not any specific nitty-gritty tactic like how you word your dispute letters to the credit bureaus.

Here’s what I’ve learned:

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Why Cutting out Lattes Won’t Improve Your Finances

It seems like up until a few years ago, personal finance literature focused on getting people to give up overpriced luxury items like Starbuck’s coffee.

The argument went like this: if you buy 5 of those lattes a week at $4 each, that’s $1,040 per year you’re spending on coffee. If you contributed that $1,040 to your IRA instead, after 40 years you’d have $222,154. Therefore, giving up coffee will make you $222,154 richer. Case closed.

The math is alluring, but somewhere between theory and reality there’s a breakdown. My favorite retort to this kind of logic is the following from Reddit:

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Running Out the Clock on Debt

If you have charge-offs or collection accounts on your credit report, you’ve probably heard that debts can no longer be collected after the statute of limitations expires. That’s true–sort of. The devil is in the details, though. So here are some important distinctions about running out the clock on old debt.

On a personal note, I have done this myself. I had a few charged-off credit cards that went into collections several years ago. Some lenders had sold the debt, and others had kept it and hired collection agencies to try and collect.

At this point, I was well into my credit repair journey, and I knew that if I could make it 4 yeas from the date of first delinquency (without getting sued or doing something to extend the statute of limitations–more on that later), I was home free. At the time though, 4 years (the statute of limitations in my state) sounded like forever.

Running out the clock should never be your Plan A. It’s more like Plan B, C, or D. But you need to be aware of the statute of limitations and some other important info no matter what your plans are. 

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What’s Better than Predicting the Future?

Benjamin Graham was the most successful investor the world has ever known. Over the twenty-year period from 1936 to 1956, he achieved a 20% annual return on his stock investments (vs a 12.2% return for the market overall). Legendary investor Warren Buffett was one of Graham’s proteges, and called him the most influential figure in his life after his own father.

Don’t worry, this post isn’t about investing or the stock market. It’s about a principle that Benjamin Graham wrote about in his magnum opus The Intelligent Investor that can be applied to virtually every area of your life (but most especially your financial life).

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The Credit Ladder: How to Leverage Your Way into The 1%

What is the one kind of money that is least likely to make you rich? The answer may surprise you: it’s your salary. But if you think about it, it is really, really hard to get rich off of the money your company pays you every two weeks.

When you try to think of high-earners in America, most people think of athletes, movie stars, and entertainers. But if you look at any list of the wealthiest people in the country, there aren’t any of those professions in there. In fact, there aren’t any people who have gotten rich off of their salaries. So how to they do it?