by Edward Jamison, Esq.
Do you have a client with bad credit? Not quite sure just how bad it really is? Frustrated and confused when it comes to deciphering the mess and trying to figure out what to do about it?
Well, you're not alone.
In this article I'm going to help you figure out exactly how bad their credit is and what you need to do to help them raise their scores and retake control of your sale.
The first step to figuring out where they stand is to find out what their lenders are reporting to the credit reporting agencies. To do this you'll need to order their credit reports from all three of the major credit reporting agencies. Although there are numerous websites to order reports and scores from, they don't need to spend a dime.
Thanks to the Fair Credit Reporting Act, everyone in the U.S. is entitled to one free copy of their credit reports once a year from each of the credit reporting agencies. To claim their reports they can go to www.annualcreditreport.com or call 1-877-322-8228. If they'd rather do it the old fashioned way, they can even mail in this request form - https://www.annualcreditreport.com/cra/requestformfinal.pdf - and they'll mail their reports to them.
After you've obtained their credit reports, you'll need to assess the information and determine the following, primarily:
- Are there any negative/derogatory items in the report; and
- How much debt do they have?
Let's focus on the first question. It's safe to assume that if they have negative information in their credit reports, it's hurting (not helping) their credit rating. It's also safe to assume that if they have a lot of this information; it's likely causing their situation to be even worse.
To interpret the derogatory information in their credit reports, you can follow these general rules:
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