Carolyn Feldman of Nationwide Credit Clearing rejoins us this week to continue the conversation about her services.
Nobody intends to get into debt, but it happens. The problem with so-called "credit counseling" or "debt consolidation" is that you often have to stop making payments on your debts before they can get involved. This will tank your credit score. Carolyn and Paula talk about other ways to handle debt. But if your credit score needs improvement, that's where Nationwide Credit Clearing comes in.
Not only are they the only legal credit repair company in the country, but they also have industry-exclusive access to your FICO score. They can check your credit score without dinging you to see exactly what's happening. From there, they are able to dispute any bad marks with the 3 major credit bureaus and potentially have them removed from your report.
Carolyn also talks about establishing credit for someone. When done right, a parent or spouse can co-sign a lease or other document to help build credit. But the pitfall is that if payments are not made, it can sink the credit scores of both individuals.
Do you know about the 30% rule? Using more than 30% of your available credit can damage your credit score. And while it's supposed to be 30% of your total credit, that's not what Carolyn has seen in the real world.
We spend some time in this episode talking about all the scams out there. What are the red flags to watch out for? A good resource is RipOffReport.com.
Also in today's episode, Jon reveals something about his financial history that he's never talked about on the show before...
To reach Carolyn at Nationwide Credit Clearing, you can call her at 248-254-3315 or send her an email at carolyn@mynationwidecredit.com
To reach Paula Christine regarding any financial questions, visit her website at PaulaChristine.com or email her at Paula@PaulaChristine.com
Paula: Welcome to Beyond the Paycheck. I'm Paula Christine. So last week we talked to Carolyn Feldman with Nationwide Credit Cleaning and we just talked a little bit about credit scores on your credit report and I asked her back today cuz we never got to talk about the service that she offers. So welcome back Carolyn.
Carolyn: Thank you again for having me.
Paula: Last week's information was just, I learned a lot. I thought it was fabulous. Let's talk, first of all, nobody intentionally gets in debt. I truly believe that. I think things just happen and people end up sometimes getting a little bit over their head.
Debt is just overwhelming. And they wanna get out of it. So we know that there's different strategies, but if you can't do it yourself, then they might wanna reach out to a service like yours. So why don't we talk about what your service offers?
Carolyn: Our service, we are not a debt consolidation company. In fact, I usually discourage people from doing debt consolidation.
Paula: Why is that?
Carolyn: Sometimes they're not in a position to negotiate debt down. Some of them mislead you to believe that they can. The second thing is that nobody cares more about your credit than you do in terms of trying to get bills down and all of that.
And the third thing is with debt consolidation, is that they charge you. So sometimes you're paying more to get out of debt than had you just negotiated yourself and got out. See, as an example, I had a girl call me that told me that she was $12,000 in debt and that she had found out about a service.
And I said how much are they gonna charge you? And she says total, it's gonna be around $4,000 when all is said and done. I said if you have $4,000, wouldn't you rather be $8,000 in debt instead of $16,000? And you're hoping that they can do this debt consolidation or negotiate on your behalf.
But the problem is that you're now at $12,000. If you pay $4,000, now it's $16,000. Instead of just taking that $4,000 and paying down those creditors and now you're down to 8,000. Why would you pay a third party? Because they're making money off of your debt. Yes. So just get rid of your debt. You have that extra money.
Pay down your own debt and it records is the perfect A on the report card every month. Cause you're paying it down.
Paula: I guess I'm a little confused on your service and consolidation cuz when I think of debt consolidation, I think about maybe going to a bank or something and getting a loan that, and paying off all your debt and just making one payment to the bank.
That's what I think is debt consolidation. But you're saying there's companies out there that you can hire who will do this? Set up like a payment plans for you.
Carolyn: So you're right. It's actually probably better for you to do it the way you suggested, which is go to a bank and pay it down at a lower interest rate.
Consolidate that way. But there are companies out there, they call themselves debt settlement, debt consolidation, and what they're doing is they're charging to have them do it for you.
Paula: Okay, so what do you do?
Carolyn: We do what's called credit repair. The difference is when somebody calls me, they already have bad credit.
They have low FICO scores because here's what happens at the bureaus. Whenever somebody defaults on anything, whether it's a monthly payment, a collection, a charge off, any of that, it affects their scores for seven years. If it's a public record, it would be 10 years. So the weight of all of those, so to speak, on the report card, weigh down any A's on the report card.
So when somebody's coming to me, they're saying, I don't wanna wait seven to 10 years to get these FICO scores up. So could you delete that information off of my report? So all I have is the good reporting.
Paula: You can do that?
Carolyn: Yeah. We do it legally. We're the only legal credit repair company in the country.
In fact, the attorneys around the country use me to clean up their own credit. Because the difference is, when it's legal is it's permanent. If they do it themselves or they go to most of these other companies around the country, the majority of them, they cannot guarantee it's permanent. If they do guarantee they're permanent, they're probably lying to you.
We do legal repairs, so they don't wanna pay triple damages for putting it back on the report.
Jon: Okay, so this has got me really curious. I'm about to reveal something, Paula, that I've never revealed on the show before, and that is in 2016, I had massive credit card debt and I declared bankruptcy.
Paula: Oh, it happens.
Jon: So if I had found you, Carolyn, in 2016, 2017, 2018, how could you have helped me after I took that $25,000 in credit card debt and declared bankruptcy?
Carolyn: Okay, so here's what happened on your bureaus for the purposes of credit repair. When you had all of that debt and that showed as defaulting. How many companies would you say you default it with?
Jon: I'd say ballpark, four or five credit cards.
Carolyn: Okay. So let's see. So with five, when somebody files a bankruptcy, we have to go in and clean up the five that are going to record for seven years. And then we have to also delete the bankruptcy, which is gonna record for 10 years. So now we're cleaning up six items.
Jon: How do you delete a bankruptcy if I just defaulted and filed on all that debt?
Carolyn: Because this is legal repair, we can get bankruptcies removed. But they have to be discharged. Otherwise we won't start the case.
Jon: It has to be all the way through before you can take it up, right?
Carolyn: So there's a difference between a chapter 7 and a chapter 13. Chapter 13 is repayment. Chapter seven is your debt break. But both of them record for 10 years. So if somebody's been discharged, I can start their case and go after all of it. If it's in the middle of the repayment cycle, it's like coming in the middle of a party and hoping the house is gonna look clean. No, we have to wait until it's discharged. Then we can go after it.
Jon: So you're saying 10 years? I was always told I discharged the debt. It wasn't a repayment; it was 2016 and I was looking forward to it coming off my record in 2023. Now, seven years later, you're saying I've gotta wait another three years to get rid of it?
Carolyn: Again they're legally supposed to record it for 10. Here's what records for 10 years, any public records. So a tax lien, a judgment, a bankruptcy, those are public records, so they record for 10 years. Everything else records for seven.
Paula: Okay. I have a question. It's recording. I get that part, but is it discharged?
If it was discharged, then he could reach out to you and have it take it off his record.
Carolyn: Correct. We go in and we dispute all of it, so we would send out six disputes to each bureau to remove all six on each bureau Interest. And we do it very successfully.
Paula: So I'm gonna go back to something you mentioned earlier. So I got the credit repair part, but let's say that the girl that had the $12,000. Do you work with her creditors to help her reduce down her interest rate and to make payment plans? Is that also part of what you do?
Carolyn: No, not at this time.
Paula: Okay. But there is a service that does do that, correct? Is that what the debt consolidation is?
Carolyn: Here's the problem with these companies. They give them terrible advice upfront so that they can make their money, which is stop making your payments so we can settle it. Because what they're saying is, hurt yourself so we can help you. And that person has now destroyed their FICO scores so that company can make a commission.
Paula: That's just not right.
Carolyn: No, you wanna keep those FICO scores up. So they won't negotiate with you unless you destroy your own credit because you stop making payments. And I tell people, why would you flunk your 12th grade classes and expect to get into any good college?
Jon: You love these report card analogies, Carolyn.
Carolyn: It gets to people a lot faster.
Paula: Yeah. It makes you really completely understand.
Carolyn: Yeah. I tell people, look, even though it's recording that you flunked an eighth-grade class that had less impact than when you start flunking your 12th grade classes, but they're still both Fs on that report card that we have to remove. It's just that the 12th grade class is doing more damage.
Paula: That makes sense.
Carolyn: So I tell people, if you're trying to help yourself, you don't wanna destroy yourself to try to get out of this debt. If anything, just keep making the payments on time and stay away from those debt consolidations because they're gonna tell you to stop making payments.
Paula: But if you keep making those payments, sometimes they can take you, and I'm not saying anybody ever default on your payment, but I mean you keep making minimum payments. You're likely to take 10 or 15 years to get out of debt. It's that ridiculous. Especially with how high interest rates are right now.
Carolyn: Yeah, but here's the thing, isn't it better to maintain your good credit than to destroy it? It records monthly, so every month it's gonna be an A or an F on that report card.
You wanna make the minimum payment on time. And then like you said, some people, if you have good credit, guess what? Now you can go to a bank and try to consolidate those debts into one loan at a lower interest rate because you kept your good credit. When you have bad credit, you don't have that option.
Paula: Eventually you have to put some sort of strategy in place to get out of debt. You can't continue to make minimum payments for the rest of your life.
Carolyn: Correct. As an advisor and a consultant, that's what I go through with.
Paula: I have a few people that I know that I'm going to give them your phone number because they can't get ahead in life because their credit score is so low.
And it's past stuff that can probably be taken care of with some sort of repair program.
Carolyn: And just so you know, Paula, the bureaus think we're the best in the country. Over 10 years ago. They called us, we did not call them. So because they respect us, they said, we're gonna give you access to our software.
And what that gave us an advantage over all the credit repair companies, over all of the banks and mortgages, brokers and everybody else and attorneys, they gave us an opportunity. When anybody calls us, they let us go through their back door to look at somebody's credit report without the inquiry so we can see everyone else, but they can't.
So we can evaluate their situation before we, start their case or whatever whatever's gonna happen. And I can go over the report with them. They're not making me go through the front door like they do everybody else. So now that I can see everyone when I click off, I'd have just observed for that particular day what their credit looks like that day, cumulatively.
And they show me everything. They even show me if another credit repair company's been up there. But the great thing about that is if we actually do the credit repair itself, so to speak, when they apply to Harvard, they won't know they cheated.
Jon: Legally cheated, I should specify.
Carolyn: Legally cheated, right? Yeah. We're the only company that can do the credit repair without anyone seeing us.
Paula: That's fantastic.
Carolyn: That's a privilege. We're also the only company in the nation that has permanent repair. That's why the attorneys used me to clean up their own credit.
Paula: Yeah. I just because people do well in life doesn't mean that they don't have bad credit scores and are in debt.
Carolyn: Correct. And a lot of people run into problems with divorces. For instance when people go through a divorce, any debt that they had together, if they signed it together is a joint. The divorce decree does not negate anything. So if they signed up for something together, like a mortgage or whatever, if one's supposed to be paying the other, like the husband is supposed to be paying the, monthly payments on the car.
If he stops making those monthly payments, it's affecting both of them because if that was a joint account, it continues to record as being late for both of them. But if I clean up the credit, then if, let's say the wife's just calling. If I clean it off her bureau, he still has it on his.
Paula: Oh, that's nice.
Carolyn: All the bureaus care about, was the payment made on time or not? How was it recorded with them?
Paula: Let's say That is the situation. We're married we get divorced. The cars in both of our names.
Carolyn: Isn't this on short notice? Paula? I didn't know that we were that close. Okay, go ahead.
Paula: Oh, I gotta marry somebody someday.
Well, Jon's already married, so I don't know. Oh, okay. So I dunno if you might be married. I dunno. But anyway, so I think my face is all red. We get divorced. And would it be best to then say, you know what? You need to go get a loan and get my name off of this car.
Carolyn: That would be the better solution. But here's the problem.
When two people sign together, it stays that way until the end of the loan. Unless the person can refinance under their name only. Correct. The other person has to be willing to take their name off.
Jon: If the divorce is contentious, I can't imagine your ex would be like, sure, I'll refinance this in my name so you don't have to worry about it.
Carolyn: Yeah, there's definitely battles going on that would interfere with that, and I feel very badly for parents that co-signed for 20 year olds or whatever. Oh and they're supposed to be making their monthly payments for the car, but they co-signed for them. The parent is watching their own score go down every month because of that child, because they co-signed.
So unfortunately the parent is being dragged down with them. And that's why I always tell people, be careful about co-signing for anyone.
Paula: So I have heard that a good way to establish credit in your child's name is like when you're buying a car for them for their 16th birthday, is just you're planning on making the payments anyway. But put their name on it as the cosigner. Even though you know that you're making the payments, so it'll help them establish credit.
Carolyn: Absolutely. So anything that's recorded as a joint account, authorized user account, any of that records on both reports, meaning the person and the person who's benefiting from it.
So do you know what an authorized user is?
Paula: I know what it is, but go ahead and explain it.
Carolyn: If somebody wants to benefit from somebody else's credit scores, they can become an authorized user on a credit card. Some companies don't do it anymore, but a lot of companies still do it where they record it on the person who's benefiting from it.
But they do put in the verbiage on the top line authorized user. But whatever history is on the original person, that other person gets to benefit from the entire history. On a month to month basis.
Paula: Yeah. I did that for my daughter when she was buying a house.
Carolyn: Yeah, so they got the benefit of it. The only disadvantage to it is a couple things.
One, if that person, and the person who's the authorized user, they see their own scores go down. The second thing is if somebody's trying to buy a house or something else, if that person is charging up those credit cards at the wrong time, then the other person's score is lower because of that ratio that they're using up on their credit card.
Oh, so that's the other disadvantage.
Paula: That's good to know.
Carolyn: Right? Because it's recording on both reports the same way, and I told people the key number to know is 30%. Once you go over 30% on a credit card, then your score starts to come down about a point per each percent you're over so it doesn't matter on a month to month basis what that credit score is. But, if you're going to apply for new lines of credit, you better know where that percentage is at.
Jon: Carolyn, is that 30% of total credit available or specified to each credit card?
Carolyn: That's a very good question. It's supposed to be total, but usage wise, I noticed that's not always true. Because I had very high expenses last year for attorneys.
And I was only using one credit card because I was trying to get mileage points. Yep. I was paying it off in full every month, but in between the reporting of it and the posting cycle of it, I started to watch my scores go down. So even though I had a lot of available credit and I was really only charging up one credit card, I noticed my scores were being affected.
So they tell you it's based on the total. But I found that's not true, so I started paying the attorneys differently.
Jon: That's useful to me because I just signed up for one of those airline credit cards where it was, if you spend X in the first six months, you get a gajillion miles from them. So I've been putting everything on the same card.
That might be good to notice. Spread it around a little bit, keep it under 30% on each card.
Carolyn: Correct. So if you wanna see what your true FICO scores are, you wanna make sure that they're below 30%, so now you really know what the score is.
You had asked me before about reputable companies.
How do you know? Here's the thing with companies that are out there, the majority of them are not legitimate companies. Here's what people need to look for. First of all, if a company's legitimate, there should be full compliance with state and federal laws. The worst scams in the country happen in California and Florida because there's no state laws protecting these people.
I always tell people, you wanna Google the company and there's another site called RipoffReport.com. So these companies that are writing up their own reviews or having their friends do it, they can't monitor RipoffReport.com. That's where people can go to complain. The other thing is if they're charging you a flat rate, that means they're not legal or legitimate.
Here's why. Legitimate repair would require them to charge you monthly as you are getting the service done for you. The other thing is if they're based upon their charging, that's another red flag, or they promise you how long it's going to be. If they claim they're psychic, run. There's no way to know how long the repair is going to take because you're dealing with a third party out there who put it on there, okay?
And also you wanna know how long they've been in business. Are they having you sign a contract? If there's no contract, what kind of a company is it? And also, you gotta be careful because these companies out there that say they do credit repair whenever they're getting your social security number, can you afford to risk identity theft?
You gotta make sure that this is legitimate repair and not something you have to worry about in the long term. Also, on our website, we allow people to watch their own credit repair. They can look at their credit anytime they want while we're doing the repair. So there's just a lot of scammers out there that tell people what they wanna hear to get to their money.
Jon: We'll link to the ripoffreport.com in our show notes as well. What is your website for your company, Carolyn?
Carolyn: Our website is www. Mynationwidecredit.com., but if they wanna deal with me directly, they would have to call me. And the phone number for you directly? 248-254-3315.
Paula: You just have wealth of knowledge.
Carolyn: Thank you.
Paula: It's something that everybody should know when they're first even establishing credit would be just to even know a lot of the basic stuff that we were talking about today. And nobody teaches how to establish credit.
Carolyn: That's true. They learn it, unfortunately, too late. But I know that around the country I have different nicknames.
The credit whisperer, o r the credit guru. The Credit Ninja. And sometimes people call me Judge Judy with a sense of humor. I know that people can handle the truth, so I always tell them what they need to hear, not what they want to hear.
Paula: Yeah, me too. It was such a pleasure. And just again, your wealth of knowledge.
I learned a lot today and I think Jon did too.
Carolyn: Thank you.
Paula: So I really appreciate you being a guest and will likely have to have you back cuz I'm sure you have a lot more that you can teach us. So thanks again Carolyn. If anybody wants to reach me, they can email me paula@paulachristine.com or check out my website at paulachristine.com.