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Rondi is known as America’s Credit Expert and is the Founder of Fortress Credit Pro, an award-winning TV & Radio Show host, and a best-selling author as seen on ABC, CBS, CNN, FOX News & NBC.
While serving in the military, he was also called to serve his local community. He spent 15 years as a firefighter, and was named Firefighter of the Year in 1998 in Littleton. In 1999, he was one of the first responders to the Columbine High School shooting. In 2006, his younger brother, who was also a firefighter, took his own life over a few thousand dollars in medical bills and other debt. At the time, he vowed to help other people fix their financial situation, so no other families had to deal with that type of loss.
In 2007, he founded Fortress Credit Pro., a reputable credit repair company that has removed millions of late pays, collections, charge-offs, repositions, short sales, foreclosures, tax liens, judgments and bankruptcies from credit reports. Rondi and his team have helped non-qualifying applicants become mortgage-ready in as little as 90 days eliminating over 50 million dollars of consumer and tax debt.
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Credit & Debt: All You Need To Know | Rondi Lambeth
I have a good surprise for you, a dude who is closer than a brother to me. Even more importantly, to everybody else who’s reading, he’s the School of Wealth Podcast host, Founder of Fortress Credit Pro and Fortress University, an award-winning TV and Radio Show Host, and a Best-Selling Author as seen on ABC, CBS, CNN, FOX News and NBC. We met each other, pitching TV producers. My good brother, Rondi Lambeth, welcome.
Thank you so much. It’s good to be alive.
I was looking back. You guested and were awesome to help me launch the show. You were one of the first 3 or 5. We talked a lot about credit back then. There was a lot that has happened since then.
You did that in my studio, didn’t you?
Yes. It was so fun. We’ve both grown tremendously since then, personally and professionally. You just got off 75 Hard too, didn’t you?
That was my fourth time completing 75 Hard and then Phase 1 and Phase 2. I’m going to start up 75 Hard again. It’s challenging. It’s not something that you take lightly. Otherwise, you don’t complete it. You just fail. I’m working up the mental toughness to start again in 75 days. Physically, about day 45, you start hurting and then you hurt until day 75.
Day 76 is a party.
I did that a couple of times. You saw me at one of those moments on day 76. Last time, I did not do that and I won’t do it next time.
We were talking before the show. I was reading you my credit scores across the board from Equifax, TransUnion and Experian, 828, 834, 846. It’s almost like a perfect 850. I think that was on Experian. We were talking about it because you’ve helped me in the past. I’ve had a little blip. It’s not even something that was on me is what I got blipped with. I remember days to where my score was launching into the entrepreneurial space having twins and my credit score was 505.
How does that feel having an 846 versus 505?
I got a new BMW X7 M. I was getting out of a bad lease because I should have never gotten the escalate, which I hated. They were like, “No problem. We can do this for you.” They absorbed a lot of the negative equity, which was awesome in the car. When I walked in, first off, they googled me, which is what a lot of dealers do now to see who you are. The salespeople are smart that way. Even though it’s a business lease, they don’t run the credit check on you personally until you sign the app. They were saying that like, “We’ll try to push for no money down for you.” I was like, “It’s not an issue.” They were like, “We just have to make sure that everything calls back in how you said and how it feels. It’s just you know that you can get done what you need to get done without any hiccups or anything.” That’s the real difference is that you know you’re not going to get anything back at you.
It’s a great feeling to have great credit. It’s a horrible feeling to have bad credit. I’ve had both. I’ve helped hundreds of thousands of people like you go from 400 to 500, to high 700 to 800. It’s that confidence. My assistant is 24 years old. He and I work out almost every day together. Seeing the confidence that I have as almost a 50-year-old man versus a 24-year-old man and confidence with women, money and people. He’s a very confident and great guy. Seeing that difference and then you take that with the credit score ties in there with the confidence of when you go into that car dealership or sit across from a banker to get a business loan or a mortgage, it is that confidence that you have that, “I got this. I know they’re going to approve me.” Versus, which I’ve had before, that lump in your stomach and throat. What I’m trying to say here on the stomach thing is that pain in your stomach like, “Please go through,” and hoping that they don’t see something on your credit and deny you, and you get 24% interest on your car loan.
When it comes to cars, would you agree that almost anybody will approve you?
If you have a job, for the most part, everybody will approve you. I coach a lot of young credit repair owners that want to build something like I’ve built. One of the things they always want to do is they want to work with car dealerships. I tell them, “It’s a complete waste of time to spend any of your efforts trying to market to a car dealership because they can finance anybody. The worse your credit is, the more the yield spread is and the more money that dealership makes when they sell you that car. Don’t focus on working with car dealerships. Instead, work with real estate agents, mortgage brokers, attorneys, etc. They can finance you anywhere.” In fact, I have a friend who created a company called Bar-None. Do you remember Bar-None?
A long time ago, yes.
He sold it for a couple of billion dollars and then he had a ten-year non-compete. That non-compete is expired now. He’s in business. He figured out that instead of selling someone a car at a buy here, pay here dealership, he’s doing car rentals where you pay $500 a month for six months, a total of $3,000. He then applies that as a down payment and he can get everybody approved, every single person who buys a car, regardless of the score. The banks will finance anyone with 20% down on a car loan. He has got a cool little gig. I’m trying to get my brother into that gig where he’s renting the car, which means if you don’t make a payment, they can come and take it immediately.
The problem that a lot of these car dealerships have and these buy here, pay here deal is, you’ve got to chase down the car, put GPS trackers on them and repo it. There’s not a lot you can do legally, with the exception to sue somebody. How do you get blood out of a turnip? What this guy did is he registered the car. Do you know what it’s called if you don’t pay rent on a rental car? Literally, it’s auto theft. He was like, “I don’t have any problems at all with people not paying me because I call them and say, ‘I am going to call the police. They’re going to throw your ass in jail because it’s auto theft if you don’t pay on a rental car.’” He has got this whole thing figured out.
I would stay away from that as a consumer than from that scenario. That’s great for your friend.
It’s people who have bad credit scores. They can’t prove income. Maybe they’ve got stuff going on right now. What we’re doing together is they get the car. He sends them to me, within three months we have their credits fixed, then they can go in and get good rates on those cars.
You were talking about that lump in the stomach. Every time I used to apply for anything, there was always that lump. In that scenario of my life to where I was at 500 credit score, I was like, “I couldn’t get approved for a visa.” Anything outside of a secured card from Capital One. This was coming out of being laid off, starting a business and having the 500 credit score. I was so excited when I got my first credit card again for a $500 limit. That lump in my stomach was always every time because I moved a lot of times during those years to get a mortgage or even say, “Can I go rent a house? Is that possible from a private lender?” They always want to see your credit report too to see if there’s anything there. As an entrepreneur, it’s a little more difficult to prove your income, too.
I say this almost every single day, “Bad credit is expensive because everything costs more if you have bad credit.” People will try to argue with me and they’ll say, “I don’t have any debt.” Your gas still costs more for your car, “I don’t have a car.” Your electricity, groceries, car insurance, cell phone, cost more. I’ll prove it to you. What are gas prices right in Chicago?
Premium, $3.93 a gallon.
Let’s round it up to $4 a gallon. I’m sure there are some places in Chicago that are $4 a gallon. If you and I go into the gas station at the exact same time, I fill up my Ferrari with $4 a gallon gas and you fill up your Aston with $4 a gallon. If you pay with a debit card or cash, it costs you $4 a gallon because that’s the cost of gas. I’m going to pay with my American Express Platinum, Capital One Venture, Citi/Chase card, it’s going to cost me 5% less because I get 5% cashback. I’m only going to pay $3.80 a gallon. Versus if you pay with cash, debit card or check, it’s going to cost you $4 a gallon. That’s a very simple illustration or example of how bad credit costs you.
My Aston takes racing fuel to a minimum of 95 octane, which is $7 a gallon. The BMW is at $4 a gallon on premium. I use my Citi Costco card for that because that has 5% back on gas. In 2020, I got an $800 Costco check for that card just for gas.
I always get $400 or $500 a year back from Costco. I don’t remember when this was. Someone was like, I asked, “Do you have a Costco membership?” “No, it’s too expensive.” I was like, “Expensive? What do you mean?” They were like, “The membership is $50 a year.” I said, “Mine is $110 because I run my business through it.” They were like, “That’s outrageous.” I was like, “I get $400 or $500 back every year. That’s not expensive at all.” That’s what you get out of good credit to get that Costco Citi card.
I remember too, I think that was coming out of that stretch of bad credit for me. I’ve tried Citi for maybe three years in a row, and they were one of the toughest to get approved for.
Each credit card company has different rules. Chase has what’s called a 5/24 rule, which means if you’ve had more than 5 inquiries in 24 months, they auto-deny you. There are all kinds of crazy rules that these credit card companies have, but they’re great. I did a show interview and I was in Cozumel. I went and took my girlfriends in scuba diving. The whole trip in cash for seven days, an all-inclusive resort, ten dives a piece and a rental car, first-class airfare there and back, out of pocket was $52 or $53 cash because I redeemed my points.
In February, I went to the Bahamas and went scuba diving there. It didn’t cost me anything because I redeemed my points. In January, I took my family to Costa Rica and that trip was $30,000. I redeemed points for that. It’s because I have good enough credit that I get those points. It’s a little different with you and I because we have lots of marketing expenses and other businesses. I pay payroll. Twenty-two of my staff members, I pay with my American Express card and I get points. Even as a consumer, you can get points enough for one vacation a year for your gas, groceries, electricity, karate or maybe piano lessons. Whatever your expenses are, put it on a credit card, rack up the points, save it up and a year later, you’ve got enough for a vacation for you and your wife or you and your girlfriend.
A couple of questions coming out of that because you said you and I have good credit. What defines good credit?
It depends on who you ask. If you ask me what I think good credit is, it’s 740 or higher. They used to be 720 and FICO changed the algorithm, which means the banks changed their underwriting. I think it’s 740 or higher. Anything above 740, you’re going to get the same offers as you would if you had an 850. In fact, there are many credit card companies that turn you down now because your credit score is too high. They have figured out that if you have high credit like you said, one of your scores was 846. That’s probably an 846 because that month that reported, you didn’t use your credit cards that much or you paid it by the statement date so the utilization rate was perfect.
Banks have figured out people with high 800 credit scores, the 830s and 850s. They’ll turn them down because they’re not using their credit cards. They’re not using it to where the bank will make any money from it. To answer your question, 740 or higher is a great credit. You can get pretty much anything you want with that. You can get a mortgage as low as 580. It’s 620 for agriculture and 580 for VA and FHA. It changes all the time. Seven hundred forty or higher is probably the best. It’s where you want to strive to be. The advantage of having that 840 credit score is if you do max out a credit card, you have 100 points of leeway, versus if you have a 741 and max out one credit card, you could drop into the 660s or 640s. You can lose 100 points by maxing out one credit card.
I’ve seen personally with that too. My score might fluctuate 40 or 50 points because most of what I do is through business cards with the exception of my travel expenses, which I use a Chase Sapphire Reserve just because of the points that come back on that. The points are worth so much when I go to redeem them also. That’s a personal card. I only use it for business, but there’s no business version of that card.
That’s something that would be good to clarify. The IRS does not care whether or not it is a personal credit card or a business credit card when you deduct it on your business. They don’t care who the cosigner is. That’s all that means. If it’s a personal card, then you personally guaranteed it with your Social Security number versus American Express Platinum that is used through your business EIN number and not your Social Security number. If you are using personal credit cards like that, make sure you are not co-mingling, getting groceries on that Sapphire card and booking travel because that’s when you get in trouble with the IRS is if you use it for both business and personal. You need to separate the two of them.
Where I was at 500 to where I’m at in the 800s now took a long process. That was many years because you and I didn’t know each other. I just cut to the short of it with that at that time. I even went and repaired a lot of my own. It was a grueling process. If you’re going to get a mortgage or something like that, what’s the best way to quickly increase your credit score in 90 days?
The best way would be to pay your credit cards down, paying completely off and then don’t spend more than 5% on that credit card the following month.
That has got to be tougher, but I would say most of America too. If I think back to the Capital One card, the first credit card I got, it was only a $500 limit. 5% is $25.
That’s a Netflix card because FICO wants to see you using your credit cards every single month. They penalize you if you do not use your credit cards. That’s something that I see on a regular basis. I met with Donald Trump’s doctor and he was getting ready to buy a house in DC. The number one problem that he had was all his credit cards were paid off. A colonel in the Marine Corps referred this guy to me. I was sitting down with the doctor and going through it. He was Clinton’s doctor and then Trump’s doctor. He is no longer in the White House. He is no longer employed there.
He is wanting to buy a house. This Marine Corps colonel referred him over to me. I was looking at his credit report and every single credit card to pay it off. He was like, “My mortgage broker told me to pay them off and not use them.” I was like, “That’s why you lost your 50 or 60 points that you need. All you’ve got to do is go spend a little bit on it less than 5% or more than 1% and your score will be up.” We got another couple of days to find out if that worked or not, which I know it worked because I already ran the simulation on it and it’s going to give him his 50 or 60 points that he needs.
For the majority of people, because that’s the opposite, if you’re going for a mortgage or something, the best way to bump your credit score up in 90 days is to pay off or pay down your cards.
Every 10% that you pay down or pay off on a credit card, you can assume you’re going to get about ten points. That’s a general rule of thumb. I say general because there are over 4,000 different versions of FICO alone. You have different scorecards inside of FICO and so many different moving parts that I’m doing broad strokes. On average, it’s ten points for every 10% that you pay down. You’re going to lose about 50 points by paying them all the way off and then not using them again.
Do they show it as inactive on your report then?
No. What happens is, for example, I have a Capital One credit card that is on my credit right now, a $50,000 credit limit. It has been closed since July 2017. The reason it was closed in July 2017 was I worked with a lot of celebrities with fixing their credit and helping them with credit. For two years, I was the credit expert for the NBA. I had done a lot of work with other athletes. When I was in Vegas, I worked a lot with the UFC fighters. I had the celebrity who was trying to buy this multimillion-dollar mansion and needed a couple of points. I put him on my credit card. I’ve done that before for people and I did that for you as well. I put you on one of my credit cards and the same thing happened with this celebrity, I put him on my credit card. Capital One called my wife at that time and said, “Do you know who so and so?” She was like, “I have no idea.” They thought it was identity theft so they closed all of our accounts.
How does that come into the story with this? It is still showing open on my credit report. What FICO has discovered and what they know after creating billions and billions of scores, predicting the future extremely accurately, is credit card companies are notorious for reporting accounts open that haven’t been opened in years. Capital One, for example, has been closed for four years, yet it still shows up on my credit report as open. When you don’t use a credit card for more than 90 days and you’ll see it on your credit report, the last payment date or last activity, it will have a date. If that’s more than 90 days ago, FICO kicks it out of the algorithm and you don’t get credit for that credit card.
Let’s say it’s a $50,000 limit card and you’re not using it. This is what was happening with this doctor. He had one credit card that he was using all the other 9 or 10 of them that he had he wasn’t using. The one he was using only had a $3,000 credit limit. He was maxing that out every month. He had $50,000 or $60,000 of available credit, but FICO was ignoring the available credit over here on the cards that weren’t being used because FICO thinks they’re closed. When you don’t use the cards, you do get penalized for it. I recommend every single one of them is set up on auto payment to automatically pay itself in full every single month and every single one of them has some type of recurring bill.
Netflix, my Starbucks obsession, car insurance, cell phone, electricity, water, sewer, gas, trash, renter’s insurance or whatever it is that there’s some type of recurring bill on every single one of those credit cards and then those credit cards are set up to auto-pay themselves in full every month. I’m not paying interest. I don’t have to worry about late payments because, like you, I travel a lot. I put all my bills on autopilot and auto-pay. You have to use those cards. Otherwise, they will kick it out of the algorithm and you will not get credit for the credit card.
You’re saying there’s a recurring bill not on the same card but you might have Netflix on one card, Starbucks on another card and your auto insurance on a third card. There’s something hitting it every month.
I have a $25,000 card. Years and years, the only thing that’s ever been on is Netflix. That’s it.
You’re making me think because half of my cards have probably have not been used in quite a while.
Here’s the other problem with it. One, FICO kicks it out of the algorithm. Your scores go down. You lose the credit limit so your utilization rate goes up, which then makes your scores go down even further when your scores hit a certain point with other credit cards because they pull your credit every single month. These credit card companies do. Your score goes down. Now, they start closing cards, which drives your score even lower. On top of that, they’ll close them due to inactivity, which then will drive down your score even more. Now, you got 10 to 20 years of that card that is going to show up close due to inactivity. You can be denied a credit card in the future because you let a card get closed due to inactivity because they don’t want to issue you a credit card if you’re not going to use it.
We’re talking about multiple cards here, too. There’s a myth. I know what the answer is. I don’t know what the right answer is. There’s always this fear because even family members I’ve spoken with. The only reason they might open a credit card is to purchase appliances. It’s a store card. The appliances are going to cost $3,000. If they open a store card, their limit is set exactly to what their purchases at $3,000. You talked about utilization. Now, that card reports 100% utilization but then as soon as it’s paid off, they’ll close the card. I’ve seen a friend who had something hit. It was a 90-day missed payment or something that was out there he didn’t even know about. The only card that this person had was a Chase card with a $13,000 limit. As soon as that hit their score, Chase lowered their limit to $900.
Which then drives down your score even further.
That was the only card that this individual had, too. They didn’t have other credit cards to fall back on. Immediately, it was like all their spending power was completely cut off. That was super rough seeing that dude go through it.
It’s tough and that’s another reason I recommend, “Get as many credit cards as possible.” You need at least three credit cards open and used every single month at all times but you should get as many as you can. FICO has 40 reason codes of why you don’t have an 850 credit score. One of the 40 codes is too many revolving accounts. I’ve seen that once or twice in many years. My company alone will pull 5,000 credit reports a month. We’ve seen hundreds of thousands of credit reports.
I can only think of one person which was a personal injury attorney in Colorado Springs named Bill Mirror. He had hundreds of thousands of dollars of available credit. Maybe even millions because that was so long ago. He used it for his personal injury business and then he owned a bunch of rental properties. That was the only time that I remember specifically that I saw a reason code of why he didn’t have an 850 credit score because he had too many credit cards. He was still like 780 or 795. Credit cards are the most important thing to your credit score.
You said you need at least three.
You need to use them every single month and then pay them off in full every month. I don’t want you to pay interest to have good credit. Sometimes it’s worth it, but as a general rule, you shouldn’t be paying necessarily interest on a credit card just to have good credit.
We’ve talked about increasing your score in 90 days if you’re going for a mortgage. What tips do you have to get out of debt?
It depends on what kind of debt you have. One of the courses that I have inside of Fortress University is, “How to pay off a 30-year mortgage in 7 to 10 years without changing your lifestyle?” One of the things I teach is how to eliminate 70% of interest on loans. It’s the same thing with my Ferrari. My Ferrari was a twelve-year loan. It will be paid off. I’ve had this for over three years. I’m not making a bunch of extra payments. I’m not doing anything crazy. I’m simply changing where my money is deposited.
As a business owner, I get deposits every single day. That money doesn’t go into a standard checking account. It goes into a different type of account which I call Fortress Banking, which then eliminates 70% of your interest. The standard snowball or an avalanche program works well with getting out of debt, which is to take your smallest debt regardless of interest rates. Interest rates do not matter. Make the minimum payments on everything else, take all the extra money and put it towards the smallest debt you have until it’s paid off. Once it’s paid off, all that extra money goes to the next smallest debt. You continue that until your debt is paid off. You can do some more advanced stuff like credit card balance transfer checks. This is a strategy I’ve used many times for my business.
I have three different Citi cards. What Citi likes to do is these balance transfer checks. The balance transfer is they charge you 1% to 3% to write a check. One of the cards is like a $35,000 credit limit. I could write a check for $35,000 and then I could pay something with it. I get 0% interest for 6, 12 or 18 months, depending on which box that I checked that I wanted. You can do balance transfers. The problem with that is you got to be disciplined. The reason I like paying the lowest balance first versus the interest rate is, technically, if you did the Math, you should go after the highest interest rate but you will lose every time. It will end up costing you more even though the Math says, “That’s the way to do it.” The reason why is momentum. When you pay the lowest bill first, you gain momentum. It’s emotional momentum because now you’re chipping away debt and seeing a difference versus if you go after the highest interest rate, you can pay on that card for years and never see a difference.
You still might have another 9 or 10 cards hanging out there.
People can see this with weight gain and weight loss. In November 2020, I was down to 217 pounds. I was fit and then I got bitten by a tick in January 2021. I struggled with Lyme disease for five years in and out of the hospital. I ballooned up and got huge after a year of antibiotics. I got bitten by this tick after being cured of Lyme disease. The last thing I wanted to do is get sick again. I did a 90-day run of doxycycline which is a powerful antibiotic, even though I was doing 75 Hard, which is no alcohol, a gallon of water, two workouts a day and a clean diet. Even though I’m exercising like a madman, I’m eating perfectly. I’m gaining weight every single day.
When I said earlier that my belly is bigger, it was because I came 30 pounds in 90 days, all because of this antibiotic. How that ties into this is it was very difficult to continue doing 75 Hard, seeing myself in the mirror getting bigger every day versus going the opposite way. It’s the same thing with your credit card debt and other debt. If you go after the high-interest rate, you don’t get those wins. You need the wins by paying off the small bills to get that momentum so you can continue to go and it keeps encouraging you. That way, when your friends asked you to go out to dinner, vacation or ball game and it’s not in your budget, you’re like, “I’m not going to do that because I’m going to lose.”
Where if you’re going after the high-interest rate, you potentially could say, “I’m going to be in debt the rest of my life.” I’m like, “Everybody else is in debt. I’m going to stay in debt and give up.” The best way is to go after the smallest one. On top of that, what I like to teach inside of Fortress University is how to legally pay little to no income tax. I know I’ve helped you with that amazing coffee maker you have at the business, which is a write-off for the business. Taxes are our biggest expense in life. You asked me what’s the best way to get out of debt. Start with paying off the smallest balances. Number two, if you don’t have a business yet, start a home-based business and stop paying so many taxes.
For most of my clients, I show them how to reduce their tax burden by 70%. If you’re an average person making $100,000 a year, instead of paying $30,000 in taxes, I take it down to $6,000 or $7,000. That’s $23,000 extra you can put towards your debt. That way, it starts compounding. You get some big wins that way. Start a home-based business and getting some write-offs. Do some other things in there that you and I have talked about like putting your kids on the payroll, buying cars, getting clothes or renting out parts of your house. Things that you don’t write off as an employee that you cannot write off as an employee, almost anything can be written off as a business owner. That’s probably the best way. Go off the small debt, reduce your taxes and put the extra towards the debt.
There’s a lot of financial hurt out of 2020. Now, I saw in The Wall Street Journal digital paper. I’m thinking back I used to grab that thing. I get my morning recap from The Wall Street Journal every single morning and that’s what I read while I’m eating breakfast. Texas is stopping enforcement of the federal deferment on evictions, which means people are going to start losing their homes. They’re getting back to normalcy. Sometimes most people might see the only way out is bankruptcy. How do you survive something like bankruptcy?
I’ve gone through two bankruptcies. The first time I was twenty-something years old. I was a garbage man at that time, trying to get hired at the fire department and I didn’t know any better. Somebody was talking about how they wiped out their debt and I was like, “I got $30,000 in debt. How does it work?” He was like, “If you pay $1,000, it’s gone.” I was like, “Sign me up.” My second bankruptcy wasn’t so clean and easy. It was millions of dollars of debt. It all got started with some employees doing some stuff they shouldn’t be doing and then I ended up getting sued as the employer. Here’s the thing. Especially as an entrepreneur, if you haven’t filed bankruptcy at least once, I don’t think you’re trying hard enough. It’s like that badge of honor or the rite of passage. That doesn’t mean you have to file bankruptcy, but it’s a joke.
Bankruptcy is not the end of the world. It’s not that big of a deal. In fact, most of the time, when you file for bankruptcy, your credit score goes up. As long as you know somebody like me, it’s not that big of a deal. I’ve deleted bankruptcies in as little as 21 days after the discharge. I filed for bankruptcy and was discharged. Three weeks later, it’s gone. It’s no longer to be ever seen on the credit report. That doesn’t mean that you don’t have to notify potential creditors that you filed bankruptcy but it’s not on the credit report. I used to do these seminars when I had my radio show in San Diego. I did Your Credit Matters. It was six days a week on 42 different stations.
Every month, I would do a credit educator seminar. I would always pull up my credit report and then show the scores. I had to pull it right then and there in front of everybody. It would spin and then they would see the new scores. I would always ask, “Which of the three scores that you see one does not have a bankruptcy on it? Which one is it?” They would always go for the highest score because they think bankruptcy is going to affect the credit score. It was a trick question. Bankruptcies, when reported on a credit report, can increase your credit score if you have what’s called a thin credit file. A thin credit file doesn’t have very many pages. You and I probably have 60 or 70 pages. We have a thick credit file because we’ve had credit for so long.
When you have a thin file because you filed bankruptcy and everything fell off, the only thing left on there, the oldest account is a bankruptcy, that can improve your credit score. If you think about it this way, your bankruptcy is roughly 50 points. Remember, maxing out that credit card could be 100. Filing bankruptcy is about 50. On your year anniversary, every year for your bankruptcy, your score is going to go up about five points. After two years, there’s not a lot you can’t get even with a bankruptcy on your credit report. You can still get a mortgage, credit cards, business loans and car loans. The only thing I’ve found that you can’t get are airplane loans, RV loans and things that are luxurious, a $200,000 ski boat, a $500,000 RV, a couple of million-dollar jets. You’re not going to get it if you have bankruptcy. That’s about it.
To recover from bankruptcy, you need three credit cards open and use them every single month. Get a car loan. The problem with the bankruptcy code now is you cannot reaffirm any of your debt. If you do keep your cars, you’re not reaffirming it, which means it’s like a rental. Even though you’re making that payment, they’re never going to report that payment on your credit. You need a car loan on your credit in order to have great credit. You need three credit cards, a car loan and a mortgage to have a perfect credit combination. You can have an 800 credit score without a mortgage. You cannot have an 800 credit score without credit cards. In order to recover from bankruptcy, you get three credit cards, which you can get at my website, RondiLambeth.com. I have seven credit cards on there. I guarantee to give them to you. They are secured credit cards. FICO doesn’t care if they’re secured or not and then you get a car loan.
How do you get a car loan if you just filed for bankruptcy? Maybe you don’t want to go into debt. It’s simple. You take your car. You go into your local bank. Let’s say it’s a $10,000 car with no loan on it. You tell the bank, “I want to do something to improve my credit. Will you guys give me a loan on this car, say, $5,000?” Most banks will do it, 50% equity. You give them the title. They give you $5,000 in cash. Now, you have a loan reporting for the next 4 or 5 years on your credit report. You’ve got $5,000 in cash, but you’re like, “I don’t want to pay interest.” I don’t either. The following month, you write a check for $4,500 and pay down the loan to $500. You pay $10 a month for the next four years. Within one month, you’ll get almost four years of payment history because remember, you made that large payment of $4,500. You’re only paying interest on $500, but you have to pay interest in order to have good credit after filing bankruptcy. The worst-case scenario is you need to sell the car. You pay off the $500 to give you the title and then you sell it.
That’s a way to recover from bankruptcy. It’s not that scary. I used to recommend bankruptcy all the time to people when I did the radio show. Now, I’m more cautious with that because now I understand how debt settlement works. I got into the debt settlement world and we’ve eliminated over $50 million of student loan debt and credit card debt. Now, that I have a lot of experience settling this debt, I rarely recommend bankruptcy anymore because you can work out insane deals with these banks to settle the debt. If you’re not getting sued, there’s no reason again to apply your bankruptcy to get out of jail card over less than $100,000 of debt. Sometimes it makes sense. If you do file bankruptcy, it’s not the end of the world. Give my office a call. We’ll start cleaning it up for you, do the education and show you how to improve your scores. You can be right back up into the 700s with a bankruptcy on your credit report. You can be 750s with a bankruptcy on your credit report.
That doesn’t sound so scary.
That’s why it’s not that big of a deal. If you do not do what I said and you filed for bankruptcy, you are going to have horrible credit for the next 7 to 10 years. No one will loan you anything if you don’t get the credit cards, do a car loan, manage the credit cards properly, etc. The other thing with filing bankruptcy, I had a program for a long time called 90and90.com. It represented 90% of your bad credit would be fixed in 90 days or less if you filed bankruptcy within 90 days of filing bankruptcy. Fixing and removing accounts that you filed bankruptcy on is probably the easiest thing to remove from a credit report. In fact, in our 90/90 program, it was 90% deleted in 90 days after filing your bankruptcy. Otherwise, you don’t pay us anything. It’s how good we were at getting these items deleted. All you’ve got left is the bankruptcy. It’s about 50 points. It’s not a big deal.
I love in your credit repair business that you have that it’s paid on performance. I know we’ve talked about that before. There was nothing upfront that you’ve ever charged when you were doing that because you’re not doing that type of work. Now, it’s more education.
We’re doing both. We’re always going to do paid on performance because I get a lot of celebrities and guys who bought a $65 million jet or do these big seminars. Guys like that hire me because their bookkeeper forgets to make them an annual payment. It’s like the guy that you were talking about. He thought he closed a credit card, didn’t close it, didn’t use it and forgot to make the annual fee, which was $40. It was like a $5 minimum payment and didn’t make it. They need me to clean up. We’re always going to do the pay per delete for guys like that.
Our model now is Fortress University, which is 25 different education courses. All of my students get free credit repair. You pay a one-time $2,000 mission to Fortress University, lifetime access to the education and lifetime credit repair as well. Any time you or your family member needs something fixed on your credit, you simply call us and we would go in there and clean it up for you at no charge whatsoever. On the paid-on performance side, it’s straightforward. It’s $375 per account that we delete from your credit report. If you got bankruptcy, I delete it. It’s $375 after it gets deleted. There’s nothing upfront.
Everybody needs to know this. We’re going to promote and push this out heavily because 2020 was rough for a lot of people. I know coming through some of it even in business like we are as soon as the pandemic hit. For us, it was, “Can we keep people employed through this?” That was the first thing. For our team, it was, “Am I going to have a job?” It’s the same type of fear. I know because I was talking with the family that there was a lot of credit card spending before the extra unemployment benefits kicked in and people are thinking, “Now, I’m in debt for the rest of my life.” It’s that big, heavy weight that’s over them now.
I got a call after this with a girl. She’s a young lady. She’s 26 or 27 years old. She reached out to me and wanted to file bankruptcy. I pulled her credit. She got $18,000 worth of credit card debt all from 2019. She was freaking out because she has never had debt before. I’ll spend $18,000 in a day. It’s not a big deal. For me, that’s like one day. For her, it is a huge deal. It’s a big, scary $18,000 bill. I’m going to do a little coaching and counseling with her and reassure her, “It’s fine. It’s no big deal. This is how we’re going to come up with a plan and fix it.”
With COVID, I can tell you this. I was on the Experian website and found a hidden page. It talks about the CARES Act and a lot of the CARES Act I knew about. I was getting ready to do a podcast. I wanted to read up on the CARES Act. I found this little clause at the very bottom of the page. I’m going to let you and your readers in on an insider secret that a lot of people don’t know. Inside the CARES Act, it says that if the bank does accommodation of any kind, such as late fee reversal, so if you have a late fee and they reverse it, that’s accommodation. If they let you skip a payment, that’s accommodation. If they lower the interest rate or if they do any type of altering the original contract, they must report it as a positive tradeline regardless if you missed payments or not.
How does that work? As of February 1st, 2020, if you missed any payments on any type of loan and you called the bank and asked them to discount anything, there is no dollar amount. If they make any accommodation to you whatsoever, they legally now have to change it from a negative status to a positive status. The other thing they have to do is if you missed payments and they didn’t make an accommodation, but you caught up your payments, they have to change all of the past payments to positive. This has never happened before. In 52 years of credit reporting, this has never been part of the Fair Credit Report Act and it’s now in there. It’s good news for people who maxed out credit cards and fell behind on bills. It’s a light at the end of the tunnel if you would take care of it yourself or you know somebody like me who knows how to take care of it. It’s some positive news for people out there who are hurting and worried about their credit. Don’t worry about it. We can take care of it later.
It’s RondiLambeth.com. Can you get to Fortress University from that?
Yes. You can get to Fortress University by clicking on Products. It’s FortressUniversity.com as well and RondiLambeth.com. If you go to Google and type in Rondi. You’re going to find me all over the place.
Go follow him on Instagram, @RondiLambeth. It’s so good talking to you. I think we hit pretty much almost everything on the list that I had. I appreciate you. Thank you. For the readers, this is something that you need to take note of because this was phenomenal information to get back on the right track. I was there. Rondi was there years ago, too. Now, the future is bright.
I tell people this, “Bad credit is a choice because you can get it cleaned up and fixed anytime you make the choice that you want to start cleaning it up.” It’s not a magic wand. I would be richer than Jeff Bezos right now if I had a magic wand to fix it. It can take time. I said it takes 90 days to 3 to 6 months. 3 to 6 months is a long time if you’re trying to buy a house tomorrow. I recommend if you want to buy a house, you start 3 to 6 months early. Otherwise, you’re going to have bad credit for 7 to 10 years. Don’t get discouraged. Everything on a credit report can be removed from a credit report because it was placed on it in the first place. It’s not that big of a deal. If I can help you, just reach out.
- School of Wealth Podcast
- Fortress Credit Pro
- Episode Eight – Past Episode
- @RondiLambeth – Instagram