Credit Repair: Fact vs. Fiction!

Before you pay for "Credit Repair", you need to know what is FACT and what is FICTION!

Beware of claims from so-called Credit Repair Companies like:

Warning!

  • We will remove negative items, bankruptcies, judgments, liens from your credit report!
  • Improve your credit score by 50 to 100 points!
  • Erase all bad credit...guaranteed!
  • Create a new identity!

 

Sound a little too good to be true? 

 

No one can LEGALLY remove correct or accurate information that is reported on your credit report.

After all, a credit report is a recorded history of how you have used credit.  There are many factors that go intor formulating a CREDIT SCORE

There are three major three Credit Reporting Agencies:

Although each uses a slightly different set of criteria for determining and assigning a credit score, they are basically the same.

Although you cannot remove accurate information from your credit report, YOU CAN HAVE INACCURATE INFORMATION REMOVED!

We are all entitled to receive a FREE CREDIT REPORT annually. I believe it is a very good practice to request your credit report each year to make sure there are no mistakes or inaccurate information being reported!

You are also entitled to receive a copy of your credit report used by a company that denied your application for:

  • Credit
  • Insurance
  • Employment

You have to request it within 60 days of receiving notice of denial, so don't wait too long!

If you find errors or inaccurate information on your credit report, you can dispute it with the credit reporting agencies (yes, you may have to contact all three is the same information appears on each credit report).

You can either write a letter or go to the credit reporting agencie's website.  I believe going on line is the most efficient way to dispute items.

You will need to have:

A copy of the errors on your credit report.  You don't have to send or include the entire credit report.  Just circle the items you are disputing.

Next, you must explain or prove why your are filing the dispute. 

For example:

Let's say that you had a credit card that was completed paid off a few months ago and the credit report is still showing a balance.

You will need a canceled check or bank statement showing the payments or series of payments to the credit card company.  You may be able to get a copy of a letter or statement from your credit card company by calling or going to the credit card company's website.

Make a copy (.pdf if filing on line) and include with a brief statement of why this item should be corrected. 

For example:

I am opening a dispute about the account I have circled on a copy of my credit report with your company. 

As you can see from the attached (or enclosed) statements, canceled check(s) and/or bank statements, this account has been paid in full.

Please make this correction as soon as possible.

Thank you,

(your name)

  • Not only does the credit reporting agency have to correct the error, IF YOU REQUEST, they must send a copy of the corrected report to anyone who got your report over the last 6 months!
  • If the error caused you to not get the job you applied for, again, IF YOU REQUEST, the credit reporting agency must send a corrected copy to anyone who got a copy for employment purposes over the last 2 years.


By law, the credit reporting agency must investigate your dispute within 30 days.

  • They must send the information you provide in your dispute to the company reporting the inaccurate information. 
  • After they company investigates and reviews the proofs you included about the disputed item, it must report back to the credit reporting agency as well as all other credit reporting agencies.
  • Once the investigation is complete, the credit reporting agency must provide you with the results and a free copy of your correct credit report.

What about negative information on your credit report?

Unfortunately, negative items on your credit report cannot "magically disappear", regardless of the claims of some credit repair companies!

But over time, these items will be removed.

  • 7 years for most negative items
  • 10 years for bankruptcies
  • 7 years (in most states) for judgments

But what about those so-called "credit repair companies" that claim to be able to remove negative information?

Well, it's just not true.  In fact, you should read an article from the Federal Trade Commission's website about one credit repair company's penalties, etc.

Many credit repair companies use the VALIDATION LETTER technique.  While it is certainly legal and ethical to challenge inaccurate information on your credit report (as we discuss above), there are some (too many in my opinion) credit repair companies that ABUSE this  technique.

The rationalization is that the credit reporting agencies are some overwhelmed with disputes that often they will just correct and/or remove the disputed item without doing a thorough investigation.  After all, the credit reporting agencies are in business to make a profit.

So yes, maybe in some cases they will remove an item without much investigation, but the creditor reporting that information can (and most likely will) put the disputed information back on your report.

This type of CREDIT REPAIR FRAUD has caused many credit repair companies to be heavily fined or forced out of business over the last few years. 

And yet, for those who feel they cannot make disputes themselves or would be willing to pay for legitimate credit repair services, there are many solid, credible companies. Check with your state attorney general's office for a list of registered credit repair companies and also with the Better Business Bureau for complaints.

 

Photo Credit:  https://www.flickr.com/photos/brook_lands/

 

 

 


 

 

 


Tags: credit report errors, credit reporting agencies, credit report dispute, credit report and credit score, credit reporting companies

Credit Repair, Do It Yourself or Pay For Services?

Should you pay a "credit repair" company or can you improve or repair your credit report yourself?

debt free credit repair

Here a some tips on DO IT YOURSELF CREDIT REPAIR:

You have probably seen a TV  commercial or pop up ad that claims that "so-n-so credit repair company" can remove:

  • negative items from your credit report
  • history of late payments
  • judgments
  • bankruptcy
  • charge offs

Sounds like it is "too good to be true", right?

Well, you know the old saying...."if is sounds too good to be true, it probably is"!

Experian, Equifax and TransUnion are the three top independent reporting agencies.

Many people think they are non-profit or government agencies, but they are not.

They collect data and put it in a report to sell for profit!  There's nothing wrong with that, but it is important to understand that the credit reporting bureaus are in business to make a profit.

After they gather information about your credit, a report is then sold to creditors, individuals or other companies seeking information about you in order to determine your "credit worthiness".

Here is a quote from a portion of a very good article entitled:

                 How Credit Scores Affect the Price of Credit and Insurance


Information about you and your credit experiences, like your bill-paying history, the number and type of accounts you have, whether you pay your bills by the date they’re due, collection actions, outstanding debt, and the age of your accounts, is collected from your credit report.

Using a statistical program, creditors compare this information to the loan repayment history of consumers with similar profiles.

For example, a credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points — a credit score — helps predict how credit worthy you are — how likely it is that you will repay a loan and make the payments when they’re due.

 

So what happens when you find out that you have a low or poor credit score due to errors or incorrect information on your credit report?

You could seek the help of a reputable, credit repair company, but be careful!!!!

A good, reputable, credit repair company should not charge exorbitant up-front fees and should only be paid AFTER THE ERROR(S) have been removed.

But why pay for something you could do yourself?

Here's what you can do for yourself:

First, you will need a current credit report.

The law allows all consumers to receive a FREE Credit Report from all 3 of the credit reporting agencies annually.

Click here or go to www.annualcreditreport.com.

NEXT, study your credit report carefully.

Don't be surprised to find errors, such as:

  • Balances on accounts you know and can prove that you have paid off
  • Judgments that have been satisfied
  • Mistakes about your personal information, such as name change, age, social security number, address, etc.
  • Accounts that should have been removed because they have exceeded your state's statute of limitations.
  • Accounts that you have no idea about and know for certain you never opened

IT IS IMPORTANT TO STATE THAT YOU CANNOT DISPUTE ITEMS THAT ARE LEGITIMATE ON YOUR CREDIT REPORT!

This is called "frivoulous" and could result in you getting into serious trouble!

But, if you find errors or inaccuracies, and have proof that it is indeed an error or the information reporting is inaccurate, you must INITIATE A DISPUTEwith each credit reporting companies.

The best way to do this is to go on line and complete each credit reporting agencies form for disputing an error.

Here are the links to the top three credit reporting agencies:

Equifax disputes

Experian disputes

TransUnion disputes

 

  • The credit reporting companies must investigate the items in question and this must be done within 30 days!
  • The credit reporting company must forward the date that you provided to the creditor or collection agency reporting the information.
  • If the creditor or collection agency cannot dispute your claim, it must notify each of the credit reporting companies to remove the incorrect information from you file.
  • Once the investigation is complete, the credit reporting company must send you the results, in writing plus a free copy of your credit report showing the changes have been made.
  • You may also request that the credit reporting company send notices of these corrections to anyone who received your credit report in the last 180 days.

However, if you do not have access to a compute to file your dispute on line, then you will need to WRITE A LETTER (CTA) and mail it by CERIFIED REGISTERED MAIL.

After you have initiated the dispute, FOLLOW UP, FOLLOW UP, FOLLOW UP!

Although going online is the best way to initiate a dispute, you may need to call the credit reporting agency directly:

       Equifax                 888-202-4025

       Experian               888-397-3742

        TransUnion          800-916-8800

 

 

If you absolutly, without a doubt know that the listed accounts is not yours (you never opened and have no idea where it came from), then you can demand that the creditor to VALIDATE THE ACCOUNT.

This is a little different than disputing inaccurate information.

You must write a letter to each of the credit bureaus (Equifax, Experian and TransUnion) and challenge the account asking the original creditor to PROVE that it is valid.

You should enclose a copy (don't send the whole report or original) of the portion of your credit report with the item(s) that you are disputing circle and/or highlighted.

Once again, the credit reporting companies have 30 days to forward and request your dispute.

STAY ON TOP OF YOUR DISPUTE!

Most creditors and/or collection agencies think that the average consumer will not go to all of the trouble to either DISPUTE A DEBT OR REQUEST THAT THE DEBT BE VALIDATED!

One woman in Bend, Oregon won a lawsuit against Equifax of a reported $18.6 Million because Equifax failed to correct her credit report!

But what if you find out that the debts are valid?

You may be able to have them removed due to the statute of limitaions or through DEBT SETTLEMENT for a 50% or more savings!

 

 

Photo Credit to Chris Potter and StockMonkeys.com

 

                                      

 

Tags: debt validation, credit repair, credit reporting agencies, credit reporting companies, credit report dipute

Do It Yourself Credit Score Check Up

do it yourself credit score checkupWould you like to know how to improve your credit score?

 Here are a few very helpful tips you can use to do it yourself.

I've written several articles and blogs on the subject of Credit Repair, How to Improve Your Credit Score, How to Have Errors on Your Credit Report Corrected, etc. over the years.

When it comes to the subject of "CREDIT REPAIR", there are several misconceptions, but the most prevalent is that you can get the top three credit reporting agencies (Equifax, Experian or TransUnion) to remove negative information from your credit report.!

You may have seen ads from the newspaper, TV, radio, on line or phone making claims such as:

  • "We can remove bankruptcies, judgments, liens and bad loans from your credit report!"
  • "We can erase bad credit!"
  • "We will help you create a new credit identity that is 100% legal!"

Credit Reporting agencies sell (that's right, they are in business to make a profit) your credit history to those who need to know that if they loan you money, you have (or have had in the past) the ability and track record to repay that loan!

Make sense?  Sure.  Then why would you think that you or some Credit Repair Company could magically make negative information disappear?

Yes, there are some credit repair companies who, in my opinion (and most likely your state's attorey general) have the methodology to have some negative items removed from your credit report for a short period of time or until the creditor realizes it and makes a claim to have it replaced!

Some people will pay a lot of money for this type of shady "credit repair" in order to get a loan or possibly qualify for an apartment or even for employment.

Be very careful of these claims!  They could come back to  haunt you!

The Federal Trade Commission has written many good articles on this subject and credit repair in general.

Here's a link to a very good article: CREDIT REPAIR: HOW TO HELP YOURSELF

OK, but what about LEGITIMATE ERRORS?

If you haven't done so already, you need a copy of your credit report (not necessarily your score at this time) from each of the top 3 Credit Reporting agencies.

If you have applied for credit, insurance or employment, and were denied, you can request a copy of the report, if you do it within 60 days.

You are entitled to a FREE CREDIT REPORT every 12 months.  Just go to www.annualcreditreport.com or call 1-877-322-8228.

Carefully check all of information on all 3 reports.

Make sure you name, social security number, address, etc. are correct.

What you are looking for is accounts that you know (and can prove) that you have paid off.

Also, depending on your state's statute of limitations, negative information in the past (charge offs, accounts that you were late paying often, etc.) can be removed after a certain number of years.

For example, if you live in Oregon, the statute of limitations is 6 years on most accounts.

But, the biggest thing you are looking for is for accounts that you have paid off and are still showing a balance or may have been turned over to a collection agency.

Make a copy of your the page of the credit report showing the account you wish to dispute.

  • Circle the account.

Gather the proof of payment:

  • Letter or account statement with $0 balance
  • Copies of check and/or money order you used (you may have to contact your bank or go on line)
  • Letter of satisfaction if you paid off a judgment

 

Now, you are going to write a letter with this information to EACH OF THE 3 CREDIT REPORTING AGENCIES.

FREE GUIDE to

Yes, you can go on line and in many cases this works best, but somehow I think the "paper trail" of a letter with proof is more effective.

If you do not get a reply within 45 days, make sure to follow up!  Don't GIVE UP!

This is where I think it may be a good idea to hire a professional, ethical credit repair company to do this for you.

Yes, it will cost you some money, but there is a lot of time and effort that will go into challenging several items and you may not want to spend the time.

Check with your state's attorney general's office for a list of good, reliable credit repair companies.

If you live in Oregon, click here for a list of registered companies.

Comment on the subject of Credit Report Disputes:

Recently, I had written a blog about this subject and received a comment from a Credit Repair Company owner.

The blog was titled "Best Options for Credit Card Debt Relief" in which I listed and explained several ways to help get debt.

He commented and asked the question why I did not explain how to "fight for non payment of a credit card" rather than file for bankruptcy.

I understand and apprecitate the comment, but in my opinion, if you or I agree to repay a debt by taking out credit, then we have given our word...made a promise to repay and should do so if at all possible.

I don't think it is right to try an find a loophole such as they fact that a debt collector (as much as I don't like most of them) can't provide sufficient paper work to prove that the debt is legitimate in order to get out of paying a debt you know you owe.

On the other hand, I've had cases where after a creditor or collector agreed to accept less than the full balance due to the severe financial hardship of the consumer, the remaining balance showed up at another collection agency later.

Of course, in that case, you should (and we successfully did) dispute the claim.

I understand that there are many circumstances that happen that may make repayment impossible.

In those cases, if a Debt Management Program or a Debt Settlement Program can help, then a person should take advantage of such programs.

If things are so dire that neither program can help, then Bankruptcy may or should be the only option.

So, for your DO IT YOURSELF CREDIT SCORE CHECK UP:

  • Order a FREE Credit Report
  • Check for errors
  • Gather proof of payment
  • Write letters
  • Follow up! Follow up! Follow up!

If all of this sounds like TOO MUCH, we can help:


 

 

 

 

Tags: dispute errors on your credit report, credit repair, credit report, debt relief in Portland Oregon, credit report dispute, credit repair scams, credit card debt relief oregon, Equifax, Experian, TransUnion, credit reporting companies

What Determines My Credit Score?

what determines my credit scoreA lady from Portland, Oregon called to ask, "What really determines my credit score?"

There is a lot of misleading information about credit scores and this information should help.

The three major credit reporting agencies (Equifax, Experian and TransUnion) collect data about your "credit history and habits".

According to the Fair Isaac Corporation (FICO), your credit score is made of many factors, but the most important are:

  • Payment History (35%) 
  • Amounts you Owe (30%)
  • Length of Credit History (15%)
  • Types of Credit Used (10%)
  • New Credit (10%)

Your PAYMENT HISTORY (which accounts for the greatest percentage in determining your credit score) looks at how and when you pay your debts!

  • Do you pay on time?
  • If not, how late were you and how often were you late?
  • Do you have negative items on your credit report such as a bankruptcy, judgment, lien or lawsuit?

Being late on a payment is not necessarily a terrible factor on your credit report, but they are looking at:

  • How late where you (30,60, 90 days, or more?)
  • How much was the balance?
  • How recent were you late?
  • How many times are or where you late?

The next major factor that affects your credit score is the total amounts or balances on your accounts. (This makes up 30% of your credit score!)

Having outstanding balances is not a bad thing, but what the credit reporting agencies are looking for is how much of your available credit have you used?

They refer to this as your "DEBT RATIO".

What is my debt ratio?

Let's say you have 5 Credit Card accounts with a total available credit line of $20,000.

If you have only two balances of the five and the total balance is $2,000, then your DEBT RATIOwould be only 10% (2,000/20,000).

This shows creditors that although you have $20,000 of available credit, you are only using a small percentage and therefore are a better "CREDIT RISK".

On the other hand, let's say of the $20,000 of available credit you have, you have had to charge up $15,000.  Now your DEBT RATION would be 75%!

Creditors could be cautious in lending or extending any more credit to someone with that high of a DEBT RATIO!

The next factor that is used in determining your credit score is the LENGTH OF YOUR CREDIT HISTORY.

Although it may seem unfair, those who are young and/or have never established a credit history will not have a very favorable credit score, but will find it hard to be extended credit.

What type of credit accounts do you have?

The credit reporting agencies look at the various types of accounts such as:

  • Credit cards
  • Store or retail accounts
  • Installment loans
  • Finance Company Loans (pay-day loans)
  • Mortgages

You don't have to have one of each, but what the credit reporting agencies are looking for are a balance.

For example, if you had 5 or 6 Finance Company or Pay-Day loans (which usually carry very high interest rates and fees), you would most likely be considered a greater risk than someone who had a couple of credit cards (Visa, Master Card, Discover, etc.) and maybe one Sears card.

Finally, what about your NEW CREDIT?

How does New Credit affect my score?

The credit reporting agencies look at several "new accounts" as a greater risk than someone who say, had been using a (or a few) credit cards for several years and just recently signed up for one store card.

It is a negative mark on your credit report to go out and sign up for several NEW ACCOUNTS in a short period of time.

One final bit of advice, DON'T CANCEL OLD ACCOUNTS!

Closing accounts does not help your credit score.  You want an established credit history.

Even if you have had problems in the past, you can improve your credit score!

But what if you have so much debt that you simply cannot keep up with the payments?

Here in Oregon, we've been helping people become DEBT FREE for over 10 years.

Many people have used our DEBT SETTLEMENT program to final become DEBT FREE!

Once it has been determined that you simply cannot keep up with your minimum monthly payments and cannot meet the payment required in a Debt Consolidation or what is called a Debt Management Program, a Debt Settlement Program could be the answer!

We are not talking about secured debt (home mortgage, equity line of credit, etc.) but rather UNSECURED DEBTS, such as:

  • Credit Cards
  • Store Cards and Accounts
  • Personal bank loans
  • Deficiency Judgment after repossession
  • Private Student Loan
  • Pay Day Loans
  • Medical bills

A Debt Settlement Program can help you:

  • By lowering your monthly total debt payment
  • Potentially save you thousands of dollars by negotiating a settlement for less than the full balance due
  • Avoid turning to Bankruptcy!

 

 

STOP Collection Calls Free Sample Letter

 

photo by: Casey Kinstantin

Tags: Credit Score, stop creditor calls, stop the collection calls, Equifax, Experian, TransUnion, things that can't hurt your credit score, credit reporting companies