Introduction to Credit Repair

[chane]

Welcome to AAACreditGuide.com!

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Please take the time to read this introduction. You'll find many of your questions answered here. You may also find useful information by using the "search" function.

Please feel free to join in the discussion! The Forum is a great place to find answers to your questions and support for your problems.

Thanks to all who help others with their financial challenges! Please feel free to email me with any questions, comments, suggestions, complaints...anything. Thanks!


Basic Introduction

The following is a very basic introduction to credit repair. You have many more legal rights and avenues than can possibly be listed here, so be sure to read through the posts, use the "search" function for topics that interest you, and feel free to ask questions when needed!

You will find many people willing to help you along the way, so don't be shy....post away!


Where Do I Start?

First, you need to know where you stand and what you have to work with. The very first step is obtaining current copies of all 3 of your credit reports. The information contained in your report changes, sometimes frequently. A current copy is the best place to begin.

Each Consumer Reporting Agency (CRA) maintains its own, seperate database, and the information on each report is often different. Please plan on getting all 3 reports.


How to Get Your Reports

Sign up for one of the credit monitoring services. Several allow for a free trial. Please pay attention to how many "new" reports can be pulled when you join. Some allow a new report daily, some monthly and others only 4X per year. You can always ask for opinions in the credit forum before committing yourself to a membership.

Some of the most popular credit monitoring services are listed below:

* MyFICO - $42.84/yr. The only site that offers your real FICO scores. (The scores that the banks use.)
* Equifax Credit Watch Gold - $12.95/mo.
* FreeCreditReport.com - 1st month free, then $12.00/mo.

Please pay attention to how many "new" reports can be pulled when you join. Some allow a new report daily, others allow one per month.


Ok. But, can I get a free copy of my credit reports?

Yes! However, I highly recommend purchasing your credit reports at one of the services above. By obtaining a credit report for free, you give the credit bureaus an extra 15 days to verify your disputes. 15 days is a crucial amount of extra time to give the credit bureaus. In my opinion, you are much better off just spending $10-15, plus you get to see your credit scores.

There are a few ways to get them free:

1. Visit AnnualCreditReport.com. ACR was set up by the big three credit reporting agencies in the United States, to furnish free annual credit reports, as required by federal law.

2. Call, write or visit the website of the CRA's.

Equifax.com
TransUnion.com
Experian.com

3. If you have been denied credit, insurance or employment, you should have received a "notice of adverse action". The letter will give you instructions on how to get a free copy of the report used in the decision. Note that this will not get you copies of all 3 reports, just the one you used in the decision.

If you are married, your reports are still separate. There may be "joint" accounts common to both reports, and your spouses' name may be noted on your report, but otherwise your report is yours alone. Changing an item on yours does not affect your spouses.


Ok, I have my reports, now what?

You should try to understand what is being reported.

You report is divided into several sections:

1. Personal Information

This section contains your name, address, employer, date of birth, social security number, and your spouse's name. Several variations of each may be listed, along with former addresses and names. This information is supplied both by creditors, and by you when you fill out a credit application.

Perhaps the first thing to attack is all of the old addresses and name variations. These serve no positive purpose on your report. If this information is needed by a creditor, you can supply it on an as-needed basis. These items can be removed by calling or writing the CRA, and asking for their removal, as they are "not accurate".

2. Public Records

Bankruptcies, liens, judgments, garnishments, felony convictions may all be listed here.

Review this information carefully. Anything that is a public court record is fair game. Information here can be disputed just like anything else on your report. It often passes through many hands between the courthouse and CRA, and is prone to errors.

Be cautious of sending in documentation in an effort to "correct" your report. You may find that you have inadvertently verified information by your own submission, making it's dispute nearly impossible later.

3) Credit History

Loans, leases, mortgages, credit cards, collection accounts will be listed here. Also listed is your payment history, and various details about each account.

The important details here are:

Date of Last Activity - This is the date that is used to start the 7-year reporting clock.

Date Last Reported - This is the last date that the creditor supplied an update to the CRA. It has no bearing on reporting period or SOL computation.

Account Type:

R= "revolving"
I="installment"

Followed by payment history:

0 Too new to rate
1 Pays account as agreed
2 Not more than two payments past due
3 Not more than three payments past due
4 Not more than four payments past due
5 At least 120 days or more than for payments past due
7 Making regular payments under W.E.P (wage earner plan)
8 Repossession
9 Bad Debt; placed for collection; skip

Limit/Original Amount - For installment loans, the amount of the loan at it's inception. For revolving accounts, your credit limit. This is used to compute your credit utilization %, an inaccurate low limit will lower your score.

Balance - The amount owed as of the date reported.

Open/Closed - Whether an account is open, active, and available for your use, or closed and no longer usable.

Closed by Consumer - Indicates that the account was closed at your request. Neither positive or negative.
Closed By Credit Grantor - Indicates that the account was closed by the creditor, often involuntarily. This is nearly always seen as a negative.


4) Inquiries

This is a listing of everyone who has "pulled" a copy of your report.
Often divided into two sections, "hard" and "soft".

"Hard" inquiries are a result of you applying for something, or a current creditor looking at your report. These are the inquiries that lenders can see.

"Soft" inquiries are only viewable by you, and are commonly the result of you pulling your own report, or marketing inquiries.

Listed by date, this is a list of who has pulled your report.

There are specific reasons which must be met before anyone can pull your report. "Permissible Purpose" refers to the legal requirements for anyone to do so. Generally, you must:

1) Apply for something, like credit or insurance.
2) Have a current, open account with the creditor.
3) Have otherwise given your permission for the report to be pulled.

Companies or individuals pulling your report without "Permissible Purpose" are violating Federal Law, and subject to fines of $1,000, more in certain states.

[chane]

How long do items remain on the report?

Most negative items remain on the credit report for 7 years from the date of first delinquency.

Delinquencies: (30 - 180 days late) Remain 7 years from the date of the initial missed payment.

Collection accounts: Remain 7 years from the date of the initial missed payment that led to the collection (the original delinquency date). When a collection account is paid in full, it will be marked "paid collection" on the credit report.

Charged-off accounts: Remain 7 years from the date of the initial missed payment that led to the charge off (the original delinquency date), even if payments are later made on the charged-off account.

Closed accounts: Closed accounts are accounts that are no longer available for further use. Closed accounts may or may not have a zero balance. Closed accounts with delinquencies remain 7 years from the date they are reported closed, whether closed by the creditor or by the consumer. Positive closed accounts remain at least 10 years.

Lost credit card: If there are no delinquencies, credit cards that are reported lost will continue to be listed for 2 years from the date the card is reported lost. Delinquent payments that occurred before the card was lost are reported for seven years.

Bankruptcy: Chapters 7, 11, and 12 remain for 10 years from the filing date. Chapter 13 remains 7 years from the filing date. Accounts included in bankruptcy remain 7 years from the date they were reported as included in the bankruptcy.

Judgments: (child support, civil & small claims) Remain 7 years from the date the judgment is filed.

Tax Liens: (city, county, state, and federal) Unpaid tax liens remain 15 years from the filing date. Paid tax liens remain 7 years from the paid date of the lien.

Inquiries: Remain for 2 years, with those in the last 6 months usually given the most consideration.

Positive Accounts: Remain indefinitely and paid positive accounts remain 10 years.


Ok, I understand what is being reported and I'm ready to get started!

You need to have a basic understanding of the Fair Credit Reporting Act (FCRA) and Fair Debt Collection Practices Act (FDCPA).

These are the laws that apply to credit reporting and debt collection. You have specific rights regarding both. Understanding your rights is basic to moving forward. Read and re-read until you are familiar with these laws. Post questions as necessary for clarification.

You have the right to dispute any information contained on your credit report. This is done by writing the CRA. The CRA then is required to verify that information with the furnisher. They have 30 days by law to do so. If such information cannot be verified, it must be deleted.

Note that whether the account is "really" yours or not has no bearing on their responsibility to verify it. If it cannot be verified, it must be deleted. Period.

You also have the right to "validation". This is demanding that the creditor reporting the information prove to you that the account is really your responsibility, and that the balances, etc are accurate. In the case of collection agencies, they must also prove that they have legal right to collect the debt.

They must STOP all collection activity, including reporting and verifying, until they supply proper validation to you after a written request. Although no time limit is specified for them to validate, they cannot continue collection activities until they provide such. Sometimes, Collection Agencies will stop collection activities and return the account to the original creditor rather than validate. (This is perfectly legal.)

*You do NOT have legal right to validation under the FDCPA when dealing with an original creditor. They may supply validation at their option, but are not required to do so. However, you do have the right under the FCRA to dispute directly with an original creditor any information reported that you feel is incorrect. This can be found in section 623. Once they have received your dispute, they must investigate the reported info and, they must also report the acct as disputed with the CRAs.

You may also have additional rights under the Fair Credit Billing Act (FCBA), and possibly your state's laws.

If you demand validation from a creditor who is already listing a derogatory tradeline on your credit report, they are required to note that account as "disputed by consumer" (or similar language). They may NOT place a new listing, or verify a current listing with the CRA until they have provided you with validation.

It is most always a good idea to send validation demands via CMRRR.
(Certified Mail Return Receipt Requested) as this gives you proof, in the form of a receipt ("green card") that your demand was received, and on what date.

Sample Validation Letters


Disputing with the Credit Bureaus

It's never appropriate to be dishonest with a CRA (or anyone else).
There are ways to accomplish your goals while remaining 100% truthful and honest and it's the much more effective anyway!

For example, while it may be tempting to dispute a known account as "not mine", it's a better option to instead make a request that it's validity be proven.

"Please provide documentation that this account is accurate and belongs on my report".

Also be very careful in what information you supply to the CRA's. If you supply court papers or collection statements in an attempt to correct your report, you may find those very papers used against you later! You will have difficulty questioning an account that you previously verified yourself.

Sample Dispute Letters

They have 30 days to verify their information, correct the information or delete the account. You will be provided with the results of their investigation and a new copy of your report (if anything has changed) after the investigation is complete.

If you have any questions, please feel free to ask in the forums! (Just remember to always search first, as someone may have already asked that question!)

Also, please feel free to share your success stories and help others with their questions!

Good Luck on your credit repair journey!

Chane

[AntiPlastic]

I'm so glad I found this forum. I've already found a few "simple" mistakes that I have made, or was planning to make, in my credit repair quest.

[elysium]

Me too. Really great site! Thanks so much!

[grn910]

I noticed on my CR there is a hard inquiry from a creditor whos account has been removed off my report. The account was removed in 7/08 & the inquiries are from 9/08 & 11/08. Are they still allowed to monitor my credit reports? Can I get these off?