Archives for "The Credit Bureaus"
Credit Repair Truth Or Dare
Credit Repair and the Great Illusion
Credit repair is a discovery process. The vast majority of consumers in the United States are intimidated by the thought of credit repair. The credit bureaus are viewed in the same light as the Internal Revenue Service; a temperamental and potentially ruthless big brother. Oddly enough, this perception could not be farther from the truth. It turns out that the credit bureaus are quite tame and even reasonable, if you know how to manage them.
Protecting the Myth
Like the Wizard of Oz, the credit bureaus live happily behind the curtain of illusion, benefiting from the aura of power. Let’s dispel the myth a bit to spark your credit repair efforts. The credit bureaus are not government entities, nor do they have any government blessing. They are big business, and exist to make money. And they do a great job of it. They are well managed, well focused, and extremely profitable. And in spite of the fact that they have become indispensable intermediaries and guardians of your precious credit score, any communication from you is an unwanted burden on their bottom-line.
Credit Repair and the Truth
So, what went wrong? If the credit bureaus are doing such a great job of running their operations why are there so many errors in consumer credit files? Why is credit repair even needed? There is no contradiction here. Profitability and competence in no way guarantee an accurate product. In fact, by moderating the effort that goes into quality control the credit bureaus demonstrate their business savvy and bolster their bottom line. Does this seem outrageous? After all, your financial life depends on your credit scores. Shouldn’t the credit bureaus be held to the highest level of accuracy when it comes to such important data? Yes and no.
Legislation Cuts Both Ways
Because of the importance of the product they offer, the credit bureaus have been on the business end of countless lawsuits. In fact, a day does not go by when a non-compliance lawsuit is not filed against one of the three major credit bureaus. The importance of credit repair and the groundswell of consumer concern have not escaped the notice of federal lawmakers. The law that governs the credit reporting industry and provides legal leverage used by professional credit repair services is called the Fair Credit Reporting Act (FCRA). There is much in the way of consumer protection built into the FCRA, but there is just as much protection for the credit bureaus.
Credit Repair to the Rescue
The law simply demands of the credit bureaus that reasonable steps be taken to maintain quality. And here is the essential point for all of those interested in credit repair to be aware of; reasonable steps may be determined by the credit bureaus based on the costs associated with implementation. In other words, if it costs too much to fix, it’s going to stay broken. But, not to worry, you are not without a remedy. Credit repair to the rescue.
Credit Repair and the Bureaucracy
As frustrating as it may be to discover that there is such a margin of error allowed in an industry that has so much power over your life, there are ways you can make sure that your credit report shines. All the credit repair tools you need are built into the same tome of law, the FCRA. Many people think of the FCRA as the consumer protection law that was designed to force the credit bureaus to provide more accurate data. It’s not so.
Looking More Closely
A close reading will reveal the fact that the overriding focus of the consumer protection built into the FCRA is to provide consumers with the basic legal rights to rectify credit reporting errors. This is a radical difference from forcing the bureaus to be accurate. The true message of the FCRA is, look out for you, because no one else will.
How Bad is it?
If the FCRA puts so much of the burden of accuracy on the consumer, it means, by inference, that in the absence of consumer participation credit reports are likely to contain errors which require credit repair. And that is exactly what has occurred. Fully seventy-five percent of consumer credit reports contain errors. Fifty percent contain errors significant enough to cause those afflicted to pay premium interest rates and even get denied for loan requests.
The Law is Your Sword
Credit repair, as a result, is as an essential process in your life as a regular physical examination or tuning up your car. Credit repair is far more than a credit rejuvenation for those with past credit issues, it is a necessity for everyone. If you don’t have the time to manage the credit repair process on your own, hire a professional. It’s important, it’s your credit, take care of it. Good luck!
Copyright © 2008 Sky Blue Credit Repair. All Content. All Rights Reserved.
Credit Repair Essential Guidelines
Let’s Get to Work!
We speak with people all day long about their credit reports. Here is a review of the most common questions that we encounter about reporting periods for derogatory information, as well as guidance on resolving the related issues. These details, if properly understood and acted on, can make a significant difference in your credit score.
A Point of Caution
The following information involves the reporting periods for derogatory information on your credit report. In all cases, creditors are responsible for recording the commencement date of the reporting period. This date is coded in the credit file that is furnished to the credit bureaus, and eventually will tell the credit bureaus when to cease reporting. This commencement date is supposed to be inherited by subsequent collectors as well. In actual practice, neither creditors nor collectors are completely diligent in reporting or maintaining these important dates, hence the need for credit repair. Consumers are well advised to monitor old derogatory information to insure that it ceases reporting on schedule.
Chapter 7 Bankruptcy
A discharged Chapter 7 bankruptcy will show in the Public Records section of your credit report for 10 years from the initial filing date – please note that the filing date is different from, and prior to, your discharge date.
Debts that are discharged in a bankruptcy can continue to report for seven years. Handy credit repair tip! Once a debt is discharged it should not report with a past due balance, or as a charge off, or in a collection status; this derogatory information should be removed.
Dismissed Chapter 7 bankruptcies will report for ten years. A dismissed bankruptcy is a bankruptcy which was filed and thereafter canceled or disallowed.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy which has been completed will continue to report for seven years from the initial filing date, rather than the discharge date.
A Chapter 13 bankruptcy which was not completed will continue to report for seven years from the initial filing date.
Bankruptcy and the Fair Credit Reporting Act – A Legal Note
It may be of interest to note that the only reference to bankruptcy in the Fair Credit Reporting Act is a blanket rule that limits the reporting time to 10 years following the filing date. See § 605. [15 U.S.C. §1681c] (a). The credit bureaus, however, voluntarily make exceptions for Chapter 13 bankruptcies as noted above.
Collections – Overview
Collections are unique for the reason that they typically change hands, often several times during their lifetime. Important credit repair tip! Please note that only one collector at a time can legally report the debt; and only the collector that owns the debt can legally report it. All duplicate collection accounts for the same debt should be deleted from your credit report.
Collections can report for seven years plus 180 days from the original default date. The original default date is defined as the first time that you missed a scheduled payment prior to entering into a collection or charge off status. The original default date always begins with the original creditor and cannot be reset, nor can the reporting period ever be extended by subsequent collectors.
Charged Off Credit Cards – A Tip
Once a creditor has passed a charged off account to a collector they cannot report a past due balance. The balance should report as zero; the charged off amount may report on a separate line.
Unpaid Judgments
Unpaid judgments can continue to report for seven years or until the governing state statute of limitation has expired, whichever is longer. You need to check your state statute of limitations to know for sure. State statute of limitations for judgments range from 4 years (PA) to 21 years (OH), and in some cases may be renewed one or more times.
Paid Judgments
Paid judgments can report for seven years from the initial filing date. This is handy to know if you are in a credit repair program; you may quickly remove a judgment from your report if you are willing to pay it, as long as the original filing date is seven years old. For legal support see FTC Official Staff Commentary § 605(a)(2): “Paid judgments cannot be reported for more than seven years after the judgment was entered, because payment of the judgment eliminates any “governing statute of limitations” under this subsection that might otherwise lengthen the period.”
Tax Liens
Paid tax liens may not report more than seven years beyond the date of payment. Unpaid tax liens may report as long as they are in effect. If you are in doubt consult a CPA or tax attorney.
Student Loans
Late payments on your student loans will cease reporting after seven years. Defaulted student loans are another story…
A 1991 amendment to the Higher U.S. Department of Education Act lifted all time limits for collection of student loans. The reporting of defaulted student loans on your credit report can now go on forever. In addition, a 1998 change in federal law made it virtually impossible to discharge a student loan in bankruptcy.
If you are in default on a student loan you are well advised to address the issue, sooner rather than later. Fortunately, there are excellent rehabilitation and consolidation programs now available to everyone. These programs offer affordable repayment options and can even erase the default status from your credit report! This can prove to be a painless and powerful step for anyone in a credit repair program. Explore your options today with the Student Loan Ombudsman Office at (877) 557-2575.
Copyright © 2007 Sky Blue Credit. All Content. All Rights Reserved.
Credit Repair Common Sense
It’s Your Life
Do you take your credit for granted? When is the last time you took a close look at your credit reports? Here is our take on inaccuracy in the credit reporting system and the potential impact it may have on your life.
High Stakes in the Credit Repair Game
Your financial life depends on the content of your credit. Every time you apply for credit a lender will check your report with at least one of the three bureaus. The content of your report will determine your eligibility for a loan as well as the interest rate you will pay. The interest rate in turn will determine your monthly payment. Higher rates mean higher payments, and higher payments erode your ability to save and enjoy the security that comes from building wealth. The goal of any legitimate credit repair company should be to re-shape your credit to meet the highest lender standard and improve the quality of your financial life.
Some Amazing Numbers
Did you know that each of the three bureaus maintain credit files on over 200 million Americans? Each individual credit file contains the history and current status of credit cards, auto loans, mortgages, collections, public records, and more. Current accounts must be updated monthly and are dependent on the accurate participation of millions of creditors and other data furnishers. The shear amount of data is mind-boggling.
The Cost of Errors
Given the amount of data being managed by the credit bureaus it is not a surprise that there are errors. But what does it mean to you? According to the National Association of State PIRGs (a nonprofit, public interest advocacy organization) 79% of all credit reports contain mistakes, 54% of all credit reports contain personal information that is long outdated, belongs to a stranger, or is otherwise incorrect, 30% of all credit reports contain accounts that are closed by the consumer but continue to be reported as open, and 25% of all credit reports contain errors serious enough to result in the outright denial of credit. As a credit repair professional dealing with credit reports on a daily basis, I can attest to this widespread occurrence of errors. Is everything correct on your on your report? The odds are not in your favor.
Russian Roulette
Somewhere between the 79% of consumers with errors on their reports, and the 25% who will be denied credit due to those errors, exists a vast number who will be bumped into a lower credit class and pay a higher interest rate than they should. Many of these consumers will never be aware of the fact that lenders are quietly charging them one or two percent more on their loans. Let’s translate the statistics. 79% represents 158 million Americans with errors on their credit reports. 25% represents 50 million Americans that will be denied credit due to errors. The vast middle ground contains 108 million Americans who may be paying hundreds of extra dollars each month as a result of errors in the credit reporting system. What about you? If you are not paying attention to the content of your credit report you are playing financial Russian roulette. If you are in the majority, an intelligent credit repair effort can pay for itself a hundred times over.
A Case of Skewed Statistics
I have been in the credit repair business since 1989 and have come to the unfortunate conclusion that people with real credit issues, those whom have missed payments, fallen behind, or defaulted on a debt, are more than twice as likely to have serious errors on their reports than the statistical norm. In other words, the potential for errors becomes considerably worse for those that can afford it the least. Why does this happen? When an account slips into a derogatory status it is no longer in the mainstream; the creditor often moves the account to a different department; the creditor name may be reported slightly differently and account numbers may be modified. If the account is charged off and sent to a collector it is almost inevitable that it will eventually appear in duplicate or triplicate on your report. And over time collection accounts change hands, often shedding their statute of limitation start date and continue to report well beyond their proper expiration, sometimes appearing as if brand new.
The Credit Repair Road to Recovery
Have you had legitimate credit issues? Are you working on recovering from those issues? The good news is that a competent credit repair effort can effectively remove the errors from your report and give you the fair chance that you deserve. Do you know that you can get your three credit reports for free one time per year? Go to AnnualCreditReport.com, the only site where you can get your reports for free with no strings attached. Review your reports. Call a credit repair expert for a consultation. Take charge today. It’s your right, and there is nothing that can have more of an impact on your financial life.
Copyright © 2007 Sky Blue Credit. All Content. All Rights Reserved.
Credit Repair: Avoiding Scams!
Credit repair can be the greatest business in the world. But, as in every industry, there are those that do it right, and those that don’t. It helps to know what to avoid. We would like to offer a few suggestions, some of which may surprise you!
The Credit Repair Professional
The credit repair business requires a clear grasp of the interaction of many factors. Credit bureaus, creditors, and collectors are each regulated under their own set of federal laws. There are state laws that may supersede the federal laws. In the background of all of this activity is Fair Isaac and Company that formulates your FICO Score based on the makeup of the information on your report. Credit repair professionals must have a working knowledge of all of these factors and more.
And the Not-So-Professional
True credit repair professionals provide an incredibly valuable service. But there are also those that misrepresent themselves and the services they offer. These deceptive practices will waste your money, and in some cases leave you worse off than ever. Here is our list of the top offences…
Authorized User Alert
Some so-called credit repair companies have been brokering “authorized user” status on credit card accounts. This involves making the customer an authorized user on someone else’s credit card to boost the customers FICO score. This is not illegal, but you should be aware that Fair Isaac and Company, in response to this practice, has eliminated authorized user benefits from the new FICO scoring model. According to Fair Isaac, one of the three credit bureaus will begin using the new scoring model in September 2007. The other two credit bureaus will adopt the new model by mid-2008.
The New Identity Trap
There is a busy little credit repair sub-culture that offers to help you establish a new identity by applying for an Employer Identification Number (EIN) which they suggest that you use in place of your Social Security Number. This amazes us! And it is a serious crime that could put you in prison. Steer clear.
Promises Promises
Watch out for companies that guarantee results such as a specific increase in your credit scores in a specific period of time. Professional, reputable credit repair companies can produce dramatic results! But given the fact that there is no way to predict the responsiveness of the credit bureaus, creditors, or collectors it is inappropriate to make such promises, and a sure sign of bad business.
The One-Dimensional Credit Repair Problem
Beware of credit repair companies that offer credit bureau disputes, and nothing more. They are most likely using software that simply pumps out dispute letters – repeatedly. This one dimensional approach to credit repair is certain to produce disappointment. Effective credit repair requires the skill to challenge the bureaus, creditors, and collectors alike; all with the knowledge and understanding of the legislation that governs them, and a grasp of how each change in your report can affect your FICO scores.
Power Corrupts
I’m going to stray a bit from the category of credit repair scams and touch on two of the more egregious offenders in the credit reporting industry. Many people mistake size for honesty. Power can corrupt, and the journey to the dark side is often led by corporate attorneys who constantly test the limits of consumer’s tolerance. Credit repair can be tricky enough, but getting hoodwinked by the credit bureaus can be downright discouraging. Here are offenders that we encounter on a daily basis.
False Credit
Every day untold numbers of consumers go to TransUnion’s “True Credit” website and pay for what they believe to be their credit scores. What they get are deceptively named “TrueCredit” scores which vary significantly from the FICO scores used by lenders. Here is the (almost impossible to find) small print from the TransUnion website. “TrueCredit is not connected in any way with Fair, Isaac and Company; the credit score provided here is not a so-called FICO score. The credit scores of TransUnion may not be identical in every respect to any consumer credit scores produced by any other company.”
Not Free Credit Report
Are you starting your credit repair effort? You can get all three of your credit reports for free, one time per year, from AnnualCreditReport.com. Don’t be fooled by Experian’s freecreditreport.com website! Here is the fine print: “When you order your free report here, you will begin your free trial membership in Triple AdvantageSM Credit Monitoring. If you don’t cancel your membership within the 30-day trial period, you will be billed $12.95 for each month that you continue your membership.” And it may not be so easy to cancel. The Office of the Attorney General of Florida lists the following issues in their investigation of Experian: “Deceptive advertising, misleading domain name, and failure to honor cancellations in violation of Chapter 501, Part II, Florida Statutes (Florida Deceptive and Unfair Trade Practices Act).”
Copyright © 2007 Sky Blue Credit. All Content. All Rights Reserved.
Credit Repair: The Truth About the Credit Bureaus
The Truth About the Credit Bureaus
In a recent blog entry I wrote, “Significant legislation has been enacted to protect you from the impact of the credit bureau’s inaccuracies. The right that you have to receive copies of your three credit reports for free on an annual basis is not a friendly public service by the credit bureaus. The bureaus have been required to provide this service as one of the protective measures included in the Fair and Accurate Credit Transactions Act. Your credit report can have a major impact on your financial life. Give your credit the attention that it deserves and review your reports regularly.”
A Reader Responds
A reader responded by asking, “I’ve read that the credit bureaus are regulated by the Federal Trade Commission. Doesn’t this indicate a relationship with the government?” Below is my reply along with some additional thoughts on the subject.
The Credit Bureaus are Not Government Agencies
I replied that, “The relationship between the credit bureaus and the government is the same as the relationship that you have with the government. Because your actions are conscripted by law does not in anyway suggest that you are necessarily a law abiding citizen (although I’m sure that you are!). As many people live in a constant adversarial relationship with the government, so do many large businesses. The credit bureaus happen to be constantly at odds with the law. Given the potential impact that credit reporting errors can have on your financial life, I strongly suggest that you modify your opinion of the bureaus enough to be very cautious of the content of your credit report.”
Strictly For Profit
One of the unfortunate underlying assumptions that people, like the above reader, have in their attitude towards the credit bureaus is that the bureaus have some form of official status. This could not be farther from the truth. They are strictly for profit businesses. Experian and Equifax are publicly traded companies and list their revenues in the billions of dollars. Trans Union is a privately held company with revenues estimated also in the billions. The three credit bureaus have maintained a consistently adversarial relationship with the government and consumers throughout their histories.
An Adversarial Relationship
An adversarial relationship with the public is not unusual for large businesses. All activities are chosen for the purpose of producing profits. The history of lawsuits brought against the bureaus over time paint a clear picture. The office of the Attorney General of Florida is currently pursuing action against Experian relating to misleading claims, deceptive advertising, a misleading domain name (freecreditreport.com), and failure to honor cancellations to their credit monitoring service offered through this so-called free credit report website.
A History of Conflict
The type of behavior described by the Office of the Attorney General of Florida is consistent with countless charges against the three bureaus. In the 1970s Equifax was charged with rewarding its employees for collecting negative information on consumers. This charge, which resulted in a consent decree, provides an interesting hint about the corporate culture.
Experian Gets an “F”
In 2006 a leading consumer advocate website rated the customer service offered by the three bureaus. The ratings were dismal including a grade of “F” given to Experian, who was sited for not even providing customers with a customer service telephone number. Credit repair is not on the priority list at the credit bureaus!
Nothing Has Changed
The above mentioned consumer advocate site has a current post that says, “With the 2003 amendments to the FCRA, and the introduction of the FACT Act, millions of consumers will see the quality of their credit reports degrade even further. FACT stands for Fair and Accurate Credit Transaction Act, but in reality it is just our government trying to appease millions of consumer who complain about the current credit reporting industry. But they are only appeasing us in name only…”
The Forces at Work
We have been assisting our customers with credit repair since 1989 and as such have dealt with the three bureaus on a consistent basis. There are two major forces at work that shape the behavior of the credit bureaus. The first major force is the need to maximize and protect profits which may result in decisions about operating policy that are not in the best interest of the public. The second force that conspires with the profit motive is the sheer bulk of data that the credit bureaus are trying to manage and maintain. The result has been widespread and serious errors on consumer reports combined with a horrible corporate bureaucratic resistance to fixing the problem. So check your credit reports regularly.
Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.