Would you like to own a home some day?  Buy a car?  Rent an apartment?  Have you had difficulties obtaining these things, or others, due to bad credit?  Well, there is hope!  You can repair your credit… yourself!

“Bad Credit?  NO Problem!” offers are available everywhere, but unless you take steps to keep your credit rating on the right path, you run the risk of costing yourself money… the very thing you can least afford!  High interest rates (like with those “Bad Credit?  NO Problem!” offers) cost YOU.

Suppose you wanted to buy a $20,000.00 car and pay it out over 48 months.  With good credit, they may be offering a 6.5% interest rate (sometimes much less!), meaning you’d pay approximately $2700.00 in interest over the life of the loan.  *However*, with bad credit, they may offer you an 11% interest rate (sometimes MUCH higher!), meaning you’d pay approximately $4800.00 in interest over the life of the loan!  That’s a big difference!

For those with bad credit ratings: DO NOT FEEL ALONE:  In 2005, approximately 2 million households filed for bankruptcy, so a lot of us have been in your shoes.  There are many reasons why you may find yourself in this situation – divorce, medical bills, lost job, the “ignorance of youth”, etc. 

Your first reaction may be to stick your head in the sand and ignore your credit situation.  DON’T DO IT!  I know how discouraged you can feel, but it’s important to do whatever you can NOW to get back on the path of good credit.  Depending upon the severity of your credit problems, it may take weeks, months, or, sadly, years to successfully repair them; however, it CAN be done.  And more importantly, you can do it YOURSELF.

Know where you stand!

Take steps immediately to ensure that your credit rating allows you to do the things you would like to do.  You may not be able to afford a new home or car now, but what about later?  You never know what the future may hold and, without good credit, you may be limiting yourself and your dreams.

You may have good credit and not be aware of it.  Creditors can use this against you by charging higher interest rates.  What you don’t know CAN hurt you.  ALWAYS stay on top of your credit situation.  Know what your credit report says and make sure that what it shows is accurate.

So where do you start?

 
Good news!  You already have.  Within this site, I’ll explain the “mysterious” Credit Process, show you how to obtain your credit reports and credit scores, what to look for once you receive them, how to dispute inaccurate information, and how to improve your credit rating.  Although the process can be a slow one, it’s simple, it’s easy and it’s one you can do for yourself!

For those who may be unfamiliar with the credit process, here’s a quick summary: You apply for a credit account to purchase goods or services.  Based on various factors, the Creditor agrees to open a credit account for you and begins reporting your information to the Credit Reporting Agencies.  In turn, the Credit Reporting Agencies update, store, and share your information with other potential Creditors or potential employers.  There are laws governing all of you in order to protect each of you.  To break it down further…

Give Me Credit!

Companies (or, “Creditors”) lend you money to purchase goods or services by opening a “credit account” in your name, which you promise to pay back according to the Creditor’s rules. 

Creditors use several different factors to determine your credit worthiness (the likelihood that you’ll pay as agreed during the next 2 to 3 years), how much credit to lend you and at what finance rate to lend it. 

Though each Creditor will have it’s own guidelines on granting credit, the most common factors taken into consideration are:

• Your job history,
• Your banking information,
• Your mortgage information,
• Your Credit Report,
• Your Credit Score,
• Previous credit accounts with the Creditor, and
• Special reasons for past credit problems (sometimes).

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The Grapevine

Creditors may supply information about you to any or all “Credit Bureaus” (or, “Credit Reporting Agencies”) on a monthly basis.  As your Credit Score and Credit Report are the two most important factors a Creditor may use in granting you credit, you should obtain them from EACH Credit Reporting Agency at least once a year to check for omissions, inaccuracies and for possible identity theft.

If you are married, both you and your spouse should each request copies from all of the Credit Reporting Agencies, as the information contained in the reports may be different for you and your spouse.

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Share and Share-alike

The Credit Reporting Agencies generally maintain the following information about you:

• Identifying information: your name, your current and previous addresses, social security number, telephone number, date of birth, current and previous employers
• Credit history: debt payments made to Creditors
• Public records: judgments, bankruptcies, foreclosures, tax liens, etc
• Inquiries: a list of Creditors and other parties authorized by you and/or by law, which have received your credit report
• Other information: banking information and/or collections

Think of the Credit Reporting Agencies as huge libraries filled with data about you.  They do not verify the information.  They only receive, update, and share their records on you.  It is YOUR responsibility to verify the accuracy of the information, which they hold.  It is the Creditors, NOT the Credit Reporting Agencies, which use this information to determine your credit worthiness.

As a consumer, you do have rights, which protect this information.

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Your Rights

In the US, your rights are protected by:

• the Fair Credit Reporting Act (FCRA) and
• the Consumer Credit Protection Act (CCRA).

There may also be additional rights granted to you at the state level.  When there are contradictions between the FCRA and State law, the law which offers the best consumer protection will take precedence.  To find out more information about your state’s Consumer Protection Offices, check here. These acts are meant to protect YOU, the consumer, and establish rules for Creditors and Credit Reporting Agencies. 

In Canada, at the federal level, the Personal Information Protection and Electronic Documents Act (PIPEDA) outlines requirements for organizations who maintain personal information during the course of business.  In addition, individual provinces may have their own credit report legislation.  There is a list of provincial links available here.

Certain consumer rights are consistent between the US and Canada.  Among them:

• Access to your credit report is limited


• You have the right to know if information has been used against you


• You have the right to know what’s in your file


• You have the right to dispute incomplete or inaccurate information


• Inaccurate information must be deleted or corrected

Obtaining Your Credit Information

Once a year, you should check your Credit Report for accuracy and to guard against Identity Theft.  Since Creditors may report to one or more Credit Reporting Agencies, it is suggested that you request a report from each.  Married couples should each request a separate report from all three agencies, as the information may be different for each spouse.

You can also obtain a copy of the Credit Reporting Agency’s Credit Score for you.  These are not a part of your Credit Report, so must be requested separately (or, in addition to).

In The United States…

In the US, as of September 1, 2005, you may now request one free annual Credit Report, every 12 months, from each of the three major Credit Reporting Agencies.  The three agencies have created a central location for you to obtain these reports.  By law, ONLY www.annualcreditreport.com has been authorized to provide these free reports.  Be leery of any other organization that offers you a “free” Credit Report, as many times there ARE fees.

To get your free annual Credit Report:

• Visit www.annualcreditreport.com,


• Call 1.877.322.8228 or


• Complete the Annual Credit Report Request Form (available from www.annualcreditreport.com) and mail it to:
• Annual Credit Report Request Service
• P. O. Box 105281
• Atlanta, GA 30348-5281

To obtain your Credit Score and / or Credit Reports directly from the Credit Reporting Agencies, you may request them by phone or over the Internet.  There are fees.

You may be exempted from some of the fees, IF you:

• Are unemployed and intend to apply for employment in the next 60 days;


• Are on public welfare assistance;


• Believe your credit file may contain inaccurate information due to fraud;


• Have had an adverse decision (denial of credit, insurance, or employment) within the past 60 days.

The Credit Reporting Agencies are:

• Equifax - 1.800.685.1111


• TransUnion - 1.800.916.8800


• Experian - 1.888.397.3742

Apparently, there is a “new” Credit Reporting Agency.  It differs from the “Big Three” in that it does not sell consumer credit information to lenders, insurers, and potential employers.  Instead, it helps creditors compile mailing lists.  For example, if you have good credit, you are likely to receive many “pre-approved” credit offers.  If you have bad credit, you can count on receiving offers targeted specifically at you. 

• Innovis - 1.800.540.2505

(Please double-check each agency’s website for information required, fees required, and addresses if you are going to request by mail.)

Opting Out of Marketing Lists

While you’re requesting your Credit Reports, you may want to consider opting out of their marketing lists.  In the US, the Credit Reporting Agencies may sell your information to marketing firms.  To “opt out”, you may:

• Go to www.optoutprescreen.com,
• Call 888.5OPTOUT (888.567.8688), or
• Use the Letter to Opt Out of Personal Information Release provided in the Sample Letter Index.

You may also want to contact the Direct Marketing Association to remove your name from their mailing and telephone listings obtained from other sources.  See their site for more details.

 

Obtaining Your Credit Information

Once a year, you should check your Credit Report for accuracy and to guard against Identity Theft.  Since Creditors may report to one or more Credit Reporting Agencies, it is suggested that you request a report from each.  Married couples should each request a separate report from all three agencies, as the information may be different for each spouse.

You can also obtain a copy of the Credit Reporting Agency’s Credit Score for you.  These are not a part of your Credit Report, so must be requested separately (or, in addition to).

In Canada…

In Canada, you may request a copy of your credit report by mail (FREE) or online (FEE) from the major Credit Reporting Agencies.  In addition, you may request your Credit Scores, though there is a fee.

• Equifax Canada, Inc. Consumer Relations Department Box 190 Jean Talon Station Montreal, Quebec H1S 2Z2 1.800.465.7166


• TransUnion Canada TransUnion Consumer Relations Centre P.O. Box 338, LCD 1 Hamilton, ON L8L 7W2 1.800.663.9980 For Quebec Residents: TransUnion (Echo Group) 1 Place Laval Suite 370 Laval, PQ H7N 1A1 1.877.713.3393
• Northern Credit Bureaus, Inc P.O. Box 727 Rouyn - Noranda QC J9X-5C6

(Please double-check each agency’s website for information required, fees required, and addresses if you are going to request by mail.)

Opting Out of Marketing Lists

For Canadians, the only information that I’ve been able to find on “opting out” is to contact the Canadian Marketing Association.  See their site for more details.  Also, you may want to check the Office of the Privacy Commissioner of Canada site.  If you are aware of other options available, please let me know!

from the FTC:

For Release: June 4 , 2004

FTC Issues Final Rule on Free Annual Credit Reports

The Federal Trade Commission has issued its final rule regarding free annual credit reports under the Fair and Accurate Credit Transactions Act (FACTA) and the Fair Credit Reporting Act (FCRA). FACTA, which was enacted on December 4, 2003, amends the FCRA and requires, among other things, that the three nationwide consumer reporting agencies (CRAs) – Equifax, Experian, and Trans Union – provide to consumers, upon request, a free copy of their credit report once every 12 months.

woohoo!  good move by the FTC.  so what does this mean to you?  once a year, you are entitled to a *free* credit report, so you can find out what information has been gathered about you.  eligibility for these free reports is based on the FTC’s rollout schedule:

december 2004: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming

march 2005: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin

june 2005: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, and Texas

september 2005: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, and West Virginia, Puerto Rico, and all U.S. territories.

currently, there are three ways to get these reports:

• online: www.annualcreditreport.com
• by phone: 1-877-322-8228
• by mail: download the request form at www.annualcreditreport.com and mail to:
  Annual Credit Report Request Service
  P.O. Box 105281
  Atlanta, GA 30348-5281
  

please note:  only www.annualcreditreport.com (and experian, transunion and equifax) has been authorized by law to provide these free annual credit reports. be leery of anyone else who states they can do so.

Whether you are in Canada or the United States, when the Credit Reporting Agencies send your credit report, they will furnish you with information on how to read it, since each is slightly different.

You will want to read through the entire report (and its instructions) very carefully. It will contain four basic types of information: personal information, account records, credit inquiries, and public record information. I suggest using a highlighter as you read through your report, highlighting any information that you think needs to be corrected.

Following these guidelines below will help you as you read through your credit report:

PERSONAL INFORMATION

Verify all the “personal information”, such as your name, your date of birth, your address, your social security number (social insurance number in Canada), your employer’s name, your spouse’s name, etc. If the information is not correct, you’ll need to have it updated. Creditors want to see that you are stable; therefore, the longer you have worked in the same place and the longer you have lived at your present address the better. Also, if they have the wrong personal information, this CAN cause you problems later. (If you have been the victim of identity theft, your personal information may be incorrect! If it is incorrect, pay close attention to the next step!)

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ACCOUNT RECORDS and PUBLIC RECORD INFORMATION

Verify the “account records” and “public information” records. Do all of the accounts belong to you? If you have a name like John Smith, don’t be surprised to find Creditors of some OTHER John Smith showing up on your report. If you find items that do not belong to you, try contacting the Creditor directly. If the Creditor doesn’t remove the item, contact the Credit Reporting Agencies and explain that the account is not yours.

In cases of identity theft, where the person has used your information to obtain credit, there may be accounts listed that you know nothing about. In the US, if you believe you are the victim of identity theft, visit the FTC’s “National Resource on Identity Theft”.  In Canada, go to the Privacy Commissioner’s Fact Sheet on Identity Theft.

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Verify that the balances and the credit limits showing on each account are accurate and that any accounts you have previously closed are actually showing as closed. Potential creditors will look at the percentage of your outstanding account balances against your available credit limits and at the percentage of your available credit limits against your income. In both cases, lower percentages will look best. Your available credit limits should not exceed 25% of your income.

For example: You make $30,000 per year, your total available credit limits are $25,000, and your outstanding account balances are only $1,000. While the percentage of your account balances is low compared to your available credit limits, if you actually used all of your available credit, you would be unable to pay all of your bills; therefore, a potential Creditor may hesitate to lend you money.

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Verify the “Date of Last Activity” showing for each account. (The “Date of Last Activity” is usually defined as being a date 30 days after the last payment missed was due.) Outdated items are usually the easiest to get removed.

At times, Creditors may use questionable procedures, which keep a negative item on a credit report. They may change the “Date of Last Activity” or write off the bad debt and then sell it to a collection agency, which then reports the account to the Credit Reporting Agency and extends the time an account is reported. By disputing items you believe to be outdated, you may be able to get these items removed.  See Length of Reporting (For US Residents) or Length of Reporting (For Canadian Residents).

Negative items that are outdated, inaccurate, unable to be verified, or that don’t belong to you MUST BE REMOVED.

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NEGATIVE ITEMS

Look for negative items, such as late payments, collection accounts, charge-offs, bankruptcies, foreclosures, judgments, and delinquent child support. Obviously, these items count against you with a potential Creditor.

Late payments: Check the payment history for each account and verify that this information is correct. If the information is not correct, prove that you were never late by providing canceled checks or payment receipts. The fewer late payments you have, the better your credit rating will be, of course. If the information is correct, but is now outdated, ask the Credit Reporting Agency to remove the late payment information.

Collection accounts: If a Creditor has turned your account over to a Collection Agency, the account should only be listed under the Collection Agency on your report. If the account is listed with both the original Creditor and the Collection Agency, have this corrected. Also, the Collection Agency listing will not always show the original Creditor. Contact the agency to determine the original Creditor. If the collection account is outdated, have this item removed.

Bankruptcies: In the US, if you’ve had a bankruptcy dismissed or discharged over 10 years ago (6 to 7 years ago in Canada), it should not appear on your credit report. If your bankruptcy is more recent, verify that the filing date and the dates of dismissal or discharge are correct.

Judgments: Verify that the judgment actually belongs to you. If you were unaware of it, contact the Courthouse. If the judgment does belong to you and it’s now outdated, have the item removed.

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CREDIT INQUIRIES

There are two types of “credit inquiries”: (1) where you have applied for credit (hard inquiries) and (2) where businesses with a “permissable purpose” have requested your report.  Credit scores are not affected by inquiries not initiated by you (promotional credit offers), inquiries by your employer, or your own requests to view your credit report.

In the US, inquiries initiated by you will remain on your credit report for 2 years.  In Canada, the general rule seems to be that inquiries are purged automatically 3 years from the date of the inquiry, though a minimum of 5 inquiries are kept.

So how do these inquiries affect you? 

If you have a history of declined applications (hard inquiries), it makes you look like a credit risk.

If you have a history of multiple approved applications (hard inquiries), Creditors will look at your ability to repay these loans by comparing your outstanding lines of credit to your income.  The more debt you take on, the more your capacity to repay a loan is diminished.  Of course, if you’ve been shopping for an auto loan, you are apt to have multiple inquiries.  This will not adversely affect your credit score as long as the applications are all done within a few weeks of one another.

Length of Reporting (For US Residents)

The guidelines for what is considered “outdated” are very clearly spelled out in the Fair Credt Reporting Act (FCRA), though it’s important to remember that each state has it’s own laws governing credit reporting.  When there are contradictions between the FCRA and state law, the law which offers the best consumer protection would take precedence.

In general,  the length of reporting periods are:

Bankruptcies: 10 years from the discharge date of the bankruptcy

Civil Suits | Civil Judgements | Dates of Arrest: 7 years or until governing statute of limitations has expired

Collections or “Charged to Profit and Loss” Accounts: 7 years—*Exception: The reporting periods have been lengthened for certain adverse information pertaining to U.S. Government insured or guaranteed student loans, or pertaining to national direct student loans.

Other adverse information, other than convictions of crime: 7 years

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Exemptions to the above rules governing the length of reporting:

1. Credit transactions involving a principal amount of $150,000 or more
2. Underwriting of life insurance involving face amount of $150,000 or more
3. Employment of any individual at an annual salary of $75,000 or more

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Reporting Periods for Collections or “Charged to Profit and Loss” Accounts begins on the expiration of 180 days from the date of the delinquency immediately preceding the collection activity, charge to profit and loss, or similar action.

These rules only apply to items of information added to the file of a consumer on or after the date that is 455 days after the date of enactment of the Consumer Credit Reporting Reform Act of 1996.  (Prior to 1997 any account activity could extend the reporting period so creditors and collectors took advantage of this loophole to keep negative items on a consumer’s report for many years.—source, Carreon and Associates)

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OMG. PANIC ATTACK FORTHCOMING!!

You’ve obtained your credit report and read through it, noting what items can be disputed, etc, so you may be feeling discouraged or, as it was in my case, COMPLETELY PANICKED.  Stop for a second.  Take a deep breath.  DON’T GIVE UP HOPE YET!  The next step will walk you through disputing the entries on your report.  It CAN be done.  Just remember to be patient.  We didn’t get ourselves into this mess in a day, so it will take time to straighten it all back out.  BUT.  It can be done.  And that’s the most important thing!

So continue on to Step Three: Disputing Entries on Your Credit Report and remember, you are not alone.  I’m with you every step of the way!

 

Length of Reporting (For Canadian Residents)

Canadians, your laws are a bit tricky, as you seem to have no federal guidelines, but leave it up to the individual provinces instead. The following chart comes from the Financial Consumer Agency of Canada and shows the reporting periods followed by TransUnion and Equifax by province.

Please make note of the fact that each Credit Reporting Agency seems to have somewhat different guidelines and defintions on reporting periods.

TransUnion	BC	AB	SK	MB	ON	QC	NB	NS	PEI	NL	Terr.
	(Years)
Credit transactions (trades) (from the date of last activity or the date opened)	6	6	6	6	6	6	6	6	6	6	6
Judgments (from the reporting date)	6	6	6	6	7	7	7	6	10	7	6
Collections (from the reporting date)	6	6	6	6	6	6	6	6	6	6	6
Secured loans (registered items) (from the date opened)	5	5	5	5	5	5	5	5	5	5	5
Bankruptcy (from the discharge or reporting date)	6	6	6	6	7	7	7	6	7	7	6
Registered consumer proposal, Orderly payment of debts (from the date satisfied or reported, whichever comes first)	3	3	3	3	3	3	3	3	3	3	3
Credit counseling (from the date satisfied or reported, whichever comes first)	2	2	2	2	2	2	2	2	2	2	2
	BC	AB	SK	MB	ON	QC	NB	NS	PEI	NL	Terr.

Equifax	BC	AB	SK	MB	ON	QC	NB	NS	PEI	NL	Terr.
	(Years)
Credit transactions (trades) (from the date of last activity)	6	6	6	6	6	6	6	6	6	6	6
Judgments (from the date satisfied or deposit)	6	6	6	6	6	6	6	6	7 to 10	6	6
Collection (from the date of last activity)	6	6	6	6	6	6	6	6	6	6	6
Secured loans (registered items) (from the filing date)	6	6	6	6	6	6	6	6	6	6	6
Bankruptcy (from the discharge date)	6	6	6	6	6	6	6	6	6	6	6
Registered consumer proposal, orderly payment of debts (from the date paid)	3	3	3	3	3	3	3	3	3	3	3
Credit counseling (from the date paid)	3	3	3	3	3	3	3	3	3	3	3
	BC	AB	SK	MB	ON	QC	NB	NS	PEI	NL	Terr.

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OMG. PANIC ATTACK FORTHCOMING!!

You've obtained your credit report and read through it, noting what items can be disputed, etc, so you may be feeling discouraged or, as it was in my case, COMPLETELY PANICKED. Stop for a second. Take a deep breath. DON'T GIVE UP HOPE YET! The next step will walk you through disputing the entries on your report. It CAN be done. Just remember to be patient. We didn't get ourselves into this mess in a day, so it will take time to straighten it all back out. BUT. It can be done. And that's the most important thing!

So continue on to Step Three: Disputing Entries on Your Credit Report and remember, you are not alone. I'm with you every step of the way!

You’ve ordered and received your credit report, verified the information on it and identified items to be disputed…

I suggest that you dispute all NEGATIVE items.  (Don’t dispute an outdated POSITIVE item. I did that once. It was removed and I felt like an idiot later.) 

There are several methods you can use: (1) dispute items with the Credit Reporting Agencies, (2) dispute items with the Creditors, (3) negotiate with your Creditors, (4) file segregation (do NOT use.  illegal.), and (5) a statement to be included with your credit report. 

Choose the method that best fits your situation.

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1: Disputing Items With the Credit Bureaus

When you write to the Credit Reporting Agencies, include the following information: your credit report file number, social security number, date of birth, current address, company name of the disputed item, account number of the disputed item, reason for your dispute and any corrections to your personal information.  In most cases, you can dispute your credit report online, by mail, or by phone (not suggested).  I have included sample letters to be used when disputing credit report entries; however some Credit Reporting Agencies may also include a form with your credit report.  You can use either method.  I found that using my own letters was easiest, so that I didn’t have to write everything out more than once.

Keep a file for each Credit Reporting Agency and an accurate record of all correspondence with them.  Track the dates you send letters and the dates you receive responses.  If you speak to someone over the phone, record the time and date and the person’s name, along with any information covered during the phone call.

Once the Credit Reporting Agencies have received your dispute, they will flag the disputed items. The flag will usually stay on your file for 60 days after the investigation is completed. You will be notified of the results of the investigation and be sent a copy of your updated credit report. If you again dispute the item without waiting the 60 days for the flag to be removed, the Credit Reporting Agency MAY reject your dispute and mark it as frivolous.

If you do not agree with the results of the Credit Reporting Agency’s initial investigation, wait 60 days and send a follow up letter. You’ll also want to send a follow-up letter if you have not received a response from the Credit Reporting Agency.

When dealing with the Credit Reporting Agencies, do not allow a refusal to remove or correct an item that you know is inaccurate to intimidate you. As a consumer, you have rights under the Fair Credit Reporting Act (FCRA) and the Personal Information Protection and Electronic Documents Act (PIPEDA) in Canada.

Be persistent. Note, however, the Credit Reporting Agencies will NOT investigate items that they feel are frivolous, so don’t overburden them with disputes.  (Meaning: Don’t send 20 copies of the same disputes to the same Credit Reporting Agencies. It won’t do any good and it may make them angry.)

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2: Disputing Items With Creditors

In some cases, your best bet may not be to contact the Credit Bureau first:

Late payments: If you can prove, with canceled checks or payment receipts, that you were never late on the account, send the Creditor a certified letter with copies (NOT originals) of your proof and ask that they review your payment history and send you a copy. Hopefully, this will suffice and they’ll correct your credit report. If they don’t, send a letter to the Credit Reporting Agency disputing the late payment and provide copies of the letter you sent to the Creditor, the payment history (if they sent it to you) and the proof of your payments. If the Credit Reporting Agency can verify that you weren’t late, they’ll remove the negative item from your report.

Bankruptcies: If your bankruptcy information is inaccurate, mail a certified letter to your Bankruptcy Trustee requesting that the information be corrected on your credit report.

Collection accounts: If you have multiple items on your report for an account in collections (for example, both the original Creditor and the collection agency), mail a certified letter to the original Creditor and ask that their item be removed since the account was placed with a collection agency. If they don’t respond, send a letter to the Credit Reporting Agency.

If you’ve disputed a negative item with the Credit Reporting Agencies which was NOT accurate, but they’ve not changed or removed it (similar to the “Late Payments” section above), go directly to the Creditor and ask for the information being used to support the negative item on your credit report. If they don’t respond within a reasonable amount of time, send a letter demanding that the negative rating be removed.

When you contact the Creditor, identify yourself and the account in question. Hold them responsible for the incorrect rating. Inform them that you will contact an attorney if the matter is not resolved. Send the letter to either the Credit Manager, the President of the Company, or both, or anyone you feel would be able to correct the item.

See the Sample Letter Index!

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3. Negotiating with your Creditors

What if negative items on your credit report ARE accurate? Sometimes you can negotiate with your Creditor to get the negative rating removed.

There are two methods you can use: consulting with a professional such as Consumer Credit Counseling Services, or negotiating on your own. (Consumer Credit Counseling Services is free. You can visit them at www.cccsintl.org, or call 1-800-873-2227.) There is some debate over which method is the best way to negotiate accurate negative items appearing on your credit report. When using Consumer Credit Counseling Services, your accounts may be listed with a rating of “in consumer credit counseling”. Since your goal is to improve your credit, this may not be the best route to take, since Creditors may consider this a negative rating. HOWEVER, some people need the structure that CCCS can give, so decide which is best for you.

If you decide to negotiate on your own, the best time to do so is when your account is in the last stages of collection. By this time, the Creditor has generally given up any hopes of ever collecting the full amount and may be more willing to negotiate.

When you call the Creditor to begin negotiating, remember that you got yourself into this predicament (for whatever reasons). Be honest and polite with the Creditors. Let them know you are trying to re-establish your credit and return to the “good credit” path. Offer some type of repayment plan to the Creditor, preferably a lump sum, not a monthly installment, as a complete settlement of your debt. Realistically, you should expect to pay anywhere from 60% or more in order to clear the debt and its negative rating. The smaller your balance is, the more you can expect to pay.

As with any negotiation, start with a lower amount than what you want to repay (unless your balance was small to begin with); however, don’t start too low or the Creditor won’t take you seriously. Also, make sure you are negotiating with someone who has the power to agree to a settlement. Ask them. They need to understand up front that your only motivation in working out an agreement is to re-establish your credit. Settle for nothing less than a neutral rating or non-rated account.

Once you have reached a verbal agreement, send a written copy of the settlement agreement to the Creditor. Request that they sign it and return a copy to you. Upon your receipt of the signed agreement, send your check to the Creditor. Write “Paid in Full” on your check. After 30 days, order your credit report. If the item has not been changed or removed per the agreement, send a follow-up letter to remind the Creditor of the agreement. The Creditor can be sued for breach of contract if they do not abide by the agreement.

See the Sample Letter Index for a sample “Settlement Agreement”!

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4. File Segregation

File Segregation is a method touted by some “Credit Counselors” as a way to improve your credit. Do NOT attempt this method. It IS illegal. Be wary of anyone who attempts to sell you this type of information. You want to improve your credit rating, not go to jail.

Typically, these “Credit Counselors” will tell you to apply for an EIN - Employer Identification Number - and to use this in place of your Social Security Number on any credit applications.  It is a crime to misrepresent information on your credit applications and you can face stiff penalties for doing so.

For further information on File Segregation and your rights, if you’ve been approached by one of these “Credit Counselors”, please see the Federal Trade Commission’s publication: ‘File Segregation’: New ID Is a Bad IDea.

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5. A Consumer Statement

You may write up to a 100-word statement, explaining the reasons for a negative item. This can be useful when the amount of debt is small or when your credit report has only one negative item and several that are positive. Your statement should be concise and to the point.

A sample “Consumer Statement” has been provided in the Sample Letter Index!

Disputing Credit Entries - Contact Information (For US Residents)

Credit Bureau	Online	Mail	Phone	Email
EQUIFAX:	Available	Equifax Information Services LLC P.O. Box 740256 Atlanta, GA 30374	N/A	N/A
TRANSUNION:	Available	By Mail	800-916-8800 Monday through Friday, 8:30 a.m. to 4:30 p.m.	N/A
EXPERIAN:	Available	Experian National Consumer Assistance P.O. Box 2104 Allen, TX 75013	N/A	N/A

See the Sample Letter Index!

Disputing Credit Entries - Contact Information (For Canadian Residents)

Credit Bureau	Online	Mail	Phone	Email
EQUIFAX:	N/A	Equifax Canada Inc. Consumer Relations Department Box 190 Jean Talon Station Montreal, Quebec H1S 2Z2	1 800 465 7166 8:00am and 5:00pm ET	Available
TRANSUNION:	Available	TransUnion P.O. Box338, LCD1 Hamilton, Ontario L8L 7W2 (Provinces Other than Quebec) TransUnion 1 Place Laval Ouest Suite 370 Laval, Quebec H7N 1A1 (For Quebec Residents)	N/A	N/A

See the Sample Letter Index!

Okay, you’ve begun to get your credit reports cleaned up, so you can now begin re-establishing your credit. You need “positive” ratings on your report! There are several ways to accomplish this…

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1. Open a checking and savings account. You’ll need to have these when applying for credit.

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2. Apply for a “secured” credit card. With a secured credit card, you deposit money with the credit card issuer to be held as a guarantee.

For example: You deposit $300.00. The credit card issuer will open a “savings” account with your $300.00 and in turn, give you a credit card with a $300.00 limit. You’ll make payments, etc., just as with a regular credit card; however, in the event that you do NOT make your payments, the credit card issuer will use your $300.00 to pay off your balance.

Note: Always make sure before applying for a “secured” credit card that the credit card issuer will report to all three credit card bureaus. If they don’t report to the bureaus, you’ve not done yourself any favors.

Also, some “secured” credit card companies will allow you to convert your account from “secured” to “unsecured” after a period of time (generally, 1-3 years). This means that they will refund the amount you secured the card with and often with interest, too!

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3. Lenders seem to prefer a ratio of less than 25% owing versus your available credit, so try having your limit raised…IF you have made your payments on time and have a good payment history with the Creditor. (Be careful: you do not want the percentage of your available credit to your income to be too high.)

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4. Close unused credit accounts. You don’t want potential Creditors to think your available amounts of credit exceed your ability to pay them. If you’re not using the account, close it.

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5. Apply for department store credit cards. Don’t attempt this, of course, until you’ve managed to remove most of the negative items on your credit report. Once you receive a new department store card, go out and charge on it, but MAKE YOUR PAYMENTS ON TIME (*ahem*). Do not charge to the maximum limit available. I charged about one third of my limit, paid that amount within a three-month period, then charged again and repeated the process. You need to be able to afford the amount you’re charging, though!

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In the end, re-establishing your credit rating boils down to patience. Lots of it. Send your letters, wait for responses, and send more letters if necessary. (If things get removed after the first letters…it feels WONDERFUL.) It takes time to improve your credit rating, but in the long run, you’ll be better off for it.

I wish you the best of luck and hope that my site has proved to be a valuable tool in your effort to improve your credit rating!

If you have further questions on credit repair, please read through the FAQ section of our forums!  Also, you may want to move on to “Credit Scores”, as these are what determines your “credit-worthiness”.

—arin

Credit Freezes will be available to all consumers by November 1st, whether or not they have been victims of Identity Theft.

from bankrate:

Consumers in all 50 states already have the right to place a fraud alert, regardless of whether they are victims of ID theft. The fraud alert lasts for 90 days and alerts new creditors and other businesses checking the creditworthiness of an applicant that the consumer may be a victim of fraud.

While the fraud alert merely asks the lender to take additional precautions, a credit or security freeze prevents third parties from receiving a copy of the consumer’s credit report or credit score, making businesses less likely to grant credit or services to the applicant. Only businesses with a permissible purpose, or for whom the consumer lifts the freeze may obtain the consumer’s credit information.

 

—With TransUnion, you may do so by mail.  To remove the freeze permanently, you must do so in writing.  The credit freeze remains in effect until you remove it permanently in writing.  You will receive a PIN, so that you may lift the freeze temporarily by writing or calling.

—With Experian, you may do so by mail.  To remove the freeze permanently, you must do so in writing.  The credit freeze remains in effect until you remove it permanently in writing.  You will receive a PIN, so that you may lift the freeze temporarily by writing or calling or instantly online.

—With Equifax (their plan has not yet been finalized),  you may do so by mail.  You may permanently remove or lift the freeze temporarily by calling the toll-free number provided to you.

All credit freezes will remain in effect until you remove it permanently or lift it temporarily, except in Kentucky, Nebraska, Pennsylvania, Rhode Island and South Dakota, where it expires after seven years.

Fees to add or remove a credit freeze will vary, so please check with each.

Is it possible to have too many credit inquiries showing on your report and, if so, can you have them removed?

The inquiry section contains a list of businesses that have received your credit report within the past 24 months. This can look bad to a potential Creditor. They may believe that you’ve received these lines of credit and the accounts have just not appeared on your credit reports yet. If they believe that you have overextended yourself, you can find yourself being denied credit, due to the inquiries.

I’ve never had this occur (which doesn’t mean it can’t). Be careful when soliciting credit lines. If you’re interested in buying a new car, don’t let every dealership in town request your credit report. Shop around, settle on the car you’re interested in, and THEN let them run your credit. Treat your credit report as a very special, private thing that is NOT meant to be seen by everyone in the world! Practice safe-crediting! smile

Most potential Creditors disregard inquiries over 6 months old, since by that time, the account should have appeared on your report, if you really did receive the credit.

I was told that my letters to the Credit Bureaus must contain the specific law that required them to remove disputed items that cannot be verified. Your letters do not state the laws in them. Do you know if this is necessary?

My letters refer to the Fair Credit Reporting Act, which is enforced by the Federal Trade Commission. To my knowledge, this would be the only law that would need to be referred to. Laws in other states may be different, but, in Texas, this seems to have been sufficient.

I am trying to buy a house and I have a bankruptcy and an item in collections. Is it possible to clear that up?

Negative items that are outdated (7 years for negative items, 10 years for bankruptcies), inaccurate, unable to be verified, or that don’t belong to you MUST BE REMOVED, according to the Fair Credit Reporting Act. Unless your bankruptcy, or collection item, is outdated, or somehow inaccurate, the items cannot be removed.

In Understanding Your Credit Reports, you stated negative entries should only remain on your credit report for 7 years from “date of last activity” (or 10 years, in the case of a bankruptcy). What exactly is the meaning of “date of last activity”? Is there a legal definition for this? If an account goes from onecollection agency to another to another does all that time count as “date of last activity”?

Okay, I went to Experian to see what their definition was and this is what I found: “The original delinquency date is the date you first missed a payment - the original date the account became late - and after which you never again brought the account current.” This would be the “date of last activity”.

http://www.experian.com/ask_max/max120402a.html

Also, I found the following at another site, though I’m not sure of its validity: “Re-aging of debts is strictly illegal and is more than sufficient grounds for filing of a lawsuit. The DLA is defined by Congress as being a date 30 days after the last payment missed was due.”

What should a bankruptcy look like on a credit report? I have some entries, which show as “included in a bankruptcy”, and others, which were also included in the bankruptcy, that show notations for 30/60/90 days late and account balances.

Okay, I’ve never filed a bankruptcy (knock on wood), so I’ve never actually seen one listed on a credit report. I did a bit of hunting and found a site called “411 Bankruptcy”, which states: “After the discharge, you are entitled underfederal law to have the balance of each discharged debt reported as zero. The history of delinquencies can be reported, but the balance must be zero. If it is not so reported, dispute the debt.”

https://www.411bankruptcy.com/creditrepair.asp

Note: I know very little about bankruptcies, but I believe the key here may be the discharge of the bankruptcy.

I’ve researched one of the Creditors listed on my report and they don’t seem to exist. Is this good or bad?

Creditors must be able to verify the item in question. If the Creditor no longer exists, then there is no way for them to prove the negative information provided to the Credit Bureaus and the item will be removed. (Yay!)

Do I need to send a separate letter to each Credit Reporting Agency?

Yes. You should tailor a letter for each Credit Reporting Agency and the items which appear on each report they have provided.

The Credit Bureaus provided a form for disputing entries with my credit report. Should I use it?

You can use their form. I choose not to, because it’s easier for me to type everything in one letter. Plus, by writing your own letter, you’ll have more space to say what you need to say.

Can I dispute everything in one letter or should I put each dispute in a separate letter?

As far as I know, there is no reason you should not dispute all negative entries in one letter. For example, you have 3 outdated entries and 2 incorrect entries. Write one letter disputing all 5 entries. If you’d prefer to write 2 letters, one for the outdated entries and one for the incorrect, you can do that, too.

When corresponding with the Credit Bureaus, how much information should I provide?

The rule of thumb is to make the Credit Bureaus responsible for verifying credit entries; therefore, you don’t want to confirm negative entries for them. If you’ve been the victim of identity theft, though, you’ll want to tell them EVERYTHING. Use common sense.