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Credit Repair
Increases Your Chances Of Getting A Loan
Anytime
you apply for a loan with any type of lending institution your credit report comes
into the picture. This report is an overview of your credit history that contains
past and current accounts, payment history, and balances. The credit report is
a primary tool used by lenders to determine the level of risk they take when extending
you credit. For
many people, the credit report is just a formality. But for over 65% of the population,
it can mean the decline of their loan application. Why? Because their report shows
negative, misleading or inaccurate entries. Viewing
Your Credit Report Practically
no one reviews their credit report as often as they should. If you have not read
yours within the last year, it is strongly advised that you do so now. Simply
contact your local credit bureau, and request that a copy of your credit report
be mailed to you. You can find agencies in the yellow pages of your local phonebook
listed under "credit bureau." There is normally a small charge for generating
and mailing you the report. Once
you receive the document, review it carefully. Look for negative, misleading,
or inaccurate information. If you find entries like these, you have the full right
to dispute them and have them corrected or removed. Repairing
Your Credit The
process of changing your credit history is often referred to as "credit repair."
To start, write a letter to the credit bureau stating one discrepancy in your
report. (Your credit-reporting agency will correct only ONE item at a time.) Request
that they investigate the entry and provide you with proof of its accuracy. Do
the same with each additional incorrect or negative item. Should
the bureau not be able to prove that the entry is accurate, it will be removed
from your report. Likewise, if the agency is unable to prove the entry within
a "reasonable" amount of time, it will be removed. Because
these agencies are extremely busy, it is always wise to correspond with credit
bureaus via registered mail, return receipt requested. This service is available
from your local post office. In
addition to repairing actual entries to your report, you can also improve it by:
maintaining your employment and residence status for at least TWO
years.
not carrying your credit card balances near, at, or over the
credit limit.
paying your minimum payments on time and in full, as required by
your monthly statement.
Each
of these actions proves stability - something lenders specifically look for on
all applications. Often
times, your credit report can be greatly improved simply by disputing items that
are misrepresented or misleading. With a little attention and legwork, you might
be able to significantly increase your chances of getting a loan.
What does the law say
about repairing your credit?
As the credit bureaus computerized their processes and greatly expanded
their reach and influence in the late 1960s and early 1970s, consumer
complaints began to pile up at the FTC and state attorney generals' offices.
The credit reporting agencies quickly became huge bureaucracies second only in
size to the federal government. Yet, the credit bureaus expressly served only
the needs of their clients, the credit grantors.
Many consumers were
negatively effected by the credit bureaus, but they had no way to correct or
change their credit information. The American consumer lay completely at the
mercy of the credit bureaus. The United States Congress enacted the Fair
Credit Reporting Act (FCRA) in 1971 to insure that the credit bureaus
investigate the credit items disputed by consumers. This federal law set
procedural guidelines which gave the consumer the right to challenge the
accuracy, validity, and verifiability of the credit listings appearing in
their consumer credit report. It also required that the credit bureau repair
any credit listing if it was inaccurate or could not be verified.
In theory, the FCRA charges
the credit bureaus with responsibility to the consumer as well as the credit
grantor. In reality, the credit bureaus resist, resent, and reject consumer
disputes. The credit bureaus would rather be left alone to make a profit. And,
each time a consumer challenges his credit, profit is lost. The credit bureaus
first defend their profits by erecting walls of stall tactics, including
requests for more information, further clarification, and additional
identification. The vast majority of consumers give up before they even
receive copies of their credit reports. If a consumer manages to get a credit
report, decipher the codified information, write a coherent dispute, and mail
it, the bureaus may still find some reason to disregard the challenge. The
entire dispute system is designed to frustrate and discourage the consumer.
Many consumers have the
idea that the credit bureaus must complete their investigation within thirty
days or be forced to remove all disputed information. They threaten to sue the
credit bureaus if they don't conclude their investigation in time and repair
their credit. In practice, such thinking is delusional. Nobody forces the
credit bureaus to do anything. However, if you manage to submit a valid
dispute letter, and the credit bureau investigates your dispute, the chances
of success are good - whether or not the negative listings are accurate!
Accuracy actually has little to do with the deletion of negative items. If a
credit bureau cannot verify an item before completing its investigation, that
item will be removed. Many creditor grantors are simply reluctant to take the
time to verify the data. While the credit bureaus may be in the business of
reporting credit histories, creditor grantors are not.
How long do the credit
bureaus have to respond to a dispute letter when credit repair is attempted?
Under the most recent version of the Fair Credit Reporting Act, the credit
bureaus must complete a reinvestigation within 30 days of receiving a dispute
letter from the consumer. However, the credit bureau still has the right to
consider a dispute letter "frivolous and irrelevant" at their own discretion,
if they feel that someone is attempting credit repair. While the credit
bureaus are careful not to overuse this privilege, they may deem virtually any
dispute frivolous or irrelevant without having to justify their decision or
point to credit repair methods. Learn how to get the credit repair companies
to take positive action on your dispute. While the credit bureau is required
to complete their reinvestigation in 30 days or less, the consumer has little
recourse against them if they don't.
Many consumers assume that
the credit bureau must repair all disputed credit if the investigation isn't
completed within the required time. This is not the case. The credit bureau
may take as long as it likes to repair the credit. The only real recourse a
consumer might have would be to gather a class-action lawsuit to penalize the
bureau for taking too long. At Trans Union, for example, it is common practice
to receive the credit repair dispute letter, take a week or two to process it,
then send the consumer a letter saying that the reinvestigation will begin on
the date that the credit repair dispute was finally processed. This often
gives them a total of six weeks from the date of receipt of the dispute to
complete the reinvestigation. |
