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Fixing your
Credit
Before
you fix your credit you will need to get a credit report. There
are many online companies which provide this service for a fee.
The best we have found is
ConsumerInfo.com
Under the law, both the CRA
(Credit Reporting Agency) and the organization that provided the information
to the CRA, such as a bank or credit card company, have responsibilities
for correcting inaccurate or incomplete information in your report. To
protect all your rights under the law, contact both the CRA and the information
provider if you have a dispute.
- First, tell the CRA in writing
what information you believe is inaccurate. Include copies (not originals)
of documents that support your position. In addition to providing your
complete name and address, your letter should clearly identify each
item in your report you dispute, state the facts and explain why you
dispute the information, and request deletion or correction. You may
want to enclose a copy of your report with the items in question circled.
Your letter may look something like the one below. Send your letter
by certified mail, return receipt requested, so you can document what
the CRA received. Keep copies of your dispute letter and enclosures.
-
CRAs must reinvestigate the item(s)
in question—usually within 30 days—unless they consider your dispute
frivolous. They also must forward all relevant data you provide about
the dispute to the information provider. After the information provider
receives notice of a dispute from the CRA, it must investigate, review
all relevant information provided by the CRA, and report the results
to the CRA. If the information provider finds the disputed information
to be inaccurate, it must notify all nationwide CRAs so that they
can correct this information in your file.
-
Disputed information that cannot
be verified must be deleted from your file.
-
If your report contains inaccurate
information, the CRA must correct it.
-
If an item is incomplete, the
CRA must complete it. For example, if your file showed that you
were late making payments, but failed to show that you were no
longer delinquent, the CRA must show that your payments are now
current.
- If your file shows an account that belongs
only to another person, the CRA must delete it.
-
When the reinvestigation is complete,
the CRA must give you the written results and a free copy of your
report if the dispute results in a change. If an item is changed or
removed, the CRA cannot put the disputed information back in your
file unless the information provider verifies its accuracy and completeness,
and the CRA gives you a written notice of its intent to reinsert the
items that includes the name, address, and phone number of the provider.
-
If you request, the CRA must send
notices of any correction to anyone who received your report in the
past six months. You can have a corrected copy of your report sent
to anyone who received a copy during the past two years for employment
purposes. If a reinvestigation does not resolve your dispute, ask
the CRA to include your statement of the dispute in your file and
in future reports.
- In addition to writing to the CRA, you should tell
the creditor or other information provider in writing that you dispute
an item. Be sure to include copies (not originals) of documents that
support your position. Many providers specify an address for disputes.
If the provider continues to report the disputed item to any CRA after
receiving your notice, it must include a notice that you dispute the
item. If you are correct—that is, if the information is not
accurate—the information provider may not report it
again.
Accurate Negative Information
When negative information in your
report is accurate, only the passage of time can assure its removal. Accurate
negative information generally can stay on your report for seven years.
There are certain exceptions:
- Bankruptcy information may be reported for 10 years.
- Credit information reported in response to an application
for a job with a salary of more than $75,000 has no time limit.
- Information about criminal convictions has no time
limit.
- Credit information reported because of an application
for more than $150,000 worth of credit or life insurance has no time
limit.
- Default information concerning U.S. Government
insured or guaranteed student loans can be reported for seven years
after certain guarantor actions.
- Information about a lawsuit or an unpaid judgment
against you can be reported for seven years or until the statute of
limitations runs out, whichever is longer.
Seven-year Reporting Period
There is a standard method for calculating
the seven-year reporting period. Generally, the period runs from the date
that the event took place.
With regard to any delinquent
account placed for collection—internally or by referral to a third-party
debt collector, whichever is earlier—charged to profit and loss, or subjected
to any similar action, the seven-year period is calculated from the date
of the delinquency that occurred immediately before the collection activity,
charge to profit and loss, or similar action. For example, assume that
your payments on a loan were late in January, but that you caught up in
February. You were late again in May, but caught up in July. You were
again late in September, but did not catch up before the account was turned
over to a collection agency in December. You made no more payments on
the account, and it is charged to profit and loss in July of the following
year.
Under the FCRA (Federal Credit
Reporting Act), the January and May late payments each can be reported
for seven years. The collection activity and the charge to profit and
loss can be reported for seven years from the date of the September payment,
which was the delinquency that occurred immediately before those activities.
Adding Accounts to Your
File
Your credit file may not reflect
all your credit accounts. Although most national department store and
all-purpose bank credit card accounts will be included in your file, not
all creditors supply information to CRAs: Some travel, entertainment,
gasoline card companies, local retailers, and credit unions are among
those creditors that don't.
If you've been told that
you were denied credit because of an "insufficient credit file"
or "no credit file" and you have accounts with creditors that
don't appear in your credit file, ask the CRA to add this information
to future reports. Although they are not required to do so, many CRAs
will add verifiable accounts for a fee. However, understand that if these
creditors do not report to the CRA on a regular basis, the added items
will not be updated in your file.
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