what you need to know.
There are no secrets to repairing your
credit. Negative items can be removed from your credit report and you can do
it yourself. One does not necessarily need a credit repair “expert” or “law
firm” to do it either. While the credit world can seem complex to the
average individual, the basics are really simple once you know them.
Fact: You CAN remove negative items from your credit report.
According to the Fair Credit Reporting Act, you have the legal right to
dispute any piece of information with a credit bureau. Upon doing so, the
credit bureau then has 30 calendar days to investigate the item(s). After
that time, the credit bureau will either update the item as you request or
leave it alone if they proved it was correct to begin with. If you submit
additional information on the dispute during the 30 days, the credit bureau
is allowed to take an additional 15 days. Disputes can be submitted online
at the credit bureau’s site or simply sent via postal mail. Disputes sent in
based on the free credit report now provided under Fair and Accurate Credit
Transactions Act are given 45 days to resolve.
Myth: Collection agencies can call you anytime and do as they please.
To stop collection agencies from calling you, simply send them a cease and
desist letter stating they are only allowed to contact you via postal mail.
This ability is afforded you via the Fair Debt Collection Practices Act.
Collection agencies have a series of actions they must do to be in
compliance. You would be surprised at just how many FCRA and FDCPA
violations are committed on a daily basis by many collection agencies. Never
speak with a collection agency over the phone. Conducting discussions via
written form is best because you have proof.
Fact: Paying a collection account will not improve your score.
As far as credit scores go, a paid collection account is the same as an
unpaid one. Your official credit score is called a FICO score. It takes into
account many things such as:
• Age of overall credit file.
• Number of accounts in good standing.
• Number of accounts delinquent.
• Negative items: liens, bankruptcies, repossessions, etc.
• Time since the negative item was created.
• Amount of your credit being used (utilization).
• New account under six months old (which hurt your credit).
• Number of hard inquiries.
Typically, mortgage lenders will require delinquent accounts be cured, but
this won’t improve your score.
Myth: You must pay any bill that comes to your home from a collection
Under the law you have the right to challenge the legitimacy of any bill
sent to you—it is called validation. By sending a validation letter to a
collection agency they must, by law, cease all collection activities until
they can validate the debt. It is important to note the word is validation
and not verification which mean two entirely different things. Validation
means they must submit to you proof the bill is yours, which is not simply
an invoice sent to you. Until that is properly done, they can not report the
item on your credit report, ask you for money or do anything which can be
deemed further collection activity. Do they anyway? Yes they do. This is why
it is important to know the law, which is on your side.
It is vital that you check your credit report often as most individuals have
erroneous data in them. Don’t assume that everything will work as it should
because it almost never does. No one will be looking out for your credit
identity but you. Credit standing has never been more necessary than it is
today. Just about everything we do in life from applying for a job to
booking a hotel room has something to do with our credit worthiness.
How To Repair Your Credit Report
A credit report is run on a buyer when he or she needs to buy something that
will take a long-term loan, such as an automobile or a house. The credit
report can come from one of three agencies – Equifax, Experian, or Trans
Union. Each of these three agencies uses their own techniques of arriving at
a credit score and receiving credit information, so attention should be paid
to all three. A credit report score can go up to 800, and an increase of 50
points is a big one, enabling borrowers to get loans they previously were
denied, and getting loans at much better interest rates. A 1% drop in an
interest rate on a $150,000 house, for instance, may drop a payment by over
$100 a month, saving the borrower over $35,000 over the life of the 30-year
Each of these credit agencies have taken all the financial information they
can find about you and tabulated a credit score from those results.
Information will include your current and previous home addresses and
employers, the credit cards and loans you have, and any late payments made
over the last ten years. These agencies’ credit reports will be very
similar, but there will be differences, as they all make mistakes, and the
banks and credit card companies giving them the information make mistakes,
Here’s where you can improve your credit score. Any request for a change in
information in a credit report must be answered and corrected within 30 days
because federal law regulates the credit bureaus. If you write in to a
credit bureau complaining that one of the late payments on your credit
report is wrong, they must investigate and correct the information within
the 30 days, or delete the information. Because this deadline is very
difficult to make, often the late payment report is simply deleted off of
the credit report.
This procedure is very slow and time-consuming, and you can either do it
yourself or hire an agency to do it for you. Each letter should only request
one change, otherwise the credit bureau will usually declare the request to
be frivolous and thus they are not required to do anything. Each letter
should be written to all three credit reporting agencies. These agencies,
Equifax, Experian, and Trans Union, all have PO boxes specifically set up
for complaints, but they change the PO Boxes often to make it difficult for
customers to find. Every month you, or the agency you have hired, should
send out another letter referring to a different mistake in your credit
report. After several months, your credit report will show many fewer late
payments, perhaps even none, and your credit score will have improved