The credit reporting industry has gone through tremendous changes in recent years. Most of these changes are the result of pressure brought to bare on the industry by Congress and public interest groups. Needles to say, these groups felt that the consumer wasn't getting a fair shake when it came to credit reporting and the effects of it. And rightly so with a history replete with stories of incorrect negative information on the credit files of unsuspecting citizens un-removed information and an industry that turned a deaf ear to outraged individuals.
This information deals with some of the more important changes in the credit industry and is directed at equipping you with the necessary knowledge of how the industry works, how to effectively get the system to work for you as a consumer and to prepare you with the facts that can turn a request for credit to a gratifying experience.
This article is not designed to encourage any illegal activity on the part of anyone reading it. This must be stated up front because there are so many unscrupulous peddlers of mayhem out there who are only to quick to take your money while providing inadequate information of the illegal sort.
It is really simple. It is not possible to get a completely new credit file overnight without doing it illegally. Anyone who says it is, is lying. The principals laid down in this article are built upon the foundation of solid information known by the insiders of the industry and unfortunately, little know or understood by the average consumer.
Credit is a important asset for personal financial management and a necessary tool for business growth. It is imperative that every citizen knows the inner workings of an industry that has such a profound affect on all our lives. It is to this end that this article is designed.
Silence is never golden when it comes to your credit report. And just because you ignore it doesn't mean it will go away or heal itself. You have to be engaged, plugged in, in control and informed to maximize your ability to change it for the better.
That process begins with you getting a copy of your credit file from the agencies that are oh so willing to give it out to everyone else it seems. This is a simple process that can be accomplished as easily as writing a letter and requesting it. First figure out who has it. If you're like most people it probably can be found at one and probably all three of the "Big Three" credit reporting agencies. They are Equifax, Experian and TransUnion. There are several smaller local credit reporting agencies but most are connected with the Big Three.
The cost of your credit report is zero. You are entitled for a free report per year by law. They will give it to you if you ask for it. Here is their website and address of the Big Three.
Experian www.experian.com
Experian National Consumer Assistance Center
P.O. Box 2104
Allen, TX 75013-2104
Equifax www.equifax.com
Equifax Information Service Center
P.O. Box 740241
Atlanta, Georgia 30374-0241
TransUnion www.transunion.com
TransUnion Corporation
Consumer Disclosure Center
P.O. Box 390
Springfield, PA 19064-0390
The letter of request must include some necessary information or they won't give you the file. They will want your full name including your middle name and be sure to include Jr. and Sr. and so forth when applicable. Also include your date of birth, SSN, current address and former address if you've not been at your current address for at least five years. TRW wants a list of your full addresses for the past five years. Include your spouses name if you're married and your daytime and evening phone numbers with area codes. Also, send along a copy of a billing statement from a utility bill, your drivers license or any document that reflects your current name and address. Don't forget to sign the letter so the credit bureau has your signature on file and they'll want it for security purposes.
Would you rather have a ticket to be in the studio audience for the last Sienfeld show or a copy of your credit report? Before you answer that let me tell you what's in that little report. Besides the basic stuff you would expect it also contains (no big surprise here) your credit history. But what's in that credit history may be a surprise.
Payment history on accounts that were reported to the credit reporting agency.
Name of the creditor and account/loan number.
Nature of the account (joint or individual)
Type of account/loan (revolving or installment, student loan, mortgage etc.)
Date account was opened or loan was established.
Credit limit on account/loan amount.
Current balance on account/loan. The dollar amount shown in this section of a person's report reflects the account balance at the time the information was obtained. It does not reflect what has been paid on the account or charged on the account since that time.
Account payment history, including number of late payment and whether an account has been referred to collections or has been closed by the consumer or the creditor.
Date information on the account loan was reported.
Number of months for which information has been reported.
Amount of credit that has been extended to a consumer.
Whether the consumer is disputing information related to an account.
It may not be as entertaining as seinfeld but it's a heck of a lot more important to you. Besides, the last show wasn't that funny, except for the soup nazi of course.
Your credit report also contains an inquiry section listing all those creditors and others who have checked it. Some of the inquiries listed will be preceded by such abbreviations as AM, AR, and PRM. PRM indicates that the inquiry was made for promotional purposes such as a review or screening for a pre-approved credit card offer and such. AM stands for account monitoring and AR stands for account reviews, both of which mean that one of your creditors reviewed the info, perhaps to determine whether your line of credit should be increased or to cancel your credit card. This is an important section because lenders consider the number of credit-related inquiries to be an indicator of how much credit you are trying to obtain. They may conclude that you will not be a responsible user of credit if they see a lot of inquiries. Every time you apply for a credit card, a mortgage loan, a car loan or some other type of credit your credit record is likely to reflect it so use great discretion.
Your credit report also contain a public record information section which reflects credit-related events that are found in the public record, such as bankruptcies, foreclosures, judgments and tax liens. They also sometimes make note of convictions (And you thought nobody would find out about that little incident back in college.) And recently some states have begun to report child support delinquencies as well.
Almost everyone with a few exceptions is surprised to find out what is and isn't in their report and how incomplete they usually are. There is also a different picture in each of the Big Three that has a credit file on you. Some credit-offering companies tend not to report regularly to credit bureaus, small department stores, auto dealers, mortgage companies, utility companies and medical providers fall into this group. The ones that do tend to report regularly are bankcards, large department stores and federally guaranteed student loans.
It's been estimated that as many as 50% of credit files have errors contained in them. This is not surprising when you consider the industry collects more than 2 billion pieces of credit related information each month and generates more than 550 million credit reports on 180 million consumers every year.
If you find errors in your credit report, complete the special form that is provided along with it. All of the Big Three include this research or investigation request form. You can also attach a letter or additional information to your completed form as well as any evidence that helps prove the error in your report, such as copies of receipts, canceled checks, correspondence between the creditor and yourself. This letter will go a long way to creating the paper trail you might need later on. Especially if legal action becomes necessary. Make sure when you send this letter it is sent via certified mail and ask for a signed receipt to guarantee that the right person sees it.
This letter will set in motion an investigation process from the Big Three and they will try to respond within 30 days. Once the credit bureau receives your letter, it will ask the creditor involved to verify the disputed information, or public record if applicable. If they find it truly was a error, or if they cannot verify the disputed information, by law they must delete the information from your credit record. If however the credit bureau confirms the debt, and this is frequently done by a superficial investigation , they will let the report stand as it was. This does not mean the battle is over however. Credit bureaus tend to believe their customers word over the consumers.
If they have still not corrected the problem, you're ready for the second process. First see if you can find additional documentation to help further substantiate the claim. Make copies of it and send it along with another letter. Don't forget to copy all letters and correspondence as well as documenting phone calls and conversations and file it. Send the letter as before, i.e. certified mail with a return receipt requested. Next contact the creditor involved and ask that it correct the problem. Do this by certified letter as well. To make sure the creditor follows your instructions, ask for copies of the correction in writing.
Another option to be considered for resolving this credit record problem is to call your state attorney general's office or Office of Consumer Affairs to see if they can help. Their answer will vary from state to state. Many states have consumer protection laws that are stronger than the Fair Credit Reporting Act of Congress. Contact them by writing with all of the pertinent information and follow up with a phone call.
If you still can't get satisfaction and want to stop short of a law suit, the FCRA gives you the option to put a written statement of up to 100 words explaining your side of the issue within your credit report. This is allowed under law if the credit bureau's investigation fails to resolve your complaint. The law also requires that the credit bureau must make the statement a permanent part of your credit record and that it must be included whenever there is a request for a copy of your report. If you need help writing your statement, the FCRA requires credit reporting agencies to provide someone to assist you.
If you have tried all the methods mentioned above and your problem is still unsolved. Now you're at the point where you have to take the gloves off.
1. File a formal complaint within the Federal Trade Commission. This is the agency that regulates the credit bureaus. Although they will not take action on behalf of an individual consumer, they will move against, as they have in the past, a credit reporting agency if it receives a sufficient number of complaints. Credit bureaus hate these formal complaints with the FTC and sometimes the mere threat of it can go a long way in resolving your complaint.
Federal Trade Commission
Bureau of Consumer Protection
Washington, DC 20580
2. The FCRA gives you the option of pursuing legal action if you are unable to resolve a credit record problem. It says that you may sue a credit reporting agency or the creditor, whichever is at fault, and that the suit can be for actual and punitive damages. If the courts decides in your favor, you can collect court costs and attorney fees. To win a case you will have to prove they acted negligently and this is where you will begin to have an appreciation for all of that paper work you filed away.
Depending on the laws in your state, you may be able to use the FCRA or your own state's credit reporting law to sue in small claims court. If this is not an option, you can take your case to a traditional civil court. Many communities offer sources of low cost and even no cost legal assistance. Among these are legal aid, law school clinics and clinics run by your area's bar association. They all have different income-qualifying levels so check your area.
