Credit Repair

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Many individuals are either scared to see their credit reports because of past problems, or they are totally shocked at being turned down for credit because they never had past problems. Whatever the situation, it is important that you review your credit reports from all three credit reporting agencies—Experian (TRW), Trans Union, and Equifax—at least once a year, or prior to making any major purchase for credit. This will eliminate any surprises and allow you to correct any errors that are being reported. By correcting the inaccurate information being reported on your credit re port prior to applying for credit, your chances of an approval are higher.

In a recent study the U.S. Public Interest Research Group found that nearly one-third of all consumer credit-bureau reports contain serious errors that could cause unfair denial of credit.

Among the findings:

• 29 percent of the credit reports contained serious errors, such as false delinquencies or accounts that did not belong to the consumer.

• 70 percent of the credit reports contained errors of some kind.

• 41 percent of the credit reports contained personal identifying in- formation—such as an address—that was misspelled, outdated, be longed to a stranger, or was otherwise incorrect.

• 20 percent were missing important information that could demonstrate that a consumer was in fact creditworthy.

• 26 percent listed active credit accounts that had been closed by the consumer.

When you receive a copy of your credit report, review each entry on the report. (Listed separately from the entries on the credit report is a break down of the codes.) If, after reviewing your credit report, you find any items on your report that you feel are erroneous, inaccurate, incorrect, or incomplete, you can dispute the negative items on your report. The Fair Credit Reporting Act dictates that any dispute on a consumer credit report must be reinvestigated and removed if found to be inaccurate, unverifiable, or the creditor does not respond. The credit reporting agency will complete its investigation within 30 days of receiving your written dispute. If the creditor does not respond, the credit reporting agency must re move the negative entry from the report. If the creditor does respond and the item is not removed, the consumer can place a 100-word statement on any of the remaining items on the credit report explaining why this problem occurred. The statement will appear on the report every time a credit report is run. If you do not want to put a statement on the report, wait approximately 120 days from the updated credit report and try disputing again. Repeat the procedure as necessary.

Remember, the credit reporting agency must investigate the item with the creditor unless it feels it is irrelevant or frivolous.


Q. How does inaccurate information get on my credit report?

A credit report is compiled by the credit reporting agencies. Each agency has subscribers who are the creditors you have accounts with presently or have had in the past.

Most creditors have their information computerized, which means there are operators who works for the creditor (not the credit reporting agency) who inputs your credit information into their computers. Many errors happen when the computer operators inputs inaccurate information. Frequently accounts that are paid off never get entered into the system. Bankruptcies are a common problem. Many accounts that were included in a bankruptcy are never corrected by the creditor and will show up on the credit report as still owed.

The credit reporting agencies are not the ones responsible for the inaccuracies. They only record what is given to them. It is important to review your credit reports yearly, or before you plan on establishing new credit for a home, car, or credit card.

You can challenge inaccurate entries on your credit report through the credit bureau that is reporting them. It must investigate inaccurate entries with the creditors. If the entries are unveriflable or incorrect, they must be removed.

It is advisable that you have a copy of your credit report from all three credit bureaus. When you write to them, include your full name, address, previous address, Social Security number, year of birth, and a copy of your driver’s license or a statement with your name and address on it.

Trans Union

P.O. Box 390

Springfield , PA 19064



P.O. Box 740193

Atlanta , GA 30374-0193



P.O. Box 2104

Allen , TX 75013

Experian (TRW), Trans Union, and Equifax charge $8 per credit report, unless you have been turned down for credit within the last 60 days. If you have been turned down for credit within the past 60 days you can receive your credit report free. Include the pertinent information of your identification and list the company who turned you down for credit.

A husband and wife must request their credit reports separately.


Q. A few years ago I tried to refinance my home. There was a negative item on my credit report. The creditor issued a letter indicating it was an error. It went off my credit report, but it has since reappeared. What can I do?

Any time you are getting a new mortgage or refinancing your home, the mortgage company will have a standard factual run on an individual or couple, which is a combination of the three credit bureaus, Experian (TRW), Trans Union, and Equifax. This is part of the qualification the underwriters will look for in approving a loan.

Frequently errors are found in these reports. If there are negative entries that have surfaced on these reports, the mortgage company will request a letter of explanation from you, or contact the creditor who is reporting this entry to verify if it is correct. If the entry is found to be incorrect, the creditor will submit a letter indicating the error and the entry will be corrected.

This will help gain an approval on a mortgage application, however the majority of the time the original credit bureaus have not been notified by the creditor, which is necessary to correct the entry in their systems. By not having it changed in their systems it can reappear on your credit report as a negative entry. Send a copy of the letter that was given to the mort gage company by the creditor with a letter to each credit bureau telling them to update their files.

It is always recommended to check your credit reports from all three bureaus before you apply for a mortgage or refinance. By doing this, you can solve any problems before you make an application and risk being denied credit.


Q. I have seen companies who advertise credit repair. What can these companies do to fix my credit report?

Anytime a credit repair company guarantees that it can remove a negative entry from your credit report, watch out! Many credit repair companies charge an outrageous fee for their services. You are capable of repairing your own credit report.

The Fair Credit Reporting Act states that a consumer has the right to dispute inaccurate, incomplete, and erroneous information contained in his or her credit report. A credit repair company is writing these letters for you.

If there is inaccurate information on your credit report, write a letter to the credit bureau indicating what the inaccuracy is. The credit bureau must verify it with the creditor. If the creditor does not respond or the item is not verifiable, the inaccurate entry will be removed.

Many states have requirements that a credit repair company must follow to be in compliance with the law.

There are some reputable credit repair companies, but I recommend that you check out the company with the better business bureau to make sure there are no unresolved complaints on file. Many people are not comfortable working on their credit reports and will seek the assistance of a credit repair company.


Q. I have heard of some companies who say they can get me a new credit file. Is this true?

Creating a new credit file is called file segregation. What that means is that your Social Security number may be scrambled, your name altered, and address changed. This practice is illegal. I would never recommend file segregation to anyone.

Any company that represents to you that you can get a new credit file is breaking the law and you better not get involved with this deceit.

Several years ago I read an article in the newspaper about companies creating new credit files for individuals. The article stated that not only was the Internal Revenue Service looking for individuals who had changed their identities to obtain credit, but also the attorney general was looking for the companies who were following this practice.

Individuals who have gotten new credit files were individuals who were desperate to get credit because of past credit problems and were continuously denied new credit.


Q. Three years ago I filed for bankruptcy. I received a copy of my credit report and noticed that most of the accounts that were discharged through the bankruptcy are still showing collections and charge-offs. This is not correct. What can I do?

Most of the credit reports that I have seen from individuals who have filed a bankruptcy have multiple errors. All the accounts that were discharged through the bankruptcy should be reported as discharged through bankruptcy. If the accounts are not being reported accurately, then you can dispute each of the accounts with the credit bureau. Review your credit re port for all the inaccurate entries that you know were discharged through the bankruptcy. If they are still showing up as collections or charged-off accounts, obviously they were discharged through the bankruptcy and a letter should be sent to the credit reporting agency. The letter should state that you do not owe money on these accounts.

The credit reporting agency must investigate your dispute with the creditor. If the creditor does not respond, the entry will be removed. If the creditor does respond, a change in the entry should be noted that this ac count was part of the bankruptcy.

An account discharged through bankruptcy is better than a negative entry such as a charge-off or collection that has not been paid. The discharge brings closure to the account.


Q. I received a copy of my credit report and discovered three old accounts reporting a charge-off I paid these accounts off. How can I get this corrected?

A charge-off account means that the creditor gave up on you for any type of repayment. If you paid this account off, you can do one of two things.

First, write to the credit reporting agency and indicate in your letter that you do not have a charge-off account with this company and that you paid them in full. The credit reporting agency must investigate this with the creditor. The credit reporting agency has 30 days to respond to your letter with an updated credit report. If the creditor does not respond or the ac count is unverifiable, the entry will be removed from your credit report. If the creditor does respond, your credit report must be updated as to what ever the creditor states in its response. If the creditor continues to state that your account is unpaid, the entry will remain the same. If the creditor indicates that the account was paid, the entry may read “paid charge-off.”

If you are not satisfied with what the creditor’s response is, contact the creditor directly. If the creditor is indicating that you still have a balance, provide the creditor with a copy of your cancelled check so the records can be update.


Q. I went to apply for a car loan. The car dealer ran a credit report on me and turned my application down because of a reported unpaid IRS tax lien. This IRS tax lien was paid off two years ago.

What can I do to get this corrected on my credit report?

Get a copy of your credit report from all three credit reporting agencies. Compare all three credit reports to see if all three have the tax lien re ported and what the status is.

Because you already paid the tax lien off, you should have a copy of the release from the Internal Revenue Service. If you never received a copy of the release, contact the IRS and request a copy.

Once you receive a copy of the release, make three copies. Send a letter to all three credit reporting agencies with a copy of the tax release re questing that they update their records. Once the credit reporting agencies have updated their records, they will send you copies of the new credit re ports with the changes.

Check with the county recorder to make sure the IRS recorded the tax release. If the IRS didn’t, you must make sure that it is recorded showing the tax lien was paid; otherwise anytime you try to purchase or sell real estate, the tax lien will appear as unpaid.

Save your copy of the tax release from the IRS. You never know when you may need it in the future.


Q. There was a judgment filed against me last year. I paid it immediately. My credit report shows an unpaid judgment which is hurting me getting new credit. Is there anything I can do?

Anytime a judgment is filed against an individual and the judgment was paid, the plaintiff who obtained the judgment must complete a paid satisfaction form and deliver it to the court within a certain time period. You need to contact the court where the judgment was granted to find out what amount of time is given for a paid satisfaction of judgment to be filed.

If the time period expired and the plaintiff never reported the paid judgment, then you can file a lawsuit against that party. You need to contact the court to see how much you can sue for.

I had a client who had a small claims judgment against him for $200. He paid the judgment immediately, however the plaintiff never reported the judgment as paid to the court.

My client sued the individual in small claims court for damaging his credit report by neglecting to report the paid account.

The party he was suing contacted my client prior to the court date. My client indicated that he would drop the case providing a “motion for relief from judgment by written stipulation” be filed. If the judge granted this stipulation, the judgment my client had against him would be dropped, and it would be as if he never had a judgment.

A “motion for relief from judgment by written stipulation” was granted to my client. He then dropped the pending lawsuit.

Once the paperwork was completed, my client sent a copy of the motion to all three credit reporting agencies. This resulted in all three credit reporting agencies deleting the judgment entry on his credit reports.


Q. My student loan was turned over to a collection agency. I paid it off; however, it shows unpaid by Sallie Mae on my credit report. What can I do?

You need to contact the collection agency to whom you paid the ac count. Explain your situation and find out why your account was never up dated with Sallie Mae.

Have the collection agency mail you a letter stating that the account was paid off in full. Forward a copy of the letter to Sallie Mae for it to up date your credit reports.

Request copies of your credit reports six weeks after you sent your letter to Sallie Mae to make sure the changes were made. If they weren’t, contact Sallie Mae again and request a written letter from them indicating the account was paid. Once you get a copy of the letter, send a copy to all the credit reporting agencies to update their files. Once the credit report is updated, the credit reporting agency is required to send you a copy of the report at no additional charge.


Q. My credit report has a wrong Social Security number listed. There are also some accounts that are not mine. I have a common last name. Could my credit report be confused with someone else’s?

It is not uncommon to see someone with a common name have ac counts that do not belong to them. Because your Social Security number is not accurate, you need to write to the credit reporting agency and correct the error. Identify the accounts that do not belong to you and request that they be removed.

There are times when a credit report is confused with someone else’s, especially with someone with the same name.

This will happen frequently with a father and son with the same name.

When my husband and I were first married, we applied for a loan for an automobile. My husband’s credit report showed three other car loans. My husband is a junior (Jr.) and his credit report was confused with my father-in-law’s. There was no way we could have had three car loans at our young age.

The credit reporting agencies were notified of the errors; which were then corrected. All credit reports with my husband’s name have a disclaimer from the credit reporting agency stating not to confuse the name with a family member’s name.

I have seen this disclaimer on many of my client’s credit reports when they have family members with the same name.

Next: Re-establishing Credit after a Bankruptcy or Credit

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