Good credit is an important part of personal finance. However, it is a popular misconception that people with bad credit are always bad consumers. Imagine a worst case scenario like Anne’s. After putting herself through business school, she has racked up a significant amount of student loan debt. Although the monthly payments are high, Anne budgets her money well and takes advantage of an automatic bill pay service offered through her bank. One day Anne gets a call from her education lender, informing her that her balance is three months overdue. Anne calls her bank and discovers that a glitch in their system has failed to pay her bills on time. She apologizes to her education lender and pays the outstanding balance. Six months later, her loans are still cited negatively on her credit report. Although the late payment was a simple oversight, neither her bank nor her lender will contact the credit bureau to help her remove the potentially unfair remarks from her report.
While Anne’s bad credit story may differ from yours, the same type of situation applies to millions of “bad consumers” experiencing credit company errors, temporary financial hardships, or other issues. Even if your late payments are resolved, many consumer advocacy groups claim that only time can repair questionable negative items on credit reports. Think again. The Fair Credit Reporting Act (FCRA) and the Fair and Accurate Credit Transactions Act (FACTA) uphold your right to receive both fair AND accurate credit reporting. Moreover, while a consumer’s score may be temporarily damaged, credit agencies cannot hinder your efforts to rebuild your credit as a response to their unfair credit reporting. When it feels like you’ve run out of options, get tough and fight for your consumer rights. Work to improve your credit score.
So, how do you fight false credit reporting? Follow these steps:
• Get proof. In Anne’s case, her loan receipts should reflect her payment dates. Regardless of her lender or bank’s cooperation, this evidence is sufficient to prove that her loans are not delinquent.
• Know your rights. Credit bureaus are likely to push you aside without the assertion of your consumer rights. Several consumer protection statutes provide your best defense against false and unfair credit reporting. Not only do such laws require creditors and credit bureaus to revisit your file, they usually must also communicate their findings to you in writing.
• Find an advocate. Navigating through federal regulations and protocol can be tough. Many people feel more comfortable with a licensed attorney on their side. Do your research and find a credit repair firm that can address your needs. A reputable organization follows regulations set forth by the Credit Repair Organizations Act (CROA). Make sure their practices are honest and reliable before signing up.
Bad credit does not equal bad consumerism. Individual situations deserve individual consideration from both creditors and credit bureaus. Don’t resign yourself to a life of higher interest rates and “bad risk” speeches: fight for your fair credit reporting rights and work to improve your credit score.