The Ethics of Credit Improvement
One thing to note before we proceed: there are authority figures who would very much rather that you NOT attempt to improve your credit score. Ideally in their minds, the credit score should be a natural and unchangeable measure of how you're doing in life. Some would say that you shouldn't be able to do anything to increase your credit score. According to them "there's nothing you can do to improve your credit score. Just keep paying your bills and your score might rise over time." (Or, at least, they wish that were true.) These powers-that-be, who would have you roll over and play victim to your credit score include credit scoring companies, bankers, Experian, Equifax, (surprisingly, not Trans Union), a smattering of state and federal regulators and, oddly enough, several outspoken consumer advocates. They theorize that if everyone just left their credit score alone -- and lived with the results of a low score for as long as the system dictates -- that the population of credit users as a whole will benefit (even though YOU will be "benched" from the credit game). It's their way of saying, "Hey. Take one for the team. Just let your credit be what it is, forget about having credit for the next seven to ten years so that everyone else will have slightly better rates on their credit cards."
You may buy that argument. It actually makes some sense when you look at it from the Socialistic point of view. Karl Marx and Lenin probably would have agreed, as well.
On the other hand, you might be saying, "I don't think so. That's just NOT American thinking. I'm an individual and I'm not hip to letting my family's financial situation take a bath just so that the collective population does a little better. Forget that. Let's get working on my credit score." If that's where your head's at, then here's the good news: you have TONS of options and LOTS of opportunities at your disposal to bring your score up. Here's the bad news: if you don't take action, nothing's going to happen. Your credit score may actually fix itself over time -- a very, very long time. Typically, a bad patch of credit history (where your financial life went into the doghouse for a time) will haunt your credit score for seven to ten years. That's roughly one-fifth of your adult, credit life or more down-the-tubes unless you go to work on it (or have someone do it for you).
But, you'll have to answer the ethics question first: do I feel OK about disputing my credit? And, there's the other big question: will I lie to improve my credit score? These are very good questions, but it's not-quite-so-simple.
For starters, there is substantial disagreement between the law, regulators, court cases and consumer advocates regarding what constitutes an "inaccurate" credit history. In fact, just about every consumer who engages in credit improvement has a plausible version of events that would stump even old King Solomon. If a judge in a divorce proceeding orders that your spouse take responsibility for the bills and then your spouse didn't pay them, is the negative listing on your report accurate? If you bought a car and then the auto dealership welched on the deal they said they'd give you and then a negative listing appeared on your credit report, is that accurate? If you move and the credit card company fails to send the bill to the right address (that you gave them) and you mis-pay the amount and they never send you notice that you're behind, is that an accurate negative listing? If you lose your job and you call the creditor and they agree to take smaller payments but then they report that you're late anyway, is the negative listing they mistakenly reported accurate?
While these scenarios sound like the exception, they're really NOT. A huge percentage of those with negative credit have head-scratching ethical dilemmas similar to those (real life scenarios) mentioned above. What constitutes an accurate, negative listing? Nobody can agree and no one has picked through all the possible scenarios to determine which are right and which are wrong.
Instead, the United States Congress has provided a method to challenge, test and improve questionable negative credit listings. This method is provided by the Fair Credit Reporting Act (or FCRA), the Fair and Accurate Credit Transactions Act (or FACTA) plus a bunch of other alphabet-soup laws meant to protect consumers. (In reality these alphabet soup laws are designed to protect the banking system - in other words, your creditors - not necessarily the average American.) Basically, you have the right to dispute and test any credit listing that you feel might be inaccurate, misleading, unverifiable or obsolete. (Again, we don't really know exactly what each off these means, either, since they've not been defined anywhere.) Basically, you can challenge questionable credit listings and if they're removed, they were probably wrong in the first place.
Here's where it gets crazy -- in a good way. A large percentage of negative listings that are challenged (between 25 and 35%) are deleted by the credit reporting agencies each time they're properly disputed. Nobody really knows exactly why this happens except to note that the credit reporting system is packed with billions of bits of information and that mistakes are rampant, Many...
Credit Revolution: Path of the Smart Consumer 2007 John C. Heath, Esq., Dr. Randy Padawer, Jayson R. Orvis. All Rights Reserved. Published by Far Cliffs Multimedia, LLC