OK, But Give Me A Taste of Why I Shouldn't Do-It-Myself
Given the fact that the credit repair landscape is littered with the carcasses of fly-by-night companies (make a mental note: these usually aren't bona fide law firms), why wouldn't you want to take on the task by yourself? After all, the FTC correctly warns consumers to be wary, right?
In fact you may have come across credit repair methods that really are strictly illegal. These range from booklets and consultants who will advise you to do everything from identifying someone near your age who died as a child and attempting to establish credit in their name, to simply making up a Social Security number, to acquiring an IRS Taxpayer Information Number (TIN), which looks like a Social Security Number, and establishing credit with that, to you-name-it. Needless to say, all such methods risk loss of freedom, income, and community standing. In other words, they're trouble.
Fortunately, you won't find this book espousing that type of credit repair. Anytime you see an advertisement for "NEW CREDIT FILE OVERNIGHT," steer clear. Truly legal credit repair is a gradual process that takes time to complete.
In fact, what is advocated here - and by credible credit correction attorneys - is putting Federal statutes to work in the service of improving your credit standing. Here, laws are chased and embraced -- rather than shunned and avoided. In fact, sometimes consumers being guided by credit correction attorneys use those laws to actually file lawsuits against abusive original creditors), collection agencies, and credit bureaus to meet their goals.
The bottom line is this: To effectively clean up your credit reports without seeking professional assistance requires tackling a HUGE learning curve. Without turning you into one of those dull, squinty-eyed experts we warned you about before, here is some very basic and general background regarding the handful of Federal statutes advocated here:
Fair Credit Reporting Act. As mentioned briefly before, the FCRA regulates how credit reporting agencies treat consumers. Before this law was enacted and fully implemented in the early 1970s, credit bureaus were basically unregulated and could do just about whatever they wanted. Equifax, for example, is the nation's oldest credit bureau and did business up until the seventies as the Retail Credit Company, it's original name. Retail Credit had long contracted with companies that sent "welcome ladies" to new homeowners. Such representatives would make careful notes about the new families on the block, whether anyone smelled of alcohol, the color of their skin, whether the family appeared sufficiently employed, subjective notes about perceived stability, and other such matters that should have been irrelevant but somehow weren't. Then, after the hearty welcome and a heartfelt goodbye and a basket of coupons, the welcome ladies would write up a little report and send it back to the Retail Credit Company. Retail Credit had many other ways of acquiring personal information as well, probably none as colorful as the one described here, but in any case, such methods were outlawed by the FCRA. By the early 1970s, race, religion, and subjective personal observations could finally no longer be included within ones credit report. (And it's a wonder that they ever could!) Moreover, consumers were finally allowed access to their credit reports, which up until the FCRA was enacted were never disclosed to ordinary citizens who might literally suffer financial consequences for decades due to incorrect and unfair information within those secret files.
But wait, there's more.
In order to fully and effectively tackle credit repair on your own, you need to know what rights the FCRA accords you. So, for the brave of heart, here they are in a nutshell (and the not-so-brave-of-heart may skip to the next section):
- The FCRA ensures that consumers can acquire their consumer credit reports at a reasonable price (or for free under certain circumstances), and severely restricts "investigative consumer reports" (i.e., friendly ladies bearing coupons and checklists, for example).
- The FCRA regulates who has "permissible purpose" to acquire a consumer's report. (You'll hear credit correction attorneys talk about "permissible purpose" when discussing INQUIRIES.) As we mentioned before, an inquiry is quite simply the notation made in a credit report when a creditor acquires your credit report. The FCRA details who can legally acquire your report and for what reason (i.e. permissible purpose). And here's some good news: Inquiries made without the required permissible purpose incur a $1000 per violation penalty payable by the creditor directly to the affected consumer. Successful small claims court lawsuits have been brought by consumers against those who acquire their credit reports without that required permissible purpose.
- The FCRA details the running reporting periods for information on credit reports -- generally seven years for most items except for bankruptcy related listings that can remain for ten years. Now here's what the banks DON'T WANT YOU TO KNOW: these periods of time are just MAXIMUM LIMITS. The FCRA does not indicate a MINIMUM amount of time something must remain on your credit report. (So if an original creditor or even a collection agency ever tells you, "Sorry, ma'am, but by law that must remain on your report for seven years," you'll know better. In this respect, the FCRA exists to protect you against something remaining on your report forever, but no law requires that private companies tattle-tale on you for any minimum length of time at all. In fact, the FCRA doesn't REQUIRE creditors to report anything ever. To this end, it's worth remembering what we said earlier in this book: credit reports are not official government documents, and credit bureaus are not government agencies.
- The FCRA details how a credit bureau must handle consumer disputes. The hyper-simplified version: When a consumer disputes a credit file notation (often called a "tradeline" by credit wonks), the credit bureau must note within the file that the item is disputed by the consumer and initiate a "reinvestigation" (a peculiar word, but the idea is that the original investigation occurred before the item was appended to the file in the first place). This reinvestigation must be completed within a "reasonable" amount of time, a community standard that has been almost universally held to be thirty days. When that reinvestigation is completed, the credit bureau must inform the consumer of the action that was taken -- either verified (the item remains as is), modified (certain aspects of the tradeline have been revised), deleted (the item is removed from the file), or deemed "frivolous" (an awful provision that allows the credit bureaus to basically say you're not being serious). You have the right at that point to request additional information regarding how the reinvestigation was conducted as well as specific points of contact made with the creditor (i.e., identifying data regarding who or what was contacted).
- Finally, the FCRA includes other wonderful provisions which really are well beyond the scope of this book, including such nuggets regarding the "duty of furnishers of information to provide accurate information," their "duty to correct and update" errors, and more stuff...
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