|
There is a lot of bad information about credit reports and credit repair. Below are some examples. See if you know the answers.
True or false? When I pay off a past-due account, like a charge off or a collection account, it will show "paid" and will no longer be negative on my report.
False. The act of paying off a debt can actually hurt your credit. Negative credit is allowed to stay on the credit report for a maximum of seven years, except for bankruptcy that may remain on the credit report for ten years. This seven-year clock begins ticking on "the date of last activity" or, in other words, when the last action took place on the account. By paying an outstanding, delinquent debt you will change the account status to "paid collection," "paid was late," or "paid was charged off" - which will still stand out as a very negative listing. In addition, you will create a new date of last activity on the day you settle the account. The seven-year clock will reset and begin all over again. When you have outstanding debt, you should seek an attorney to help so that you can settle your debts without further damaging your credit. Consider becoming a member of a legal service. Having access to an attorney through a legal service is usually very cost-effective.
True or false? If I succeed in deleting a negative item, it will just come right back on my credit report.
False again. The credit bureaus have cleverly spread this myth through the news media and government agencies. In truth, the credit bureaus will often temporarily delete a negative listing if they haven't heard from the credit grantor after approximately thirty days. If the credit grantor reports late, say after six weeks, and then verify the negative listing, the credit bureau will often put the negative listing back on the credit report. This is often known as a "soft delete." Usually, though, the creditor simply fails to respond and the negative listing is permanently deleted.
True or false? There are negative listings, such as bankruptcies and foreclosures that are impossible to remove from the credit report.
False. There is no type of negative listing that hasn't been removed from a credit report thousands of times. Negative items, like bankruptcy or unpaid debts, are certainly more difficult to remove from the credit report, but this has more to do with the operational systems of the credit bureaus than with the severity of the bad credit item. For example, judgments and tax liens are very negative listings, but are easier to remove.
True or false? Disputing the credit report is easy and any consumer can do it themselves for the price of a few postage stamps.
Another myth. Disputing the credit report is easy. Getting results from the credit bureaus is amazingly difficult, complex, and infuriating. It isn't a coincidence that the Federal Trade Commission receives more complaints against credit bureaus than any other type of business. Remember that the credit bureaus are primarily interested in protecting their profits. Investigating your challenge consumes these profits. Short of sparking a mass number of lawsuits, the credit bureaus seem to do everything in their power to discourage consumers from making progress with their credit restoration. Restoring your own credit is like repairing your own transmission or representing yourself in court; it is possible, but you must decide if your are willing to take the time to learn the legal side of credit, and assume the risks of doing it yourself.
True or false? If I declare bankruptcy, I can begin my credit report all over with a clean slate.
Unfortunately False. Most Bankruptcy attorneys do not adequately understand or explain the effects of bankruptcy to their clients. Bankruptcy is to the credit rating what the nuclear bomb is to war.
When you file for bankruptcy, every credit account that you decide to include in bankruptcy will become an "included in bankruptcy" account. Additionally, a bankruptcy filing and bankruptcy discharge listing will appear in the court records section of your credit report. Because so many negative items are attached to the bankruptcy, it becomes a challenge to remove all traces of the bad credit. But it can be done over time.
True or false? If you are not satisfied with the results of your credit bureau challenge, you may file a "100-word statement" on your credit report explaining your side of the story. Creditors will read your statement and will take it into consideration.
True! Well, almost true. The fact is, no known creditor considers information given in a 100-word statement. The statement only serves to verify some of the negative listings on the credit report. Realistically, you should make 100-word statements the first things you delete from your credit file.
True or false? By changing numbers in my social security number or by using an EIN tax number, I can fool the credit bureaus into creating a completely clean, new credit file under my name.
Very False! This scheme has proven to be illegal. Lying about any personal information on a credit application is usually a criminal offense. Using these "file segregation" schemes takes an enormous amount of coordination, not to mention personal risk.
True or false? If I build enough good credit, it will offset my bad credit and make me credit worthy. After all, I was only late a couple of times.
False. Sorry, even the smallest amount of negative information can prevent you from being approved by a credit grantor. Most credit grantors never actually look at your credit report. A computer pulls your credit report, rates your credit score, income, indebtedness, and stability, and then spits out an acceptance or denial.
Even one or two slow pays will usually trigger a credit card or personal loan denial. The slightest amount of negative credit after a discharged bankruptcy will cause the interest on a loan to skyrocket. You will probably find that even a little bad credit since your discharge, is an unacceptable barrier to credit approval.
True or false? I'm having trouble paying my bills, I can go to the Consumer Credit Counseling Service and they will help me to restore my credit.
You Decide! Consumer Credit Counseling Service or CCCS is a nonprofit debt counseling service that assists consumers who are over their heads in debt. CCCS is funded and controlled by the credit grantors and the credit bureaus. Because of the obvious allegiance between the service and the credit bureaus, you cannot reasonably expect them to do anything that the credit bureaus would frown upon, like help you restore your credit. In fact, if you decide to leave CCCS before you have finished their program, they can list your failure to complete the process as a negative listing on your credit report. When you are participating in the CCCS program, your creditors will often note it on your credit report as a Chapter 13 bankruptcy filing. The fact that you resorted to a debt-counseling program is a huge red flag for prospective credit grantors. Remember that paying off your debts is a step in the right direction, but it does not restore your credit.
|
THE TRUTH
