Tuesday, January 12, 2010

Bad Credit Repair Advice, and now My Good Advice!

Here is a posting from antagonist.org. I was pretty ticked off when I read it. I commented but it was denied, probably since I'm not a member. I want you to read it and see the bad information that was given. Keep reading past it. I will give my answer to the poor fellow that asked the question and was given some bad advice and no hope!

Q: I have a terrible credit history with bankruptcy, charge offs etc. making it impossible to get or re-establish credit. I used to have good credit but alot of things started happening 3 years ago that I don't want to go into, which caused me to start having the problems which culminated in my credit being destroyed. Anyway I've been reading about ways to have negative things removed from one's credit report. Has anyone ever done this? Can you actually have valid entries removed from your credit report even if they're true, if they don't respond to the dispute in time? Do you have to do this for all 3 credit bureaus? What if one removes an item and the other 2 don't? Could someone take some time and please reply to this post? If I don't have to wait seven years to get a chance to work on getting a good credit rating again if I don't have to.

A: -Our local news did a piece of this just last nite. Basically the only thing that will repair bad credit is time. These companies that say they can "remove" bad ratings are scams. -Be careful; some of those "ways" are illegal. Starting a business and using the business tax ID to create a "blank" credit file, for example, is blatant fraud. And, depending on the circumstances, saying that a particular negative incident didn't happen, when you know perfectly well that it did, could be fraud as well. If you think living with a bad credit record is tough, try living with a bad credit record and a felony conviction... If you dispute an entry, and it's not verified in (I believe) 30 days, then the entry has to be removed from the credit report. However, if the verification comes in later, then the entry goes right back on; there's no law or rule that says that correct information can't be put on a credit report because it was removed once. Then a creditor that only gets your report from that credit bureau won't see the item. However, some creditors get reports from multiple bureaus, or use other companies to get composite reports combining information from all the bureaus. And asking a creditor what credit bureaus they use is bound to raise some eyebrows. It's worth pointing out that credit reports are not just "good" or "bad"; there's all sorts of shades in between. For example, if your credit report shows credit problems two years in the past, but an excellent payment history since then, then a creditor may decide that the recent history is more important. If you feel that some of the entries on the credit report are unjustified, then by all means dispute them. But you should be concentrating on rebuilding a good credit profile in the present by making payments promptly, rather than concentrating on past events that you can't control. And be forthright about your situation. When you apply for a loan, don't wait for the creditor to pull your credit report and see the damage; attach a letter saying "Here's what happened to me, and here's what I'm doing to make sure it doesn't happen again." This sort of honesty can go a long way with some creditors; and the creditors who would reject you on the basis of such a letter would almost certainly reject you on the basis of negative credit report information anyway, so you've got very little to lose.

Okay. Now here is my response. I'm going to pick apart the answer and then help him with the correct information and help anyone else in a similar situation.

First of all, time is not the only thing that will repair bad credit. Removing the bad credit is possible with credit repair. That's why we have the FCRA, FDCPA, FCBA and FACTA on our side.

2nd. All credit repair companies are not scams. Yeah, lots of those law firms and companies that drag it out and do very little for you so they can keep collecting from you month after month are not completely legit, but many of us that do repair credit, do it legally, ethically and with genuine care for our clients.

3rd. The business tax id is fraud. Depends how you do it. Basically, the way they are saying is fraud. But, starting a business and building good business credit is not fraud. You should use the business credit while repairing the personal credit at the same time to really improve your credit. See my friend's blog or get his book on that. Corporate credit is a good thing! Here's a link to his blog. SecretSuperCredit

4th. Saying something isn't so when you know it is, is not fraud - if you say it correctly. This is why I don't tell people to say "it isn't mine", no, pick it apart. Are their dates correct, the type of credit correct, is it a collection account that you have never entered into a contract with that company? I've never seen a perfectly reporting credit report. They all have mistakes on them. Find the mistakes and dispute them, telling them to delete the line because it is not 100% accurate, as it must be according to law! Anything less is a violation of both the FDCPA and the FCRA on the part of the bureaus and the party that submitted the info.

5th. Items not verified in 30 days but come back on later when they do verify. Yep, this does happen, but there are laws to protect you here also. If it comes back, the bureau has to notify you in writing within 5 days that it is going to be put back on your credit report. If they do not, they broke the law. And, if you have demanded validation prior to that from the supplier of the information - the collection company, then they just broke the law too. Why? Because that is collection activity without first validating the account with you. Rack up another $2000 minimum for those violations.

6th. Letter of explanation to lenders. Only give this if they request it. What's better, is before you apply for credit, clean up the "baddies". Don't put 100 word statements on your credit report either, for those negative tradelines. You're basically admitting they are your accounts.

Now, here's my answer and suggestion of how to proceed to the original poster of the question.

Dear poster, yes you can repair your credit and no you don't have to wait 7 years for it to be improved. But let's do this right. First, look at your credit report and make a list of all the collection accounts, charged off accounts, and accounts showing late pays. Ignore the bankruptcy for now.

Write a letter to each of the negative reporting companies requesting validation. Tell them you want a copy of the original contract with your wet ink, authentic signature on it. Then tell them you want a complete accounting of the alleged account. From the date it was issued - where the money came from, every purchase, every payment, every credit, every fee, and accurate interest that was charged to the account. Send these letters CMRR and keep a file with a copy of each letter. When you get the return receipt for the certified mail that you sent them, put that in your file. Now you can send letters to the bureaus regarding each of those accounts after you have received all the green cards back (the return receipts).

You will dispute each one in the letter to the bureaus. The collection accounts, say I do not have an account with this company, please delete. Or I have never entered into any contract, ever, with this company. Please delete immediately. If it is outside of your state's statute of limitations (look that up), California, my state is 4 years. Say this. The date reporting is blatantly outside of the SOL and obsolete. Please delete immediately. Or attack it by saying I did not open an account with this company on this date nor have I ever. Please delete. Maybe it is the wrong type of account. A revolving, not a factoring, or not an installment or a mortgage, whatever. Say "I do not have a factoring account with this company, please delete it."

You see, when you dispute with the bureaus, you dispute their mistakes. Now, they are supposed to verify with the information supplier that what is reporting is accurate. So you have 30 days for them to get back to you. You have just done what is called the "1-2 Punch." The information suppliers are not allowed to verify if you have demanded validation from them and they have not sent you the validation. That would be considered collection activity. So, the ones that follow the law will not respond and it will be deleted. The only thing they are allowed to do is make a statement that the account is disputed.

For the bankruptcy, before you ever dispute that you had a bankruptcy, remove all the tradelines associated with the bankruptcy. Once they are gone, attack the bankruptcy. It will possibly have the wrong court, the wrong date, the wrong amount, the wrong type of bankruptcy being reported. Remember, everything has to be 100% accurate that is on your report. So, your dispute will be that you never filed a bk in whatever court, you did not have a bk on whatever date, you did not have a chapter 13 bk or chapter 7 bk for $0 dollars (I see that a lot). Dispute their mistakes. Demand they delete immediately!

I hope this helps you my poster friend and readers.

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