Myths of Credit Repair pt. 10
Myth #10 really forms the basis of what a credit repair company does. Unfortunately, there is a lot of negative and inaccurate information about it.
Myth # 10: It is illegal for creditors to take a negative, accurate listing off my credit report. The law requires that these items remain on the credit report for at least seven (7) years.
The truth is that negative information, of any type, does not have to be on a credit report for seven years, seven days, or even seven seconds. The creditors and collection agencies report it to "punish" you for your misdeeds. The law states is should not stay on the credit report greater than seven years with the exception of Ch. 7 bankruptcies which may stay on for ten years.
Here is where the confusion starts. The Federal Trade Commission says that accurate, negative information cannot be removed from a credit report. They are partially correct. The "whole" statement should be that negative information that is ACCURATE, TIMELY AND ABLE TO BE VALIDATED can legally remain on a credit report. Note that it is not required to be left on however.
Considering that 79% of ALL credit reports contain errors and that 25% are significant enough to be refused credit, what is the chance that there is inaccurate and negative information on your report? Yes... about 4 out of 5.
Let's discuss the three points in detail...
Accurate - While the credit reporting agencies are supposed to verify the information they provide when a credit report is requested, it is pretty obvious that they do not do a very good job. The vast majority of the time, the negative, inaccurate information is on your report causing you to pay higher interest rates on mortgages, auto loans and credit cards, as well as higher insurance premiums until YOU find it and make them remove it. It's like being guilty until you prove yourself innocent which, by the way, they make as difficult as possible.
Timely - As far as timely, negative trade lines are supposed to drop off about 7 years from the date of last activity (as found on your credit report as "DLA"). While sometimes these trade lines are removed automatically, often times you have to request their removal. Unfortunately some debt collectors will purchase old debt and then report it as new debt, just to hurt your score. For instance, suppose you have a hospital bill that you last paid 1-02. It is quite old and should be dropped from the report within the next several months from now (10-08). Besides the fact that it is affecting your score very little because of the age, it is past the statute of limitations for legal remedies in many states. Some unscrupulous debt collectors will "buy the debt" for 5 to 10% of it's value (due to it's age) and then report it as a new debt that restarts the clock injuring your credit score. This is illegal and highly improper, but that does not stop some of them.
Able to be validated - There are court cases that outline what it takes for the creditor or debt collector to prove that the debt is accurate, timely and that the debt belongs to you and that you agreed to be responsible. Many times, the collection agencies cannot provide the proof and the negative trade line must be deleted. Remember: it is their responsibility to prove you're 100% legally liable for the debt, not your responsibility to prove you are not.
As you can now see, the issue is not as cut-and-dry as you have been led to believe. In addition to what I have mentioned already, there are also issues with how the creditor arrived at the amount you allegedly owe, was it documented correctly, are any interest charges or fees appropriate, can the debt collector legally collect in the state you are in and much more.
If you are going to attempt to dispute your own negative items, I suggest you become very familiar with all the laws and acts that govern fair credit reporting and fair debt collections. Because of the time and difficulty involved, you can see why many people are using credit restoration organizations. In fact, Congress recognized that there is a legitimate need for this service and passed a law, the Credit Repair Organizations Act, to oversee these companies.
Hope this was helpful. Check back soon for more credit related information.
ScottScott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.
Myth # 10: It is illegal for creditors to take a negative, accurate listing off my credit report. The law requires that these items remain on the credit report for at least seven (7) years.
The truth is that negative information, of any type, does not have to be on a credit report for seven years, seven days, or even seven seconds. The creditors and collection agencies report it to "punish" you for your misdeeds. The law states is should not stay on the credit report greater than seven years with the exception of Ch. 7 bankruptcies which may stay on for ten years.
Here is where the confusion starts. The Federal Trade Commission says that accurate, negative information cannot be removed from a credit report. They are partially correct. The "whole" statement should be that negative information that is ACCURATE, TIMELY AND ABLE TO BE VALIDATED can legally remain on a credit report. Note that it is not required to be left on however.
Considering that 79% of ALL credit reports contain errors and that 25% are significant enough to be refused credit, what is the chance that there is inaccurate and negative information on your report? Yes... about 4 out of 5.
Let's discuss the three points in detail...
Accurate - While the credit reporting agencies are supposed to verify the information they provide when a credit report is requested, it is pretty obvious that they do not do a very good job. The vast majority of the time, the negative, inaccurate information is on your report causing you to pay higher interest rates on mortgages, auto loans and credit cards, as well as higher insurance premiums until YOU find it and make them remove it. It's like being guilty until you prove yourself innocent which, by the way, they make as difficult as possible.
Timely - As far as timely, negative trade lines are supposed to drop off about 7 years from the date of last activity (as found on your credit report as "DLA"). While sometimes these trade lines are removed automatically, often times you have to request their removal. Unfortunately some debt collectors will purchase old debt and then report it as new debt, just to hurt your score. For instance, suppose you have a hospital bill that you last paid 1-02. It is quite old and should be dropped from the report within the next several months from now (10-08). Besides the fact that it is affecting your score very little because of the age, it is past the statute of limitations for legal remedies in many states. Some unscrupulous debt collectors will "buy the debt" for 5 to 10% of it's value (due to it's age) and then report it as a new debt that restarts the clock injuring your credit score. This is illegal and highly improper, but that does not stop some of them.
Able to be validated - There are court cases that outline what it takes for the creditor or debt collector to prove that the debt is accurate, timely and that the debt belongs to you and that you agreed to be responsible. Many times, the collection agencies cannot provide the proof and the negative trade line must be deleted. Remember: it is their responsibility to prove you're 100% legally liable for the debt, not your responsibility to prove you are not.
As you can now see, the issue is not as cut-and-dry as you have been led to believe. In addition to what I have mentioned already, there are also issues with how the creditor arrived at the amount you allegedly owe, was it documented correctly, are any interest charges or fees appropriate, can the debt collector legally collect in the state you are in and much more.
If you are going to attempt to dispute your own negative items, I suggest you become very familiar with all the laws and acts that govern fair credit reporting and fair debt collections. Because of the time and difficulty involved, you can see why many people are using credit restoration organizations. In fact, Congress recognized that there is a legitimate need for this service and passed a law, the Credit Repair Organizations Act, to oversee these companies.
Hope this was helpful. Check back soon for more credit related information.
ScottScott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.
Labels: credit reports, credit restoration, CROA, US Consumer Credit Restoration Association, www.usccraonline.com
posted by Malinut at
8:52 PM
