credit repair

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    Credit repair is a general term often applied to the controversial practice of improving or rehabilitating one's financial reputation (creditworthiness) among creditors.To improve a credit rating damaged by poor credit habits, in the long run only one thing will work: changing those habits.Making arrangements with the creditors to repay them is often one of the steps in improving one's credit habits. Creditors may accept slow payment schedules, as an alternative to writing off the debt. In some cases, creditors may accept a less-than-full repayment (pennies on the dollar). The key here is contact with the creditor and taking action to retire the debt.At the same time, reviving an old debt that is no longer collectible can actually do additional damage to one's credit reputation. It is best to be aware of the circumstances regarding the debt's collectability, statute of limitations, and legal and illegal collection practices, before contacting a creditor on a very old debt.In December 2003, Congress passed the Fair and Accurate Credit Transactions Act (FACT Act), which included the right to a free annual credit report on request and a number of provisions designed to improve the accuracy of credit reports. On June 4, the Federal Trade Commission finalized its rule for implementing the new consumer right to a free credit report, rolling it out over a nine-month period, beginning on the west coast in December 2004 and finishing on the east coast in September 2005.From 1994 to 2004, the state PIRGs and other consumer organizations have issued numerous reports showing that sloppy Credit reference agencycredit reporting agency practices are at fault for errors in consumer credit reports. Inaccurate credit reports could damage 1 in 4 consumer's ability to buy a home, rent an apartment, obtain credit, open a bank account, or even get a job.U.S. PIRG collected 200 surveys from adults in 30 states who reviewed their credit reports for accuracy. Key findings include:
  • Twenty-five percent (25%) of the credit reports contained errors serious enough to result in the denial of credit;
  • Seventy-nine percent (79%) of the credit reports contained mistakes of some kind;
  • Fifty-four percent (54%) of the credit reports contained personal demographic identifying information that was misspelled, long-outdated, belonged to a stranger, or was otherwise incorrect;
  • Thirty percent (30%) of the credit reports contained credit accounts that had been closed by the consumer but incorrectly remained listed as open.uspirg.orgIt is possible, for example, that a bad debt of a previous tenant could be associated with a current tenant, merely because of the common address.A credit repair campaign is most likely to show results if creditworthiness has been damaged due to incorrect or misleading information in a credit report.In summary, such a credit repair campaign involves obtaining copies of one's credit reports and formally disputing erroneous or misleading information there found.The process in many countries (including the United States) can be quite complex and time consuming, thus spawning the credit repair industry. Both for-profit and not-for-profit organizations have formed to assist individuals in the credit repair process, always for a fee, though governments have repeatedly increased oversight and regulation of this industry because of predatory practices. Under the Credit Repair Organization Act (CROA), you are prohibited from pre-charging for the services of credit repair unless you are a 501 C-3 non-profit Credit Education and Repair Company. ftc.govIn addition, much self-help information on credit repair has become available, providing the motivated individual the tools and knowledge to proceed with their own credit repair campaign. Just as an organization hired for this purpose, the individual would initiate the credit repair process by first obtaining copies of their credit report, reviewing the credit report for errors, omissions, and misleading information, and requesting corrections to such information by means of a formal dispute. __NOTOC__

    How to Repair Personal Credit -

    Dispute - To dispute an entry in your credit report because it contains erroneous, misleading, or outdated information, as provided by federal law, simply write a letter to the credit reporting agency. As an !example:----

    Your? Name
    123 Your Street Address
    Your City, ST 01234

    Big Credit Bureau
    Their Street Address
    Some City, ST !56789

    2/10/1 999

    Dear? Credit Bureau,

    This letter is a formal complaint that you are reporting inaccurateand incomplete credit !information.

    Cre dit? reporting laws ensure that bureaus report only 100% accuratecredit information. Every step must be taken to assure theinformation reported is completely accurate and correct.

    The following information therefore needs to be re-investigated. Irespectfully request to be provided proof of this alleged item,specifically the contract, note or other instrument bearing mysignature. Failing that, the item must be deleted from the reportas soon as !possible:

    :

    C REDITOR? AGENCY, acct. !123-34567-ABC

    Ad ditionally,? please provide the name, address, and telephone numberof each credit grantor or other !subscriber.

    Under? federal law, you have 30 days to complete your re-investigation. Be advised that the description of the procedure usedto determine the accuracy and completeness of the information ishereby requested as well, to be provided within 15 days of thecompletion of your !re-investigation.

    < ;p>Sincerely,

    < p>your? !signature

    Yo ur? Name
    SSN# !123-45-6789

    ----

    Fraud - Many companies offer fraudulent schemes for personal credit repair, offering to wipe out legitimate records and give a person a "clean slate". In many cases, these are either fraudulent scams or schemes which may cause a person attempting to use them to violate more serious laws. It is very important to note that this is not only the case. Such schemes are primarily identified by unrealistic promises, such as the following:
  • We want you to pre-pay even though we are not a bank or a non-profit as defined in CROA.
  • We will erase bankruptcies from your record.
  • We can erase tax liens from your record.
  • We can issue you a new Social Security number.
  • We can clean up your credit in any - amount of time less than a 30-120 days.Additionally, if you do sign up for a credit restoration/repair service, you should ask them the following important questions:
  • Is their company authorized by CROA, as a bank or non-profit to pre-charge for credit repair? Even an attorney cannot pre-charge for credit repair.
  • Is there a monthly fee? If so, then there is no incentive for them to quickly and efficiently clean your file.
  • Is there a lawyer or a legal department on staff? If not they are unable to deal with issues like tax liens, wage garnishments, and bankruptcies to the fullest extent.
  • Is the name "credit counseling" in the name? Credit counseling firms are simply tools of the banks and creditors, and leave your credit report in worse shape than when you started.
  • Is the company involved in "debt consolidation" at all? Debt consolidation is worse than a bankruptcy for your credit report.Legitimate approaches which may correct erroneous, misleading, or outdated entries on a credit file, negotiate with creditors, and teach better debt habits, take months if not years to accomplish significant results.

    See also -
  • Credit report
  • Fair Isaac
  • Fair Credit Reporting Act
  • Identity theft

    External links -
  • consumeraction.gov - The Consumer Action Handbook Online Edition - Federal Citizen Information Center

    Federal Trade Commission -
  • ftc.gov - Credit Repair: Self-Help May Be Best - Federal Trade Commission
  • ftc.gov - Credit Repair, Help Yourself First - Federal Trade Commission
  • ftc.gov - Credit Consumer Protection - Federal Trade Commission
  • ftc.gov - Consumer Finance Scams - Federal Trade Commission
  • ftc.gov - Credit & Divorce - Federal Trade Commission
  • ftc.gov - File Segregation, New ID is a Bad Idea - Federal Trade Commission
  • ftc.gov - Fort Lauderdale Attorney Agrees to Settle Deceptive Credit Repair Charges - Federal Trade Commission
  • ftc.gov - Credit Repair Organizations Act, 15 U.S.C. § 1679, et seq. - Federal Trade Commission
  • ftc.gov - Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681-1681(u), as amended - Federal Trade Commission
  • ftc.gov - Telemarketing Sales Rule, 16 C.F.R. Part 310 - Federal Trade CommissionCategory:Personal finance

    • Websites


    Repair Your Bad Credit
    An excellent resource for credit repair information.
    http://www.goodcreditahead.com/

    The UK Insolvency Helpline
    Free Non Profit UK national debt advice organisation funded by the credit industry. Freephone 0800 074 6918
    http://www.insolvencyhelpline.co.uk

    Federal Trade Commission
    The FTC site includes law and rules on consumer protection and anti-trust.
    http://www.ftc.gov/

    American Credit Repair Center
    Resource on credit repair, bankrupcy, credit card applications, bad credit, and personal finance.
    http://www.usacreditrepair.com

    CreditProvide
    Offers a bankruptcy kit and tips on removing negative remarks from credit reports.
    http://www.creditprovide.com/
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