FREQUENTLY ASKED QUESTIONS?
A. As the credit bureaus computerized their processes and greatly expanded their reach and influence in the late 1960s and early 1970s, consumer complaints began to pile up at the FTC and state attorney generals’ offices. In theory, the Fair Credit Reporting Act (FCRA) charges the credit bureaus with responsibility to the consumer as well as the credit grantor. In reality, the credit bureaus resist, resent, and reject consumer disputes.
Many consumers have the idea that the credit bureaus must complete their investigation within thirty days or be forced to remove all disputed information. They threaten to sue the credit bureaus if they don’t conclude their investigation in time and repair their credit. In practice, such thinking is delusional. However, if you manage to submit a valid dispute letter, and the credit bureau investigates your dispute, the chances of success are good – whether or not the negative listings are accurate. If a credit bureau cannot verify an item before completing its investigation, that item will be removed. Many credit grantors are simply reluctant to take the time to verify the data. While the credit bureaus may be in the business of reporting credit histories, credit grantors are not.
A. Many “credit repair” companies claim to remove negative credit with the flick of a wrist. Their advertisements make bold assertions and money back guarantees. While some credit repair companies are outright frauds, others are not frauds and they use the dispute process to obtain impressive results. In fact, they delete thousands of negative credit listings every year. In truth, credit repair fraud is less common today than five years ago. Vigorous regulatory sweeps by state and federal regulators have cleared away most of the illegitimate (and some of the legitimate) credit repair companies.Unfortunately, it’s risky to trust anyone to help you repair your credit.
No credit repair company is so good that it can guarantee a specific outcome. Not surprisingly, the credit bureaus have declared war against the credit repair companies and those selling instructions on how to do-it-yourself. The simple truth is that you don’t have to endure bad credit for seven to ten years. It is possible to repair your credit within a much shorter time.However if you decide to address your credit challenges, realize that regardless of what you may hear in the news media, thousands before you have sought help and repaired their credit.
A. Accurate negative information generally can be reported for seven years, but there are exceptions:
- Bankruptcy information can be reported for 10 years;
- Information reported because of an application for a job with a salary of more than $20,000 has no time limitation;
- Information reported because of an application for more than $50,000 worth of credit or life insurance has no time limitation;
- Information concerning a lawsuit or a judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer; and
- Default information concerning U.S. Government insured or guaranteed student loans can be reported for seven years after certain guarantor actions.
- Tax liens stay on 7 years from the date PAID.
The Statute of Limitations has nothing to do with the length of time something can stay on your credit report, they are two TOTALLY separate things.
The length of time a negative mark can stay on your credit report starts from the time you were late or the late payment went into collection, not from the last time you made a payment on the account. Some collection agencies update their reporting status on you to keep the account active with the bureaus to extend the time the account appears on your report. This is illegal! Challenge this! If you do, bureaus will correctly remove it 7 years from origination. Period. In other words, paying a collection will not keep it on your credit report for a longer period of time.
A. Under the most recent version of the Fair Credit Reporting Act, the credit bureaus must complete a reinvestigation within 30 days of receiving a dispute letter from the consumer.However, the credit bureau still has the right to consider a dispute letter “frivolous and irrelevant” at their own discretion, if they feel that someone is attempting credit repair. While the credit bureaus are careful not to overuse this privilege, they may deem virtually any dispute frivolous or irrelevant without having to justify their decision or point to credit repair methods.
While the credit bureau is required to complete their reinvestigation in 30 days or less, the consumer has little recourse against them if they don’t. The credit bureau may take as long as it likes to repair the credit. The only real recourse a consumer might have would be to gather a class-action lawsuit to penalize the bureau for taking too long. At TransUnion, for example, it is common practice to receive the credit repair dispute letter, take a week or two to process it, then send the consumer a letter saying that the reinvestigation will begin on the date that the credit repair dispute was finally processed. This often gives them a total of six weeks from the date of receipt of the dispute to complete the reinvestigation.
A. A person’s credit rating is a numerical representation of how risky it is for a lender to give a person credit, which in most cases means a loan. A high Credit Score means a person is low risk, while a low credit score means a person is rated a high risk. A person with a good credit score will have more access to credit (such as more opportunities to take out a loan when purchasing a high priced item like a home or car) than a person with a low credit score. The person with a low credit score may need to pay higher interest rates on a loan or may even be denied a loan due to their credit score. A person’s credit score is very important in determining the credit, or cost of credit, available to him or her.
A. Most consumers will begin seeing positive results within 45 days after their credit reports are sent to the credit repair company.Obviously, everyone’s credit situation is completely different, so how long it takes for you to achieve your expected results depends on the nature of your case, the number of bad credit items on your reports, your participation in getting credit reports to the company, and the level of credit bureau and/or creditor cooperation. Most of the wait-time after that is usually spent waiting for the credit bureaus or creditors to respond.
On average, most consumers have obtained the desired result by the eighth month. Keep in mind that credit repair companies may not challenge all negative inaccurate, misleading, unverifiable, outdated and obsolete items simultaneously. Doing so would be less effective and may raise flags with the credit bureaus.
A. There exist many laws, both State and Federal that not only protect you – the consumer, but also regulate the credit bureaus and the creditors that report to those credit bureaus. The credit repair company will use their vast experience and expert knowledge to be your advocate in exercising your rights and correcting your credit reports with Equifax, Experian and TransUnion.
Once they receive your credit reports, they will immediately begin the process of auditing your reports and preparing the investigations that we will be sending on your behalf to the credit bureaus and/or creditors and DEBT collectors. Typically, you should begin seeing positive results approximately 30 – 45 days after they initiate the investigation process.Once the credit bureaus have processed the first round of these investigations, they will send you updated copies of your credit reports showing you the results of the investigations. Simply forward the updated reports to the credit repair company and include all other correspondence you receive from them so that we may continue the process.
Whenever they receive your updated reports, they will document the progress, re-audit your reports and initiate the next round of investigations, thus gradually working through the entire list of negative inaccurate, unverifiable, outdated, misleading or obsolete items on your credit reports.
A. Bankruptcies have been removed from your credit reports, as well as a vast array of items included in bankruptcy.Although there are guarantees the specific results of a specific account, I can tell you that questionable bankruptcies have been removed in the past.
A. Absolutely! It is because it is legal that you are able to do what, for you can use the laws that protect you, the consumer, and that regulate the credit bureaus and the companies that furnish information to them to accomplish your work. You are given certain rights under the Fair Credit Reporting Act, Fair and Accurate Credit Transactions Act, Fair DEBT Collection Practices Act, Fair Billing Act, HIPPA and other laws, to help you assert these rights.
The Credit bureaus would like to have you think otherwise, but the truth is that the Congress, when enacting the Credit Repair Organization Act, stated that consumers have a “right to seek help from Credit Repair Organizations”.
A. Credit reports contain a listing of some or all of your credit accounts that have been active at some time within the last 7 years. They also contain any public records (Chapter 7 bankruptcies are reported for 10 years), current and previous addresses, current and previous names, a listing of potential creditors who have received your credit file and other miscellaneous information the credit bureau has about you. Each account listing generally has your account number, the credit limit, your current balance and your previous payment history. This payment history can contain notes of late payments, any collection or transfer history, whether the account was included in bankruptcy and the current payment status of the account.
A. Most credit grantors are not allowed by the credit bureaus to show you your own credit report. In addition, under the Fair and Accurate Credit Transaction Act, you may be entitled to receive a free credit report. You can go to www.annualcreditreport.com to check availability. However, if you want to see your credit score, you will have to purchase it. I recommend you purchase your FICO credit score, as this is the score that most lenders will see.
A. Even one small late pay listing may result in credit denials. Any negative credit whatsoever can become a substantial credit obstacle. There are also other factors that will play into the decision of the lender. What is your debt to income ratio? How long have you been with your current employer? The exact criteria used for granting or denying credit varies from lender to lender, but any negative/bad credit remark on your credit report may be enough to deny you credit.
A. Lenders, property managers, insurance companies, prospective employers, companies which you presently have a credit relationship with and anybody with a permissible purpose who wants to know who you are can get access to your credit file. In many situations, your credit report will actually become your identity. People will know you not by who you are, but by what is reported about you from the credit bureaus. Obviously, those reports can be extremely damaging especially if they contain incorrect, misleading or obsolete information.
A. A public record is a file such as a bankruptcy, tax lien or judgment that is filed at the courthouse. Unlike your creditors, the courthouse does not report public record information to the credit bureaus. The credit bureaus must therefore rely on third parties or smaller local affiliated bureaus to go out and research this information. For purpose of fixing your credit, the laws that regulate the reporting of these public records are the same as any other item and are treated no differently in that regard.
A. When you become very delinquent on an account then the creditor will probably “charge it off” against their profit and loss. A “Charge-Off” is basically an accounting term used in accrual accounting that says the amount is now a loss. In a short period of time, the creditor determines that the account will not be paid, and they will write it off for tax purposes. Once they minimize their loss from that account they will sell that file to a collection agency to decrease the loss even further. The collection agency will then use a wide variety of means to collect on the debt. Charge-offs are very negative listings.
A. Yes, they most definitely can be when they are found to be inaccurate, outdated, unverifiable, misleading, obsolete or legally lacking in some other way. Although the credit bureaus would have you think otherwise, I have seen many deletions ranging from bankruptcies to late payments.
Just take a look at our testimonials and see actual credit reports and bad credit marks that have been deleted.
A. No. The laws that regulate the credit bureaus and your creditors are mostly federal law. Your rights are the same whether you are in Alaska or Alabama.
A. All information reported by the credit bureaus are subject to the same laws and criteria. You may challenge any items you feel that are inaccurate, and the credit bureaus must investigate these items.
A. Experience has shown that investigating too many items at one time can actually slow down the process because the credit bureau may deem our request frivolous. Therefore, only submit investigations for the number of items that you deem appropriate for your case. Challenge as many items as possible without jeopardizing a slowdown of the process which is around 3 items per dispute letter.
A. I would never advise not paying your bills, but that issue is between you and your creditors. Although related in some ways, your bills and your credit are not the same thing.If you are experiencing trouble with Your Current Debts or would like to know what options may be available to you to pay off debt obligations, click here for further resources that can assist you in that area.
A. Paying your bills on time should do nothing but help your credit score. Many of our clients are trying to buy a home, refinance a home or qualify for new credit. Good payment history will help you do all of those things. We often tell people that while we work on the past credit,you should be working on the future.If you are having trouble paying your bills you may want to talk to a professional debt counselor.
A. Yes, you can. You can also represent yourself in a court of law but that doesn’t mean it is necessarily a very good idea.It isn’t a coincidence that the Federal Trade Commission receives more complaints against credit bureaus than any other type of business. Remember, the credit bureaus are primarily interested in protecting their profits. Investigating your challenge consumes these profits. The credit bureaus will 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 you are willing to take the time and assume the risks of doing it yourself.According to a recent report by ConsumerReports.org, a Nonprofit, Independent firm, “It isn’t nearly as easy for consumers to correct errors as it is for the credit repair companies. Just as you are probably better at what you do than I would be, Credit repair companies are probably better at Credit repair than you would be.
FREQUENTLY ASKED QUESTIONS
One of the unique features of VantageScore is the scale it uses. Scores range from 501 to 990 in groupings that approximate the familiar academic scale, making it easier for you to understand your score.A: 901—990B: 801—900
F: 501—600 (High Risk)
Keep in mind that there are many different credit scores in the market and the score range will vary by model.
Too many inquiries may have a negative impact on your credit score. However, most recently developed credit scores recognize when a consumer is shopping for the best rates and either ignore multiple inquiries or count them as only one inquiry if they occur within a specific period of time. In such cases, shopping around for a home or a car will have little or no impact on a credit score if it’s completed within 45 days.Do lenders and creditors look at all three credit reporting agency reports and credit scores calculated using information from each report before approving a credit or loan application?Not always. Most mortgage lenders will look at reports from all three credit reporting agencies and credit scores calculated using information from each, but other lenders may use reports and scores from two or just one of the credit reporting agencies.
A score is derived in part from a consumer’s payment history. That is, do you pay credit cards, mortgage, and car-loan payments on time, and is your history free from ‘past-due’ amounts, bankruptcies, foreclosures, wage attachments, liens, etc.? As you might imagine, the more recent and larger a negative item, the farther it drags your score down.Amounts owed by a person also factor into part of your score. The total amount owed, whether you are close to the maximum amount on credit cards, how many accounts you have, and what balances remain on installment loans all come into play in this area. The larger the debt you have on a card and the closer that amount is to your card limit, the more likely it is that your score will drop.Another part of your score comes from the length of your credit history, including how long specific accounts have been established and the length of time since you used specific accounts. Another part of your score is determined by how many new accounts and requests for credit you have. Remember, a score is just one important indicator of your creditworthiness.Other key factors include your assets, your liquidity and your monthly expenditures.
It’s against federal law for a bill collector who works for a collection agency (as opposed to working in the collections department of the creditor itself) to call you at an unreasonable time. Before 8 a.m. or after 9 p.m. are considered unreasonable times, but other hours may be unreasonable, too, such as daytime hours for a person who works in nights.The federal Fair Debt Collection Practices Act (FDCPA, 15 U.S.C. § 1692 and following) bars collectors from:
- Harassing you
- Using abusive language
- Using false or misleading statements
- Adding unauthorized charges, and
- Many other practices.
Under the FDCPA, you can demand that the collection agency stop contacting you (except to tell you that collection efforts have ended or that the creditor or collection agency will sue you). Make your request in writing.
No. Many collectors, especially when a debt is more than 90 days past due, will suggest that you make an “urgency payment,” by doing things like:
- Sending money by express or overnight mail, which will add at least $10 to your bill
- Wiring money through Western Union’s Quick Collect or American Express’s Moneygram, another waste of money, or
- Putting your payment on a credit card — you’ll never get out of debt if you do this.
Mailing your payment with a first-class stamp is fine. Or, pay by debit card or check card — but first ask if the creditor will charge a fee. If you send your payment through the mail, you may receive further phone calls from the collector until the creditor receives and processes your payment.
Before obtaining a court judgment, a bill collector generally has only one way of getting paid: asking. This is done with calls and letters.However, once the collector (or creditor) sues you and obtains a court judgment, the law allows it to take further steps to collect the debt. The collector can:
- Garnish up to 25% of your net wages. The amount depends on where you live and how much you earn.
- Seize bank or other deposit accounts.
- Record a lien against real property. This lien will have to be paid when you sell or refinance your property. Technically, the creditor could also force a sale of your home in order to get the lien paid. However, creditors rarely do this because after the creditor pays the costs incurred in selling the home, other more senior creditors get paid from the proceeds (like mortgage holders), and the homeowner gets the amount of the states homestead exemption (most states allow homeowners to protect a certain amount of the equity in their home from creditors, called the homestead exemption), there is nothing left for the creditor.
Even if you’re not currently working or have no property, the judgment won’t disappear. Depending on the state, court judgments can last up to 20 years. In many states, it can be renewed for years beyond that.
Yes. According to section 805 of the Fair Debt Collection Practices Act:“(c) CEASING COMMUNICATION. If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except –(1) to advise the consumer that the debt collector’s further efforts are being terminated;
(2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or
(3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.
If such notice from the consumer is made by mail, notification shall be complete upon receipt.”
So the consumer can just send a third-party collection agency a written notice (preferably citing the FDCPA), ordering them to stop the collection letters and calls, and the agency is legally obligated to comply. The only permissible contact thereafter is to notify the debtor of specific “remedies,” like legal Action.
If, after you file for bankruptcy, a creditor continues it’s collection actions against you, the creditor may be violating bankruptcy’s automatic stay. When you file for bankruptcy, the automatic stay prohibits almost all collection activity, including legal Action, garnishment, and even contact by phone or mail in an attempt to collect a debt.If an exception to the stay does not apply, and the bankruptcy court has not terminated or modified the automatic stay order, then a collector’s attempt to collect a pre-bankruptcy debt is likely a violation of the automatic stay.You have several options if a creditor continues its collection actions against you in violation of the automatic stay.Tell the creditor about your bankruptcy. Many times the collector is unaware of your case (through error or negligence) and will stop collecting and correct its violation. Notify the bankruptcy court. If the collector does not stop and correct its violation, the next step is to notify the bankruptcy court.
A violation of the automatic stay does not depend upon the collector’s intent to violate the stay order, only that the collector intended to start or continue collecting in violation of the order.Generally, the court can sanction a violation of the automatic stay under its power of contempt (because the creditor violated the court’s order).
Bad news: It is legal for a creditor with a court judgment against you to freeze or “attach” your bank account. Some creditors, like the IRS, can attach your account even without a court judgment.But there are limits to what the creditor can take from your account. If all or some of the money came from sources such as Social Security or a public assistance program, this money would be protected. To prove that you deserve this protection, however, you’ll have to ask for a hearing.How to request a hearing, and how soon you must request it (usually pretty soon) varies from state to state. The best way to start is to ask the bank for copies of all the attachment papers. These papers normally outline the next procedural steps. Or, call your local legal aid office for advice and possibly low-cost legal representation.
Any time you receive unsolicited items in the mail, you are entitled to consider them to be gifts and you are under no obligation to pay. Write to the sending company and tell them that you don’t want to receive anymore, and intend to treat those you have already received as gifts.If you keep receiving bills, write to the seller again and insist that they send you proof that you ordered the items. If the bills still don’t stop, notify the state consumer protection agency in the state where the sending company is located.Before you start this process, however, make sure that you didn’t agree to pay for the items. Did you respond to an advertisement that offered you a free gift or a trial membership? If so, check the fine print: You may have accidentally agreed to pay. In this situation, your best bet is to write to the company, tell them that you think their ad was misleading, and offer to send the items back. And make sure to tell them that you want to cancel the deal right away.
It depends on whether the debt has been assigned to a collection agency. Collection agencies — an agency or person whom the original creditor uses to collect the debt –cannot use a postcard to try and collect a debt. However, no federal law prohibits the original creditor from doing so.Some state laws might forbid such a practice. For example, creditors in California who regularly engage in debt collection cannot dun by postcard.If you remain bothered by the practice, stop doing business with the company — and make sure you drop it a line explaining why. (Use a piece of stationery and put it in an envelope!)
In New York and other states that follow marital property rules based on common law property systems — as opposed to the community property principles followed in California and nearly two handfuls of other states — only the spouse who racked up the debt in his or her name is responsible for paying it. The only exception is debts for necessities, such as food, clothing, or medical care.Only if you live in a “community property” state is the deceased debtor’s spouse legally responsible for the debt. (See Nolo’s article Dividing Property and Debt During Divorce FAQ for a list of community property states.)No matter where you live, however, you have a claim against the deceased debtor’s estate. Find out whether there will be a probate proceeding in which you can request that your debt be paid out of his probate assets.
In many states, if you are behind in your car payments, the lender can “repossess” your car without warning or even leaving a calling card. The lender (or, more likely, the repossession company that the lender hires) can hotwire your car or use a duplicate key and drive it away from any location. The only limitation is that they can’t illegally enter your locked home or garage.First, determine whether your inability to pay your car note is temporary or long-term. If it’s temporary, immediately contact your lender, explain your situation, and try to work out a short-term solution (maybe adding the missed payment to the end of the loan term). Or, borrow money from friends or family to get current on your car loan.If your situation will be long-term, you should still contact your lender and try to buy some time. Then, sell the car yourself and use the proceeds to pay off your car loan. If you let the lender repossess the car, it will sell the car to cover what you owe on the loan and also charge you fees for repossession, sales costs, and the like. And if the sales price is less than what you owe (including all the extra fees), you will still owe the lender money even though you no longer have a car to show for it.