Cleaning Up Your Credit – Do’s and Don’ts

March 11, 2008

“Raise Your Credit Score Immediately – Call Now!”  – The toll free number followed in big red type. Glancing through the article our hero was surprised to learn that there are lots of quick, easy ways to fix the mess he had made of his credit. “Honey, ” he called to his wife, “I think we may be able to buy that house on Johnson Street after all.” Life was good.

Unfortunately, that’s just a fantasy as most quick fixes are. The truth is that noone can legally remove negative information from your credit report if it is accurate and falls within the appropriate time guidelines. If there is inaccurate information in your credit file, you can and should request an investigation. You can do this yourself – there is no need to pay a credit service.

You are entitled by law to receive a free copy of your credit report any time an adverse action is taken based on the report. For instance, if you are turned down for a loan or a rental application, you can get a copy of the credit report. Just look at the notice that comes in the mail and write to the address provided, requesting your free report.

In addition, you may ask for a free copy of your credit report once each year from each of the three credit bureaus (Equifax, Expirian and TransUnion). There are three ways to contact the bureaus to make this request. Pick up the phone and call 1-877-322-8228, apply online at www.annualcreditreport.com, or go to  ftc.gov/bcp/conline/edcams/credit/ and print the annual request form, fill it out and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Once you have a copy of your credit report, look it over to determine if any of the items reported are inaccurate or outdated. If you feel that inaccuracies exist, you may request their removal for free. Here’s how:

Start by writing a detailed letter to the credit reporting agency detailing the derogatory entry that you want removed. Remember, to have something removed it must be inaccurate or out of date and it is up to you to prove your case. In your letter, explain why you feel the item(s) should be removed. include copies of any documents you have that support your position. Include all of your contact information. Send this package by certified mail, return receipt requested to the credit reporting agency. In addition, send similar letters to the creditors that made the reports. Most creditors have a specific address to receive disputes. Once they receive yours, they will have to note the dispute on your credit report and do an investigation.

The credit reporting agency will investigate your claim within 30 days, unless they feel it is frivolous. They will also work with the reporting creditor to determine the validity of your claim. if they find you are right, they will remove the inaccurate information from your file, which will change your credit score in most cases.

When the investigation is over, the credit reporting agency must notify you in writing, and if a change was made, they must provide you with a free credit report. If you request, they must also send a notice of the change to anyone who has accessed your credit report in the last six months. They must also notify the other reporting bureaus so that your credit file can be changed by them as well.

If the information is accurate, however, nothing is going to get it removed from your credit report other than the passage of time. Most negative information can be reported for seven years and bankruptcy information can be reported for up to 10 years. Information about an unpaid judgment can be reported for seven years, unless a longer statute of limitations is involved. There is no time limit for reporting information involving a request for insurance or credit of more than $150,000 or obtaining a job paying more than $75,000 per year.

Before you take drastic steps to remove accurate information from your report or attempt to obtain a new social security number or tax identification number, consider this (from the ftc website) –

You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.

Even if you have good credit, you should keep an eye on it. Make sure to look at your credit report at least annually to make sure it is accurate and to monitor for identity theft. Your credit score can affect more than just loans. It can affect approval and cost of insurance, hiring decisions, and the availibility of loans as well as the interest rate you pay.

For more detailed information about your credit score and the laws affecting it, visit www.ftc.gov.

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