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A message from NAMB Convention Committee Chair George Hanzimanolis, CRMS

National Mortgage Professional
Jun 01, 2006

The world of credit: Credit repairJohn J. HudockFair Credit Reporting Act If you searched Google for the term "credit," approximately 1.53 billion references would appear, with the majority of references coming directly from Equifax, Experian, TransUnion, FICO or their affiliates. It seems that they want all of the credit repair business for themselves. In the majority of situations, they set the criteria and produce the errors in the credit reports, and, thus, the credit scores, and then charge you $79 for a free credit report that only seems to complicate your understanding of credit. You should not have to pay for a credit report, unless the information on it is correct. We should expect the information to be accurate. When the information is incorrect, so is the credit score. It is a violation of the Fair Credit Reporting Act (FCRA) for any furnishers of information (creditors) to provide inaccurate information to a credit bureau. Congressional findings have found that inaccurate credit reports and unfair credit reporting methods undermine the public confidence, creditworthiness, credit standing, credit capacity, character and general reputation of consumers. If you find an error on a credit report, the error should be disputed. Credit reporting agencies (CRAs) are required to provide consumers with everything reported on a credit report, except any information concerning credit scores or any other risk scores or predictors. Anything inaccurately reported on a credit report must be corrected upon request. The CRAs must correct the erroneous scores and send them to anyone who inquired and received your credit scores since the error occurred. The FCRA requires Equifax, Experian and TransUnion to assure maximum possible accuracy of the information on credit reports. They do not seem to care--the fines today are so minimal, the process is so complicated and the profits are so great that they would rather pay the fines. The situation continues to get worse as they charge you $79 for a "free" credit report to correct the errors that they have been making because of erroneous reporting. The Federal Trade Commission (FTC) is overwhelmed with every type of complaint conceivable. The credit bureaus are selling your credit information. They are making money every time it is sold, without any concern as to whether or not it is accurate. They are continually coming up with new types of gimmicks and scare tactics to get you to give them more fees for something that is already yours. They want to charge you to see if your credit score goes up or down or to see if someone is stealing your identity. You should not have to pay for that. Now, FICO is charging $12.95 for a credit repair manual, when you can get more information from the FTC or from The World of Credit for free. FICO's new program links you to their partners' Web sites, which will charge you $25-$35 per month to repair your credit. The credit bureaus and FICO are not making millions of dollars in profits--they are making billions. They make the errors and perpetuate them. When you dispute an inaccurate item and finally get it removed from a credit report, it reappears a few months later. There is something definitely wrong with their system. If they can maintain problems and errors on your credit report and resist your attempts to correct those errors, they can then charge more fees for programs that only appear to be correcting your credit. FICO and the credit bureaus also sell your credit score--the same credit score that may have been calculated based on inaccurate information. If you accessed credit reports from three different credit resellers five minutes apart, you would receive three different scores. If you compared these scores to the credit scores that you have on a residential mortgage credit report, you would find a huge difference. They should be the same. They should come from the same source. There are no regulations about your credit scores. The credit industry has hyped up the value and importance of credit scores, and, yet, there is not one method in place to assure the accuracy of those scores. Your credit report should not have to be "repaired." Section 623 of the Fair Credit Reporting Act requires any information that is reported to the credit bureaus be accurate. If the information being reported is accurate and the credit bureaus are maintaining it accurately, then the credit reports they are selling should be correct. We should have a 100 percent guarantee that the information and score on the credit report is accurate. You definitely shouldn't be required to pay anyone to have it corrected. No one should have to pay to have his credit report corrected. CRAs make it difficult for individuals to dispute and correct their own report. Many individuals become overwhelmed and frustrated. The limitations placed on compensations from filing credit reports violations aren't usually worth an attorney's time to file the necessary paperwork. This is where you, as a financial advisor, come in. Don't pay anyone else to do any credit repair. Credit repair is an educational process--a process that you certainly should know. You can begin by analyzing your own credit report. Learn to dispute the errors yourself. The FTC offers excellent advice, but they don't go far enough. The World of Credit will provide free suggestions and recommendations for any mortgage credit situation. First, there is no possible way to correct the information on a credit report, unless you look at and become aware of what is listed on it. You don't have to buy the credit report, either. You can get your credit report for free from the Annual Free Credit Program under the FACT Act--you are entitled to receive a free report from each of the three national credit reporting companies (Equifax, Experian and TransUnion) every 12 months. This does not count as a credit inquiry and will not affect your credit score. I suggest you get one from each of the repositories every 120 days. (If you need any help interpreting, contact The World of Credit--we do it for free.) Once you have your credit report in hand, review the entire report. Circle any errors that you may find, including incorrect past or current residences, current or past employment, any additional listing of different Social Security numbers and any information that is incorrect. Write your comments directly on the report. Identify and review each tradeline and take note of the current status code in front of the name of the creditor. Place the following codes in front of each tradeline: • O.K.--If the tradeline appears to be completely accurate • ?--If the tradeline is yours, but the information is inaccurate • D--If the tradeline appears to be a duplicate listing • X--If you know the tradeline is not yours and shouldn't be on your credit report These codes will help you organize your credit report and understand what must be disputed. Now, go back to the beginning of the report and, next to every item circled, write an explanation. Do so for each tradeline that isn't marked "O.K." For any negative items, write out exactly what you believe the problem is. Next, you must notify the creditors and the credit repository about the tradelines that weren't "O.K." The phone numbers of the credit repositories and creditors are on each report. The World of Credit can perform a free analysis to determine the approximate level of credit--no credit (below 500), bad credit (500-600), good credit (600-720) or great credit (720 and above). Sign your name and the date on the first page of the credit report and fax it to (877) 829-5757 or e-mail it to The World of Credit--we do not need a cover page. I am still looking for extreme credit reports. FICO and the credit repositories claim the credit score range is between 300-850. I have received a 399, a 394 and an 832. If you find any scores below 394 or above 832, please fax a copy to me (cross off the name, Social Security number and account numbers) to (877) 829-5757. A cover sheet isn't necessary. John Hudock is president of The International Credit Club and The World of Credit, two companies specializing in credit report problems and scores. He also has online continuing education courses on credit approved by the Pennsylvania Department of Banking and the Pennsylvania Department of Continuing Legal Education. John can be reached at (877) 829-5432 or e-mail woc@epix.net. He invites e-mails on any credit topic, will answer each one and publish any that will benefit his readers. Please be specific with your questions.
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