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
[email protected]. 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.
