The Law and bad Credit

We all know that negative or derogatory information will stay on your credit report for seven years. The cynical advice given by most people is to wait it out; that only time (seven to ten years)

can clear your record; that there is no easy solution. The fact behind this statement is that all credit bureaus purge or cleanse an individual's files after seven years, thus giving him or her a fresh start. A bankruptcy will stay on file for ten years. This has been the result of the Fair Credit Reporting Act (FCRA), which was enacted in 1971 in order to insure that credit bureaus fully investigate any credit items disputed by consumers. This law has set guidelines which give an individual the right to challenge the accuracy and validity of credit listings on his or her credit report. The law also specified that if the challenged items could not be verified, or were inaccurate, they had to be deleted from an individual's credit file. The details of the FCRA are below:

• You have the Right of Access: You can find out what type of information is in your credit file at any credit bureau. But some agencies interpret Access in different ways, in that they will only allow you to view your credit file. Access never means that you can go into a credit bureau office and physical handle your file.
• You have the Right to be notified of Adverse Action: If you have been denied credit, insurance, or employment, then you can access your file (by way of a copy) and find out if the information you have is correct. You can get a free copy of your credit report if you request it within 30 days of the denial.
• You have the Right be to notified of any Investigative Consumer Reports: If the credit bureau is interviewing other people (such as friends, neighbors, fellow-employees) about you, then the credit bureau, or its agents, must inform you in writing that such an investigation is underway. Secondly, you have the right to send a written request asking about the nature and purpose of this investigation. The credit bureau must reveal to you the questions they are asking, the number of people being interviewed, and the name of the agency on whose behalf they are investigating.
• You have the Right to Confidentiality: The only reason your credit file exists is for the purposes of credit, insurance, employment, or government licenses. However, a government agency can only get into your file with a court order.
• You have the Right to Accuracy: Only information that is current and accurate must be kept in your credit file. All other information must be deleted.
• You have the Right to Sources and Information: Those who file information about you in your credit file, as well as those who request information from your file must be disclosed to you by the credit bureau.
• You have the Right to Penalties: If your file was obtained by a third party illegally or under false pretense, then you are entitled to seek criminal penalties.
• You have the Right to Dispute Entries: The credit bureau must investigate and reinvestigate any entry that you dispute as incorrect or inaccurate, within a reasonable amount of time, namely 30 days. If the entry is indeed inaccurate or incorrect, or cannot be verified, then it must be deleted. If the dispute cannot be resolved between you and the credit bureau, then the credit bureau must enclose a brief statement in your file, which notes the existence of the dispute.
• You have the Right to be notified of Adverse Public Record Information: If the credit bureau chooses to forward information to a third party pertaining to public record items such as: Arrests, suits, convictions, liens, or bankruptcies, it must notify you as to whom and why such information was disclosed.
• You have the Right to Legal Recourse: You may proceed to bring a civil suit against a credit bureau for noncompliance with the FCRA. There are no restrictions as to the amount of the suit.

If you examine your rights carefully, you can easily discern that derogatory or negative information can be removed from your credit record.

But be warned that the process is not simple. As can be expected, when you first begin to make inquiries about your credit file, the credit bureaus will make you run a lot of hurdles, such as asking for more information, further clarification, and additional identification. The dispute system itself can be frustrating and, worst of all, discouraging. But do not give up. That is the simple key to your success. Be dogged. Don't take no for an answer. And don't take silence to mean "No".

The common myth is that credit bureaus must complete their investigation within thirty days (after you file your dispute); if the process takes longer, than they must remove the disputed information from your file. This is simply not accurate. So don't waste time by planning to sue the credit bureau if it takes longer than thirty days to investigate your claim.

It is important to understand the fact that if you submit a valid dispute letter, and the credit bureau investigates your dispute, chances of you succeeding are excellent - no matter if the disputed negative listings are accurate. You see, accuracy has very little to do with the deletion of negative entries.

If a credit bureau cannot verify an item, it will remove it. But it will remove it in its own time. Not in thirty days. Keep in mind the fact that many lenders are hesitant to spend time verifying data on any given individual. This can work to your advantage.

The credit bureau can also choose to ignore your dispute, if they believe that your claim is "irrelevant" or "frivolous". This can happen if you tell the credit bureau that the derogatory information was the result of a divorce, job loss, health problems, or any other personal circumstances.

There are, as well, several other confused opinions about bad credit and its removal from your files. Let us look at some of these opinions.

• Do not assume that if you pay off your past-due account (especially one that is a charge-off or given to collection) that your credit will no longer be negative. The fact is that even if you pay off all your past-due amounts, your file may still be negative. But you can work with lenders and credit bureaus in order to eventually delete such entries. More on this later on in the book.
• Once a derogatory item is deleted from your file, it will stay deleted, unless your lender verifies the negative listing (even after the 30 day period). A lender may challenge your account anytime, and whenever he does verify the information, it shall again be added on to you file.
• Bankruptcies and foreclosures are not impossible to remove from your credit record; they merely require a more methodical and intensive approach.
• It is simple to dispute a credit item. However resolving such a dispute in your favor takes great patience and persistence, which you will need in order to succeed. But, then, your credit life is at stake. You should pull out all the stops. It is not an impossible task.
• If you have chosen to file a "100-word statement" explaining your negative listings, you should move to remove it at once. Lenders are not interested in your side of the story and will regard this statement as proof of your bad credit.
• Some people are often advised to make minor changes in their Social Security Number, or start using their EIN tax number in place of their Social Security Number, so a new file is created under your name. This is a difficult and illegal scheme and will eventually put you in severe hot water. You don't need to reduce yourself to such drastic measures. You can clean your credit with pure hard work, which is a lot more rewarding and fruitful.
• Do not assume that if you build up enough good credit that it will offset your bad credit. Any amount of bad credit on your file is highly detrimental, because you are usually rated by a

computer that is often programmed to reject any type of negative credit. Thus even one or two slow payments will result in your being turned down for a loan or credit card.

These opinions are given so that you can clear your mind of any preconceived notions about credit repair. As with most things, there are a lot of myths floating around. Your job is to look for the impartial truth that will guide you to make the right decisions and carry out the correct actions - so that you can achieve the desired results.

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