Credit Repair 101

Credit Repair pt. 2

There are a number of things that you, the consumer, can do to repair, improve or clean up your credit history. In the following section, we will outline several ways to go about doing this.

First, it is important to remember that if you have applied for credit in any form, your credit report was pulled, and you were subsequently denied credit, you have the legal right to examine your credit history within 30 days of the denial for inaccuracies or reasons for which to reply. In addition, each and every time you are declined credit, that agency or institution that rejected you must provide written notice of the rejection along with a reason which the credit bureaus will base this denial.

In addition, the law states that a credit bureau must inform you of what is contained in your credit report upon request. It does not state that they must show you the actual report. If you have been denied credit, you should be able to receive a copy of the report upon request. Remember you have 30 days to do so. If you fail to meet the deadline, you may be charged a nominal fee from the credit reporting agency, normally around $8.00.

Upon reviewing your credit, look at the time involved in the negative information. By law, derogatory or negative information must be removed from your credit history after a certain time period. Recognizing that most people will fall victim to the occasional mishaps or late payments, the law allows people to recover from their mistakes so that they do not haunt them for the rest of their lives. Bankruptcies generally will last for ten years. Other negative information, such as judgments, liens, etc., must be removed after seven years from the date of occurrence. Inquiries only remain on your credit profile for one year. 

The law also mandates that any and all negative history on a consumer's credit file must be investigated and resubstantiated at any time the consumer requests the agency to do so. This technicality has become the basis for many credit repair companies throughout the country (and making a nice profit doing so). If you compose a letter claiming you disagree with certain items on your credit history and these items are "injurious to your credit rating" and mail this complaint by certified mail to your credit bureau, they have a "reasonable" period of time to investigate all disputes the consumer claims. Typically this period last for about four to six weeks.

The credit agency is required to contact individually each subscriber and ask for a reverification of the charge. This can be advantageous because many subscribers do not feel it is worth their time or effort to respond to the high number of inquiries from people doing just this thing and will not answer the letter in the required time period, especially if they have already written off the debt.

Many companies, especially larger financial institutions, keep records for about two years. If you are disputing a late payment or a charge-off that happened after they have thrown away or put away into storage their records of the transaction, their is no way they can prove the fact that this transaction is still bad. Or, you might have paid off a delinquent account and since the records are no longer available and have no record of that, they typically will not respond to the letter.

If the first inquiry still does provide you with the results that you want, there is no legal limit to the number of letters you can submit . Each time you submit a letter, the credit bureau must contact the creditors and the creditors must answer within a reasonable amount of time allowed. The first time the subscriber fails to answer the letter within the reasonable amount of time, the negative item is removed from your credit report permanently.

If you reach a point where the creditor will not remove the information, it is often advisable for you to contact them personally. The creditor has the legal opportunity to cancel any negative information they have provided, with or without the assistance of the credit bureau. 

If you have a late payment or a series of late payments to a subscriber and you have since paid them off and have continued a mutually agreeable relationship with the creditor, the effort involved in contacting them personally will often impress the creditor enough that they will agree to remove the negative history because you have now proven yourself a reliable consumer. They may want to keep your business.

Also, you can point out the fact that they do not necessarily have to respond to the credit bureau asking to remove negative information, but can simply choose to ignore it to an upcoming inquiry from the bureau that you will initiate. Or, another approach is to offer the subscriber payment in full (or for pennies on the dollar) for any debt or balance remaining on your transaction if they will in turn remove the entire transaction from the credit bureau's report. The key, though, is to be sure that they understand and agree to remove the transaction from your report or not respond to an inquiry rather than showing the problem has been paid in one lump sum. If they only accept payment without removing the transaction, the payment record will continue to report on your credit history and subsequently defeat the purpose of negotiation the problem off of your credit history.

If all fails and you are still unwilling or unable to resolve the problem(s), write a brief (under 100 words) detailed statement and ask for it to be included in your credit report. A credit bureau by law must include such a statement. It may not necessarily negate the effects of the problem, but can help to add credibility to your credit history for future creditors.