Rapidly Reduce Debt » Consumer Credit

Credit Repair Truth or Dare

admin — Thu, 01 Oct 2009 07:45:25 +0000

Credit Repair and the Great Illusion

Credit repair is a discovery process. The vast majority of consumers in the United States are intimidated by the thought of credit repair. The credit bureaus are viewed in the same light as the Internal Revenue Service; a temperamental and potentially ruthless big brother. Oddly enough, this perception could not be farther from the truth. It turns out that the credit bureaus are quite tame and even reasonable, if you know how to manage them.

Protecting the Myth

Like the Wizard of Oz, the credit bureaus live happily behind the curtain of illusion, benefiting from the aura of power. Let’s dispel the myth a bit to spark your credit repair efforts. The credit bureaus are not government entities, nor do they have any government blessing. They are big business, and exist to make money. And they do a great job of it. They are well managed, well focused, and extremely profitable. And in spite of the fact that they have become indispensible intermediaries and guardians of your precious credit score, any communication from you is an unwanted burden on their bottom-line.

Credit Repair and the Truth

So, what went wrong? If the credit bureaus are doing such a great job of running their operations why are there so many errors in consumer credit files? Why is credit repair even needed? There is no contradiction here. Profitability and competence in no way guarantee an accurate product. In fact, by moderating the effort that goes into quality control the credit bureaus demonstrate their business savvy and bolster their bottom line. Does this seem outrageous? After all, your financial life depends on your credit scores. Shouldn’t the credit bureaus be held to the highest level of accuracy when it comes to such important data? Yes and no.

Legislation Cuts Both Ways

Because of the importance of the product they offer, the credit bureaus have been on the business end of countless lawsuits. In fact, a day does not go by when a non-compliance lawsuit is not filed against one of the three major credit bureaus. The importance of credit repair and the groundswell of consumer concern have not escaped the notice of federal lawmakers. The law that governs the credit reporting industry and provides legal leverage used by professional credit repair services is called the Fair Credit Reporting Act (FCRA). There is much in the way of consumer protection built into the FCRA, but there is just as much protection for the credit bureaus.

Credit Repair to the Rescue

The law simply demands of the credit bureaus that reasonable steps be taken to maintain quality. And here is the essential point for all of those interested in credit repair to be aware of; reasonable steps may be determined by the credit bureaus based on the costs associated with implementation. In other words, if it costs too much to fix, it’s going to stay broken. But, not to worry, you are not without a remedy. Credit repair to the rescue.

Credit Repair and the Bureaucracy

As frustrating as it may be to discover that there such a margin of error allowed in an industry that has so much power over your life, there are ways you can make sure that your credit report shines. All the credit repair tools you need are built into the same tome of law, the FCRA. Many people think of the FCRA as the consumer protection law that was designed to force the credit bureaus to provide more accurate data. It’s not so.

Looking More Closely

A close reading will reveal the fact that the overriding focus of the consumer protection built into the FCRA provides consumers with basic legal rights to rectify credit reporting errors. This is a radical difference from forcing the bureaus to be accurate. The true message of the FCRA is, look out for you, because no one else will.

How Bad is it?

If the FCRA puts so much of the burden of accuracy on the consumer, it means, by inference, that in the absence of consumer participation credit reports are likely contain errors and require credit repair. And that is exactly what has occurred. Fully seventy-five percent of consumer credit reports contain errors. Fifty percent contain errors significant enough to cause those afflicted to pay premium interest rates and even get denied for loan requests.

The Law is Your Sword

Credit repair, as a result, is as an essential process in your life as a regular physical examination or tuning up your car. Credit repair is far more than a credit rejuvenation for those with past credit issues, it is a necessity for everyone. If you don’t have the time to manage the credit repair process on your own, hire a professional. It’s important, it’s your credit, take care of it. Good luck!

Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.

Credit Repair and the End of Authorized User Accounts

admin — Mon, 08 Jun 2009 03:09:31 +0000

Common Practice

It is a common practice for parents to give a child a credit card. It’s good for emergencies and handy for everything from summer camp to college life. It is also common for one spouse to make the other spouse an additional card member.

A Little Software Bug

None of these practices are even slightly questionable. Additional card member accounts didn’t attract the attention of lenders or Fair Isaac Corporation, the creator of the credit-scoring model used by lenders when they make credit decisions, until they noticed an interesting bug in the credit-scoring model which was to spawn a questionable little sub-business in the credit repair industry.

A Cool Credit Repair Trick

It seems that as soon as the new account appeared on the credit report of the beneficiary their credit score would jump. In other words they were inheriting the credit history of the card from the donor. In the case where the donor had excellent credit the beneficiary discovered their own credit score jumping significantly, often over one hundred points, a cool little credit repair trick, but not what Fair Isaac really had in mind.

Word Spread Quickly

Well, the word quickly spread. And as always happens, creative entrepreneurs thought up a way to package this small credit repair miracle and sell it to absolutely anyone who had the money and desire to give their credit score a quick, albeit undeserved boost. And it is this undeserved issue that became the real problem.

FICO in our Life

In 1989 Fair Isaac Corporation first made their FICO credit scores available to lenders. And in 1995 the mortgage lending giants, Fannie-Mae and Freddie-Mac made FICO scores a part of their mortgage underwriting consideration. Since that time lenders have become virtually dependant on Fair Isaac’s scoring model, and the credit repair services began to focus on these powerful little numbers.

Score Distortion

The reliability of these important numbers is essential to good decisions. If something were to threaten the validity of the FICO score undeserving borrowers would be able to obtain loans they did not deserve. Lenders making these loans would be in jeopardy of increasing default rates and potentially disastrous losses.

Credit Repair, or is it?

So you can image the concern that lenders felt as they discovered that pseudo credit repair companies were popping up on the Internet selling these accounts to anyone with the money to pay. In response, Fair Isaac went to work to modify their computer model to block the benefit of these accounts, and to end to the distortion being caused by credit repair card sellers. And so they rewrote the model and introduced it as FICO ’07. But there was a problem.

The Credit Repair Battle Continues

As much as lenders wanted to eliminate the score distortion caused by authorized user accounts, they were unable to implement FICO ’07. It seems that there is a paragraph in the Equal Credit Opportunity Act (ECOA) that states that, “when lenders assess a spouse’s credit risk they are required by law to consider the credit history of accounts which both spouses are permitted to use.”

Back to the Drawing Board

This little directive stopped FICO ’07 in its tracks and sent Fair Isaac back to the drawing board. For those of us in the credit repair business, we were amused to see the fanfare amongst the brokers of these authorized user cards that trumpeted FICO ’07 as “illegal”, and of course continued to sell their questionable credit repair product to the public. Their celebration, however, was short lived.

Credit Repair Card Brokers Say Goodbye

On July 31, 2008, Fair Isaac announced their final solution. They have managed to create a way to block questionable authorized user accounts from inheriting the score benefit of the donor without blocking those of spouses and family members. So finally the death blow was dealt against the shadowy credit repair businesses selling their quick fixes.

Those Amazing Brainiacs

The exact language of the press release reads, “We have developed technology that will reduce any impact on the FICO 08 score from intentional tampering, while allowing the scores of spouses and other genuine authorized users to benefit from their shared credit experience.” How this works, I can’t say, but my hat is off to the brainiacs at Fair Isaac.

Credit Repair the Right Way

Intentional distortion of the validity of credit scores was good for no one. Intelligent credit repair never requires questionable practices. There have always been many legal and powerful ways to boost your credit score, quickly and effectively. A well-planned approach to credit repair has always produced real and lasting results that endure and truly reflect your own credit worthiness. Do it right, and do it for real.

Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.

Credit Repair And Identity Theft

admin — Thu, 21 May 2009 07:56:41 +0000

The Problem of Unrecognized Accounts

Discovering the presence of accounts on your credit report that clearly do not belong to you can be unnerving. If you are the target of identity theft you will need to employ a very specific credit repair solution. But you must explore the nature of the issue before utilizing this powerful credit repair tool. Literally millions of people discover accounts on their credit report each year that do not belong to them. Only a very small percentage of these incidents are the result of identity theft. The vast majority of these events are the result of what are called file merger errors.

File Merger Errors

File merger errors occur when the credit bureaus confuse your credit file with the file of another person and accidently merge their accounts with yours. This can prove to be inconvenient but it is not the result of illegal of malicious activity. Oddly enough, these file merger errors are an accepted side effect of a decision made by the credit bureaus in setting the accuracy requirements for sorting credit data. They have built in a certain margin of error to allow for mistakes in data entry by lenders. This allows lenders to access a consumer’s credit file in cases where some amount of identifying data is missing or in the case where there is a small typographical error.

File Merger Credit Repair Solution

Fortunately, it is easy to determine if you are a victim of a file merger error and almost as easy to resolve it with credit repair without invoking the identity theft laws. Just call the creditor and tell them that you see an account on your report and you need to know if they are really reporting it as yours. If they tell you that they have no record of an account belonging to you it is not the result of identity theft. If this is the case, you will need to submit a simple credit bureau dispute letter listing the erroneous accounts and informing them of a file merger error. On the other hand, if they tell you that it is yours and you know for a fact that you did not apply for the account it’s time for credit repair action.

Identity Theft Credit Repair Solution

The credit repair solution for identity theft is codified in the Fair Credit Reporting Act, Section 605B, and is very clear and simple; follow the instructions, and the identified information will be blocked from your credit report within four business days. All you need to do is circle the suspect item on your credit report, and bring it to your local police station. Tell the police that you are a victim of identity theft and you need an identity theft report to send to the credit bureaus. Theoretically you only need to send this report to one of the credit bureaus as, by law, upon receipt of an identity theft report each bureau is required to notify the other two, but I suggest sending to all three. You must also include identification. I suggest that you include clear copies of your driver’s license and your Social Security Card. You must also provide a written statement that the accounts in question are not yours and do not relate to any transaction entered into by you. I suggest that you have this statement notarized. Bundle all of this together and mail it to the three credit bureaus via certified mail, or if you wish, via FedEx or other overnight service. Once the credit bureaus receive your package they will block the suspect information within four business days.

A Cautionary Note

It is worth understanding what will happen after you initiate this credit repair process. Upon blocking the information from your credit report the credit bureaus will contact the creditors and an investigation will ensue. Identity theft is considered a serious crime and there is a strong possibility that when the culprit is caught they will be prosecuted. There are two major considerations; first, if you think that a family member might be involved, think carefully before using this Section 605B remedy, second don’t ever think of using this process as an expeditious means of credit repair. If you initiate this process and it is later discovered that you have committed fraud, you will face jail time.

You Are Not Alone

Credit repair assistance is available if you need it. Identity theft can be a very disturbing event and needs to be handled properly. If you do not feel up to the task you should contact a credit repair professional. A credit repair expert will help you through the process and insure that everything is done in an efficient and effective manner. Good luck!

What is Credit Monitoring?

admin — Tue, 12 May 2009 10:05:37 +0000

There are different ways you can monitor your credit yourself. By inquiring for your credit report every six months to year, from all of the major credit bureaus, you will have a complete overview of how your credit report is doing. Another good reason to monitor your own credit is the fact that you have eyes view of your credit report.

Another effective way of attaining the accuracy of your credit report is to initially request a report from one of the major credit bureaus. Four month later, follow-up with a request for your report from another major credit bureau. You do this same process for the last credit bureau. Doing it this way allows for time to elapse between requests to see if negative reactions will occur without you knowing about it. You monitor your credit, check for discrepancies and save yourself $300 to $600 dollars a year.

Errors no matter how small have to be fixed immediately upon detection. Be sure you report any errors you find to all three of the major credit bureaus. It usually takes about a week for changes to go through. Make sure you close all unused accounts for these can be open doors for identity thieves. Upon closing all of your accounts, ask to have them listed as “closed at the request of the consumer.”

Taking control of your credit takes a little time and effort. If you’re serious about repairing your credit you should take the necessary steps to monitor your credit effectively. Contact all three bureaus at Equifax: 1-800-685-1111; Experian: 1-888-322-5583; TransUnion: 1-800-888-4213.

The Importance of Keeping Track of Your Credit Report

admin — Tue, 12 May 2009 07:45:14 +0000

Many people today don’t understand the importance of what their credit report means and why its such a valuable asset to maintain. What many don’t know harms them, and what some do know, can either get them in trouble or get them better interest rates. It’s all in what you know and how to use what you know. It’s important to track your credit report because the more you know about it, the more you can be responsible with what you spend and buy. There are those of us that wish we would have taken the time to keep track of our credit reports, and others who laugh at those of us who didn’t take the time to be smart with the once good thing that we had, and now we’re paying for it.

Make it a point to set aside the time to track your credit report at least once a month. Annualcreditreport.com helps to make this possible, as they offer one the ability to view their credit report online for free. By going to annualcreditreport.com once a month, it makes tracking your credit report easily accessible to view. Do this for three months and you’ll learn why it’s so important to track your credit report so often. Every thirty days our credit reports change. This may be because you inquired about a new credit card, you bought a new car, you were late on a payment, you purchased a house or a consumer – without your knowledge or permission – pulled your credit to “pre-qualify” you for something you don’t want or need; yes it happens and unfortunately it’s completely legal. When consumers or third parties do this, it puts a ding in your credit. It’s wrong, yes… but there’s nothing you can do about it. To the credit reporting agencies, it looks as if you are going out and trying to get credit everywhere, and initially this drops your credit score.

It’s best to keep the responsibility of tracking your credit report close to heart, so that if situations arise, such as; identity theft, third party abuse and other such situations, you can have knowledge almost immediately to be able to know when things in you credit report change. It makes things a lot easier to prove and dispute should there ever be a conflict on your credit report. Be wise, get to know your credit report, track it like you would the miles of your car for the next oil change and life will be much easier.

Three Steps To Understanding Your Credit Report

admin — Tue, 12 May 2009 07:30:30 +0000

When you turned eighteen chances are you were ready to make your first big purchase; a new car. Then you decided to get a credit card, a cell phone, another credit card and maybe some new furniture to put in your fantastic new space. Little did you know that everything you just did was being watched? If you’re late on a payment, or miss one payment, the repercussions will hurt you for things you might want in the future. Of course you didn’t know that, or if you did, you didn’t know much. But, learning to understand your credit report is the first step in insuring that you don’t make those mistakes that will cost you later.

Once you decide to take the first step and learn to understand your credit report, you might want to sit back, because you won’t understand it all in one day. The second step to understand your credit report is to research how your credit report works. Go to the library and read books about credit reports, buy a few books at the book store, that you can study; there are actually quite a few out there that are very helpful. A lot of books, come in workbook format, so that you can sit down and do the worksheets to help you see why it’s so important you make every payment and don’t get carried away with having your credit pulled every time you go somewhere.

But that’s just a small piece of understanding your credit report. The most important step about understanding your credit report, is how to watch for anything you didn’t authorize; and believe me, it does happen. You need to understand how to track your report, keep print out’s and a file of all your credit reports. This step will help save you should something unfortunate arise. No matter how large the file gets, keep it for seven years; don’t even think of throwing it out, you never know when you’ll need it. Once you understand how to read your credit report, manage it and track it, you have insured that you will not make the same mistakes many of us Americans only wished we’d learned when we were younger.