Below are some warning signs that you may be on your way to holding the title of “World’s Ugliest Credit Report”
1. You have committed to renting forever because you think you’ll never qualify to purchase your own home
2. You Can’t get a checking account
3. The only credit card you qualify for is a secured Card
4. You need a co-signer for auto Loans
5. Your utilities are in somebody else’s name
6. You’re afraid to answer your phone
7. You pay all your bills with Money Orders
8. Your only loan is from Cash Call
9. You’ve considered starting a second credit file
10. Your references had to change their number
If you think you may have the world's ugliest credit then maybe our credit repair contest is right for you!
Learn more about the details on our site: MyCreditGroup.com's Credit Repair Contest.
Below are some warning signs that you may be on your way to holding the title of “World’s Ugliest Credit Report”
If you've recently found yourself eyeball deep in debt you're not alone. Today's consumer carries more debt then ever before, and as anybody dealing with debt problems knows, big debt means two bigger problems - debt collectors and credit score problems.
While neither of these two are very pleasant, the bigger problem usually comes from consumers dealing with them improperly making a bad situation worse.
Below are the top five myths about credit repair that will help you recover from your credit and debt problems faster then you may have thought possible.
Myth #1: Charge-offs can't be deleted from your credit report.
False. Charged-off debts are deleted everyday. It doesn't mean it's going to happen every time, but it does happen.
You're going to have more luck deleting a charged off account from a smaller retailer or collection agency then you will a larger bank in most cases. Larger banks have a lot of red tape they have to go through to get special requests such as deletions obtained.
Whereas collection agents in many cases can make their own calls in regard to matters such as "pay for deletions". At the end of the day collection agents want your money and are usually more willing to delete accounts if they're going to get paid.
Just make sure you get any agreements in writing before sending any money.
Myth #2: You can't be sued after Statute of limitations.
False you can still be sued but it's easy to avoid.
The statute of limitations (SOL) is the maximum time a collection agent can take legal action on a debt and it varies state by state. Once the SOL has passed there is only one circumstance where a debt collector can take legal action; if the debtor reaffirms the debt.
This is a common mistake we see consumers make and many times it's from the advice of a mortgage broker. If you make a payment or a promise to pay in writing, your debt can be re-aged and the SOL starts all over again.
If you're trying to repair your credit and the SOL has passed I wouldn't waste my time settling or making payments. It is however a good opportunity to pay for a deletion if you're in a financial position to do so. Collectors know they have very little recourse and are much more likely to do whatever they can to recover anything at all.
Myth #3: A Paid In Full Collection is Better Then Settled.
False. You're going to get varying opinions on this one but with all things considered, I just don't see the benefit in most cases of paying in full vs. settling and here's why.
Paying off an old collection or charge off is going to do very little if anything to improve your credit score. It's the notation "collection or charge-off" that's doing the damage and they don't go away by paying them off.
Settled for less then full amount however will have about the same impact as a paid in full collection on your credit score, but you're only paying .50 cents on the dollar in most cases.
The only time I would consider paid in full is if they were willing to delete the tradeline. If they're not, you might as well save some money if you're going to end up with the same net result.
Myth #4 Accurate Information Cannot Be Removed From a Credit Report.
False: Another almost true statement and one the FTC won't agree with, but I'm just stating the facts.
The Fair Credit Reporting Act states that any information a consumer feels may be inaccurate or misleading the credit bureaus must verify it within a reasonable amount of time (30 days).
If they cannot do so, the item must be removed. Again, we don't recommend you dispute items you know to be true, but facts are facts.
Myth #5: Credit Counseling Lowers the Amount of Debt You Ultimately Pay.
False. In my opinion, Credit Counseling is a horrible mistake for people facing financial difficulties. On the surface it appears to be helping because your monthly payments are lowered.
The fact of the matter is that in most cases it is lowered because they are stretched out over a longer period of time. Let's say your payment is currently 600.00 for the next 24 months.
Under credit counseling your payment may drop to say 350.00 but for 48 months. While it may give you that immediate relief making it appear as a feasible solution, in reality its only digging the hole deeper.
When credit repair was relatively new, it was easy to improve your credit score. The Fair Credit Reporting Act (FCRA) was created to ensure and enforce your right to fair and accurate credit reporting. It gave you the right to dispute credit and often times it worked.
That was then, this is now and these letters are a waste of time, so are the credit repair companies that use them.
One of its provisions states that a consumer may request in writing validation, or proof of any debt with the Credit Reporting Agencies (CRA's). They then have 30 days to prove the debts accuracy. If they cannot provide the necessary proof in the given time frame, the debt has to be deleted from your credit report. Sounds easy right?
As you can imagine 30 days is not a long time to gather the necessary documents when you consider CRA's are responsible for millions of account files.
It didn't take long for opportunists masquerading as credit repair agencies to surface capitalizing on this loophole. For a while it worked and the concept was simple yet affective. A full frontal attack on the credit bureaus and the strategy was an overwhelming amount of dispute letters, so many that the credit bureaus had no chance of responding in time. As a result, millions of trade lines were deleted. They still are today, just not nearly as effectively as they once were.
This abuse of the system forced CRA's to create systems that allowed them quickly verify debts. They did, and can now verify debts in a matter of minutes. Can you blame them? Not only is this method outdated and ineffective, it makes your situation worse.
Once a debt has been verified, any further attempts of the same debt become near impossible and that applies to legitimate inaccuracies. Had it been disputed properly, and for valid reason, there's a great chance it would have come off legally and permanently the first time.
If you believe anything, believe us when we say these dispute letters are that last method in which you want to repair your credit. It doesn't take a whole lot of common sense to realize Credit Bureaus, collection agents or the original creditors are not going to let millions of people dodge debts over a relatively minor detail like this.
The key to successful credit repair whether it is on your own, or choosing a legitimate company to do it for you, is research. Nearly every single credit report we see, has some form of violation of your rights committed by collection agents.
Learn the FCRA & The FDCPA and you will find the violations. Find them and the debts will come off legally and permanently.
Why Credit Repair Mills Stink:
When credit repair was new, it was easy. You wrote a letter to the credit agencies "disputing" items you wanted removed. They had 30 days to verify the debts and if they couldn't do it in time, the item had to be removed. Sounds easy don't it?
So what's wrong with this method today? As you can imagine that cost creditors millions. As a result, they created systems to quickly verify debts and once they do, further disputes are considered frivolous and returned un-investigated. Can you blame them?
I'm sure we can agree that common sense dictates the following; if all that is required of credit bureaus is to respond to these letters in 30 days, you can bet they will. With the exception of a few that slip through the cracks, (the hope of other credit repair companies) your letters will be answered and your job harder.
To error is human - To capitalize on error is smart! As we discussed previously, credit bureaus validation system is completely automated. What's not automated is the method in which your credit history is input into the system. It is put in by hand, by humans and we all know the phrase "human error." This is the best kept secret of credit repair. If something is erroneous, it will come off permanently and you could even be awarded damages.
Think about it. What makes more sense, trickery, luck and relying on loopholes, or violations of your rights where the law is there to protect you?
It's easy to spot a company that depends on these credit repair letters. Look at their sign up process. If it instructs you to send them your credit reports, tell them which items to dispute and that they do the rest, save your money and do it yourself.
Think about it, if they know nothing about your alleged debts, what more could they possibly do then send the old generic "this is not my debt, please delete it" letter? You might as well just send that worthless letter yourself and save yourself the money.
The Bottom Line... Credit repair works and as long as consumers have the legal right to question items on their credit, it always will. What doesn't work is the tired methods these so called credit experts are charging you for. There is no secret and no magic letter.
To effectively repair your credit, you need to arm yourself with information and you need a lot of patience...
Credit report repair can be easy if you have the right tools. One of the hardest parts of repairing your credit report is deciphering the laws. This "how to" article is written in terms that are easy to understand and cut through the legal jargon.
Let's say you owe Mike (original creditor) $100.00 and a Guy named Steve (collection agent) comes up stating he wants $100.00 on behalf of Mike. Would you just hand him your money, or ask for proof of who he is and that he has the right to collect the $100.00?
This is called debt validation and is a very powerful tool for credit repair. Let me explain.
You can write Steve and ask for the following and he must provide it all or he cannot collect the $100.00, nor can he report it to the credit bureaus.
* - A contract between him and Mike proving he owns the debt or was hired to collect it. Think about it. If he cannot provide that contract, he is just some guy named Steve asking for $100.00
* - Account statements from Mike. Perhaps you paid mike $20.00 of the $100.00. Mike will have records of that. Steve has to provide you with that and IT CANNOT BE his own statements - they have to be from Mike.
This is important! Steve (collectors) like to provide their own printouts and this is not legal. It must be Mike's original accounting and come directly from Mike. So, here's the process to credit report repair, using Debt Validation:
Step 1: Send a letter to Steve Requesting the above information e.g. proof he has the right to collect the debt and Mike's original statements which itemize the debt and payment history.
Step 2: Dispute the debt with the Credit Bureaus at the same time.
Step 3: Wait about 30 days and you'll get a letter from Steve which will have one of the following results.
Most Common: Steve's own printout which is a violation of the FDCPA, you can then sue Steve and have it removed from your credit report. Remember, it must be Mike's personal records.
Pretty Common: No response in which case it will be removed from your credit report.
Somewhat Rare: Steve Provides the contract showing he has the right to collect the debt, a copy of the contract you signed with Mike and your payment history.
The latter is the legal method for Steve and is Rare. For some reason, Steve (collectors) still are not smart enough to follow all the rules. However, if he finally got smart and provided all the information that is required, you have one more trick.
Check and see if he is licensed in your state to collect debts. Most states require licenses, bonding and insurance to collect debts. It is very common for Steve to get those items in his own state, but not each state he attempts to collect in.
If your state requires those things, Steve must obtain them in your state and any state he attempts to collect in or he has no right to collect.
The most frequently abused rule of the FDCPA and FCRA is collection agents re-aging debts. If a collection agent re-ages a debt, there is a great chance you can have that removed.
So what is re-aging?
First, let's look at the definition of re-aging debts.
Definition: Creditors change the date that the debt went bad. Usually they like to report the date as the day they bought the debt from the original creditor. Obviously, if they bought the debt 6 months after it actually went bad, that is not fair to you since it moves the date it will be removed from your credit report up by 6 months.
How it should be reported: A debt is legally considered bad 30 days from the date of your last payment. For example; if your last payment was January 1st 2001 the debt will go bad approximately February 1st 2001
This date is important because the statute of limitations begins from that date. Think about it, if a collection agent buys the debt 6 months later and dates it from that day, that's 6 months more its hurting your credit. It's also a violation of the FCRA and an opportunity for you to have it removed from your credit report all together.
How big of a violation is this on behalf of the debt collectors?
Here is a lawsuit by the FTC themselves.
One of the nation's largest debt-collection firms will pay $1.5 million to settle Federal Trade Commission charges that it violated the Fair Credit Reporting Act (FCRA) by reporting inaccurate information about consumer accounts to credit bureaus. The civil penalty against Pennsylvania-based NCO Group, Inc. is the largest civil penalty ever obtained in a FCRA case.
Here is the proper way to send dispute letters to give you the best possible chance of getting negative items removed from your credit report.
Once you've compiled a list of all the negative information on your credit report you want to prioritize them in order of most damaging first. Start with your personal information e.g. names, social, addresses and employers.
Often times debts are "connected" to your address. Dispute any of the above personal information that is not current. The goal is to have it completely removed, not adjusted.
You want to dispute the most negative item first and you must give an outcome you would like. For example, this account is not mine, please remove it from my credit report. If you don't give an acceptable outcome, they could adjust an account when you really wanted it removed and visa versa.
Additionally, you want to use verbiage that is convincing to the bureaus that you're not using a credit repair agency. In other words, write it like a surprised and pissed off consumer. If it's a perfectly formatted letter and they recognize it, you'll probably get the "frivolous" comment and no changes.
I've written letters that say things like "what the hell is this on my report? Please get this trash off of here immediately."
Sounds stupid, but its something an angry consumer is likely to write and it's worked many many times.
Once you've sent your letters, it's very likely you'll get a response back within a week or two asking for more information - namely "what credit repair company you're using" This is a stall tactic, do not answer them. They do this because if they receive new information, they are allowed another 15 days to investigate.
If your credit reports come back verified, no change, don't panic. You can re-dispute the item only for different reasons. If you sent the first one stating "not Yours", then next letter can take the angle of "wrong account number" or wrong balance. This gives them something new they must look into and a greater chance of the creditor not verifying it.
If you've tried all of this, you still have recourse. You can request their method of verification. How did they verify the information, who did they talk to? You want to ask them the business name, address and telephone number of the furnisher of the information. That is your legal right to request that information and a very powerful tool in credit repair.
This works because credit bureaus verify your information via a computer system and a two digit code. When you ask for names and numbers, this is often a big problem for the credit bureaus.
Once you begin seeing items removed, repeat steps above until your persistence pays off.
Statistics show that 80% of Americans have either bad or erroneous information on their credit reports.
If you ask me a more startling statistic is 90% of the information on the internet teaching you how to improve your credit is bad or erroneous. Let me explain.
If you've done any research on credit report repair, surely you've seen free dispute letters, If you haven't let me show you the pitch.
"The FTC says under the FCRA credit bureaus have 30 days to investigate any dispute. If they cannot prove it's your debt in that time frame, they must delete it". Then it's followed with a generic dispute letter stating the following.
"This debt is inaccurate, under the laws of the FCRA please investigate this account and delete it from my file". I've said it for years and finally people are beginning to realize, these letters rarely work anymore. Use some common sense for a moment. If it was that easy, we could all go charge until we're blue in the face and not worry about our bills because we have the magic letters.
With that said, credit repair works and better then ever, just not with that method. The real way to improve your credit score is understanding the laws. When I say that, I mean actually using the law as opposed to just quoting it in your dispute letter.
Obviously, I can't cover every law here but I can point out a few violations that are present in nearly every trade line.
1) Re aging debts - Among the most common violations on nearly every credit report. Understanding how a debt's "date of last activity" is calculated is paramount. Chances are it won't be reported accurately. Why? Because collectors like to date it from the time they "bought the debt" and that is wrong and a sure fire way to have it removed. You can find "date of last activity" and "Re aging Debts" in both the FCRA and the FDCPA.
2) Statute of Limitations (SOL) - Another very common infraction. The SOL I'm referring to is not the SOL for how long a debt can be reported on your credit file. I'm referring to how long a collection agent is allowed to attempt to collect and/or sue on an account.
You might be surprised to learn that its only 3 to 4 years in many states.
3) Also, you must learn the Fair Credit Reporting Act (FCRA) I recommend an abbreviated version if you don't want to die of boredom.
Learn how to read a credit report. You're mainly looking for balances, date of last activity for each account, Credit Limits and payment history.
Learn the FDCPA - again abbreviated version should work. This law governs 3rd party collection agents. This is where you'll score most your points. These guys can't seem to follow the rules.
Other laws to look at:
The truth in lending act
Fair Credit Billing Act
Hippaa - Medical disputes
Service members Civil relief act - special Military laws.
If you don't see where I'm going with this, it's about finding actual violations of your rights, not depending on luck, loopholes and generic letters. It will take some time, there are a lot of laws to learn.
You don't have to be a lawyer, but you do have to get out that fine toothed comb and figure out who has made mistakes.
IF there are violations of your rights, there is a great chance ANY debt, accurate or not can come off. It comes down to negotiating a trade off between you, and the "violator"
4) Opt Out with the credit bureaus. Did you know that credit reporting agencies alert your creditors of new applications of credit you may be applying for? They alert them of disputes you're making, address changes, banking information? That's right, collectors subscribe to credit bureau services which enable them to more easily track you.
Opt out and this information is no longer available to your creditors. 1-888-5-optout
5) Check licensing information for collection agents. More times then not, collection agents will obtain the necessary licensing, bonding and insurance requirements in their home state only because the cost is so high too obtain in every state.
6) If your state and requires bonding, licensing or insurance, the collector must posses them all or is not allowed to collect. Therefore, it is not a valid collection and must be removed from your credit report. You can check your Attorney Generals Website for requirements.
7) Request the collector show proof he is allowed to collect the debt. Sounds easy enough, but you'd be surprised. When you request validation of a debt, the collection agent must show proof he has a contract with the original creditor that he has the right to collect on their behalf.
8) Furthermore, he must get proof you actually owe the debt. You'd be surprised how many collectors have nothing more then their internal records. That is not sufficient. He must get the original contracts directly from the original creditor and send them to you.
9) Send your disputes to different addresses. Credit reporting agencies have dozens of addresses which you can find on the net. Send your disputes certified mail, return receipt requested to different addresses. You are not required to send disputes to any specific address.
Many of the addresses take much longer to get to the dispute department. That's not your problem, if somebody signs for your letter when it arrives; it's their responsibility to get it to the right department.
Credit repair can be very easy when you employ all the tricks and secrets of credit repair that you have at your disposal.