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Demystifying Credit Repair Ten Greatest Myths About Your Credit

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Demystifying Credit Repair

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What is FICO 35% 10% 10% 15% 30%

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Demystifying Credit Repair

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FIRST TIME HOME BUYERS

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Demystifying Credit Repair <ul><li>Myth #1. </li></ul><ul><li>Credit Agencies are empowered with some kind of governmental authority . </li></ul><ul><li>Credit agencies have no legal authority at all, they are simply private companies who are in the business of selling credit information </li></ul>

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Demystifying Credit Repair <ul><li>Myth #2. </li></ul><ul><li>The credit agencies are required by law to keep derogatory items on your credit report for 7 to 10 years. </li></ul><ul><li>There is no law that the credit agencies report anything on you at all. Just the opposite is true! Credit Agencies are required by law to automatically remove all derogatory items older than 7 years or in the case of a bankruptcy, 10 years. </li></ul>

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Demystifying Credit Repair <ul><li>Myth #3. </li></ul><ul><li>It is impossible to get a bankruptcy off . </li></ul><ul><li>Bankruptcies come off just like any other derogatory that is incorrectly reported, obsolete, erroneous, misleading, incomplete, or that cannot be verified. Remember, the nature of the item has nothing to do with its removal under the Fair Credit Reporting Act. </li></ul>

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Demystifying Credit Repair <ul><li>Myth # 4. </li></ul><ul><li>The information on your credit report cannot be changed. </li></ul><ul><li>The opposite is true under the Fair Credit Reporting Act; both the federal and various state laws REQUIRE that items be removed if they are not 100% accurate or cannot be verified in a timely manner. </li></ul>

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Demystifying Credit Repair <ul><li>Myth #5. </li></ul><ul><li>It is illegal or immoral to have the information on your credit report altered or removed . </li></ul><ul><li>Not only is it not illegal or immoral, but it is what the Fair Credit Reporting Act is all about. It was enacted by congress for the very purpose of protecting consumers from the intrusion of the credit agencies into our lives. </li></ul>

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Demystifying Credit Repair <ul><li>Myth #6. </li></ul><ul><li>Paying a past due debt removes it from your credit report. </li></ul><ul><li>Just because you pay an old debt does not change or erase the fact that at one time you were not paying on it as you agreed. Can this record be changed? Absolutely! </li></ul>

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Demystifying Credit Repair <ul><li>Myth #7. </li></ul><ul><li>Inquiries are not derogatory and will not affect your credit standing. </li></ul><ul><li>Anything that erodes your financial credibility is damaging to your credit standing. In the case of inquiries, one or two is not too bad, but any more than that and they begin to tell a story of their own. Any prospective credit grantor will look at your credit report and think that you are desperate for credit. </li></ul>

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Demystifying Credit Repair <ul><li>Myth #8. </li></ul><ul><li>If you get a derogatory item removed, it will just come back. </li></ul><ul><li>Not if it is removed legally. When it is removed with cause under the Fair Credit reporting Act it cannot legally be placed back on your credit report. The same law that required its removal prohibits it from being placed back on. </li></ul>

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Demystifying Credit Repair <ul><li>Myth #9. </li></ul><ul><li>The past equals the future. </li></ul><ul><li>This is the biggest myth of all. The concept that once bad, always bad, or at least for 7 years is totally false. Anybody can run into hard times or an emergency situation now and then, but that doesn't automatically mean that they are a poor credit risk for a magical 7 years. The simple truth is, no credit report can predict the future </li></ul>

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First the Facts <ul><li>The Fair Credit Reporting Act: 1971 </li></ul><ul><li>Congress passed the Fair Credit Reporting Act (FCRA). The FCRA was passed by congress with the intention to regulate credit-reporting agencies. The Act spelled out all the rules and regulations that the credit-reporting agencies had to follow before they put anything on someone’s credit report. For the past three decades, those agencies have ignored most of the law. Information about “you” has to be accurate and verified before it is entered on your credit reports. If “reasonable procedures” have not been correctly followed, then any verified inaccuracies must be removed from your credit reports as defined in the FCRA. The three credit reporting agencies (CRA) ARE Experian (formerly TRW), Equifax and Transunion. There are various agencies that purchase information from these three major agencies, but they get their information from the “Big-3”, so if you can repair your credit with the Big-3, you basically repair it with everyone. </li></ul>

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More Facts <ul><li>What is the definition of “inaccurate, erroneous, or obsolete?” </li></ul><ul><li>Erroneous information is any information that has been entered onto a consumer’s credit report due to human error (data entry error), Social Security Number mismatch error, mixed file error, similar name error. “reasonable procedures” were not followed when the information was entered on the credit report, or any such related error. This happens more often than you think! </li></ul>

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More Facts <ul><li>What is the definition of “inaccurate, erroneous, or obsolete?” </li></ul><ul><li>Obsolete information is any information that is beyond the industry standard of seven years; or ten years for bankruptcy. </li></ul><ul><li>Inaccurate information is any information that cannot be verified by the CRA and/or the creditor grantor. </li></ul>

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Fair Credit Reporting Act <ul><li>How to read your results </li></ul><ul><li>Deleted - This item was removed from your credit report </li></ul><ul><li>Remains - This item has been verified as accurate </li></ul><ul><li>Updated – A change was made to this item; review this report to view the change. If ownership of </li></ul><ul><li>the item was disputed, then it was verified as belonging to you. </li></ul><ul><li>Reviewed - This item was either updated or deleted; review this report to learn its outcome </li></ul><ul><li>Items We investigated </li></ul><ul><li>We completed investigating the items you disputed with the sources of the information. Here are the results: Credit items outcome </li></ul><ul><li>CAP ONE Remains </li></ul><ul><li>ZALES/CBSD Updated </li></ul><ul><li>STATE OF ALABAMA HR Deleted </li></ul><ul><li>CBSI Deleted </li></ul><ul><li>CBSI Deleted </li></ul><ul><li>SECURITY CHECK LLC Deleted </li></ul><ul><li>HSBC BANK Deleted </li></ul><ul><li>CAVALRY PORTFOLIO SERV Deleted </li></ul><ul><li>LISTER-HILL CREDIT UN Remains </li></ul><ul><li>Visit experian.com/status to check the status of your pending disputes at any time </li></ul>

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F.D.C.P.A. <ul><li>Fair Debt Collection Practices Act </li></ul><ul><li>Imposes restrictions on collection agencies </li></ul><ul><li>Written notices must be provided. </li></ul><ul><li>Cease collection calls without filing for bankruptcy protection. </li></ul><ul><li>Remedies are available. </li></ul>

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F.C.B.A. <ul><li>Fair Credit Billing Act </li></ul><ul><li>Protects consumers from “billing” errors </li></ul><ul><li>Covers open-end charge accounts only </li></ul>

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<ul><li>Fair Credit Billing Act </li></ul><ul><li>Types of mistakes that are covered: </li></ul><ul><li>Math errors, wrong address, wrong date </li></ul><ul><li>Failure to post payments, credits, or provide proof of purchase, etc </li></ul>

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F.A.C.T.A. <ul><li>Fair & Accurate Credit Transactions Act </li></ul><ul><li>Supplement to the FCRA – added in 2003 </li></ul><ul><li>Intended to help fight identity theft </li></ul><ul><li>Free annual credit report and access to scores </li></ul><ul><li>Disputing inaccurate information </li></ul><ul><li>Removal of medical related information </li></ul><ul><li>Notice and disclosure requirements </li></ul>

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F.A.C.T.A. ALERT ADDRESS DISCREPANCY: THERE IS A SUBSTANTIAL DIFFERENCE BETWEEN THE ADDRESS SUBMITTED IN THE INQUIRY AND THE ADDRESS(ES) ON FILE TRANSUNION ID MISMATCH ALERT: PREVIOUS ADDRESS MISMATCH. INPUT DOES NOT MATCH FILE. ADDRESS DISCREPANCY: THERE IS A SUBSTANTIAL DIFFERENCE BETWEEN THE ADDRESS SUBMITTED IN THE INQUIRY AND THE ADDRESS(ES) ON FILE SCORE MODELS EQUIFAX/BEACON 5.0 - SOME PPERSON – 553970333 SCORE: 588 00038 - SERIOUS DELINQUENCY, AND DEROGATORY PUBLIC RECORD OR COLLECTION FILED 00018 - NUMBER OF ACCOUNTS WITH DELINQUENCY 00020 - LENGTH OF TIME SINCE DEROGATORY PUBLIC RECORD OR COLLECTION IS TOO SHORT 00014 - LENGTH OF TIME ACCOUNTS HAVE BEEN ESTABLISHED _________________________________________________________________________________________ TRANSUNION/FICO CLASSIC (04) – SOME PERSON - 553970333 SCORE: N!A SC3 - FILE NOT SCORED BECAUSE SUBJECT DOES NOT HAVE SUFFICIENT CREDIT _________________________________________________________________________________________ EXPERIAN/FAIR, ISAAC (VER- 2) – SOME PERSON - 553970333 SCORE: 524 38 - SERIOUS DELINQUENCY AND PUBLIC RECORD OR COLLECTION FILED 13 - TIME SINCE DELINQUENCY IS TOO RECENT OR UNKNOWN 02 - LEVEL OF DELINQUENCY ON ACCOUNTS 18 - NUMBER OF ACCOUNTS WITH DELINQUENCY 08 - TOO MANY INQUIRIES LAST 12 MONTHS

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F.A.C.T.A. B B EXPRESS RECOVERY 12108 06103 $159 $0 $0 65 0 0 0 PAID COLL SVC 05103 COLL 001 $0 XPIEF 1243097 ORIGINAL CREDITOR: MEDICAL PAYMENT DATA _______________________________________________________________________ B B EXPRESS RECOVERY 12108 11/06 $50 $0 $0 24 0 0 0 PAID COLL SVC 12/05 COLL 001 $0 XP/TU/EF 2002092 ORIGINAL CREDITOR: MEDICAL PAYMENT DATA ________________________________________________________________________ B B EXPRESS RECOVERY 12108 11/07 $104 $0 $0 12 0 0 0 PAID COLL SVC 02/07 COLL 001 $0 XP/TU/EF 2327325 ORIGINAL CREDITOR: MEDICAL PAYMENT DATA ________________________________________________________________________ B B EXPRESS RECOVERY 12/08 11106 $50 $0 $0 24 0 0 0 PAID COLL SVC 12/05 COLL 001 $0 XPITUIEF 2007261 ORIGINAL CREDITOR: MEDICAL PAYMENT DATA

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Demystifying Credit Repair FICO

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Other Names for Credit Scores <ul><li>BEACON—Equifax </li></ul><ul><li>Fair Isaac—Experian </li></ul><ul><li>Empirica—Trans Union </li></ul>

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What is Credit Scores? <ul><li>Credit scoring is a method that uses statistical models to evaluate your credit worthiness </li></ul><ul><li>Creditors use these scores, known as FICO scores in deciding whether or not to offer credit to consumers. </li></ul><ul><li>FICO scores range from 350 to 853 </li></ul>

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What is FICO 35% 10% 10% 15% 30%

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<ul><li>Trade lines </li></ul><ul><li>Inquiries </li></ul><ul><li>Collections </li></ul><ul><li>Public Records </li></ul><ul><li>Age </li></ul><ul><li>Address </li></ul><ul><li>Employment </li></ul><ul><li>Income </li></ul><ul><li>Sex </li></ul>Credit Considered in Credit Scores NOT Considered in Credit Scores

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Are Credit Reports Accurate <ul><li>Accuracy problems affect many consumer credit scores. </li></ul><ul><li>Studies have revealed that millions of Americans (79% or more) have significant errors in their credit profiles. </li></ul><ul><li>These errors affected credit scores by 50 points or more. </li></ul>

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How Credit Affects You <ul><li>The interest rate you pay on credit cards and loans. </li></ul><ul><li>Your ability to get a checking account. </li></ul><ul><li>Rates on your insurance. </li></ul><ul><li>Employment. </li></ul>

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CROA & who can charge <ul><li>Credit Repair Organizations Act </li></ul>2007 Amendment to FCRA <ul><li>Prohibited practices </li></ul><ul><li>Disclosures </li></ul><ul><li>Federal exemptions </li></ul>

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Demystifying Credit Repair

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A WORLD OF CHANGE

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Demystifying Credit Repair <ul><li>Myth # 10. </li></ul><ul><li>I cannot restore my credit on my own. </li></ul><ul><li>Yes, you can! You can try to do it yourself (just like you can represent yourself as an attorney in a court of law). But you can also allow experienced professionals to educate you and assist you in restoring your credit profile. </li></ul>

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Thank You! <ul><li>“ Right now is the time to fix the next 10 years…” </li></ul><ul><li>-Jim Rohn </li></ul>

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Demystifying Credit Repair Go to: www.United-Credit.org