Friday, July 31, 2009

Legal Aliens #11

Legal Aliens #10

15 Secrets Credit Companies Don't Want You to Know

Many years ago, I was informed I could not buy a new vehicle because my credit was shot. I was turned down despite possessing a solid position with a state government agency and a substantial cash down payment. I discovered that errors were being reported by creditors. I was also being dinged by my ex-wife's creditors although she was the primary card holder - and the primary spender.

However, this painful experience did not come without its hidden rewards. I was abruptly introduced to the Fair Credit Billing Act of 1974 [HINT: Read this law].

Creditors love to play dirty, fast and loose. Their bottom line is to make money, even if they take a long walk outside the parameters of federal and state law. They figure what you don't know won't hurt them. That is about to change. My intention is to arm my beloved readers with information on how to fight back - and win!

Remember: knowledge is power and information is king.

First, forget about all those ads that ask you to give up your credit card information for free credit reports or credit monitoring. Most of them are scams - just another way to rip off the unsuspecting and uninformed consumer. By law, you are entitled to receive one free credit report every 12 months from the three nationwide consumer credit reporting companies - Equifax, Experian and Trans Union. You can request your copy by phone or by regular (snail) mail. If you plan do make any mail inquiries to the above mentioned credit reporting companies, I strongly suggest doing it by certified mail with a return receipt requested. Inquiries have a tendency to get lost in the shuffle. Using certified mail with a return receipt request requires the receiver to sign for the letter. You will receive that sign request back. If your inquiry suddenly disappears, you have proof. Make it a habit of doing this, especially with issues that are time sensitive. Cover all your bases.

Second, if picking a fight with Equifax, Experian and Trans Union seems daunting to you, please hire a credit repair lawyer. There are reputable lawyers in your area that are experienced in disputing negative items on your credit report. This is my personal weapon of choice. Yes, it will cost you some money. Nevertheless, the rewards of obtaining a sterling (and true) credit report outweighs the cost.

Before you go hunting for a credit repair attorney, be forewarned. There are unsavory individual and companies who make fantastic claims of "magically" erasing all your debt. When the rubber meets the road, no results are forthcoming. Some of these companies may try to tempt you to change your Social Security number or get an Employer Identification number (EIN) to create a new credit report. Do not fall for this scam! This is ILLEGAL! You could be prosecuted for mail or wire fraud if you use mail or telephone to provide false information to apply for a credit or a loan. It is serious federal crime to make false statements on a loan or credit application, to give false Social Security Number, and to deceitfully obtain an Employer Identification Number from the Internal Revenue Service.

You may find that many of the debts within your credit report are not yours or were not dropped off after the time limit set forth by federal law. We will deal with the latter of the two.

Time Limits

You or your attorney will concentrate on these ten negative items on your credit report. If any of these are past the time allotted by Federal law, it can be disputed. The creditor has 30 days to provide proof that the negative is valid. If the creditor fails to do so, the disputed negative item must come off.

  • Bankruptcy: Ten years from the date of discharge for chapters seven, eleven and twelve. Seven years for chapter thirteen. Any accounts covered by the bankruptcy stay on individual's report for seven years.

  • Delinquencies: Seven years from the first missed payment or original delinquency date.

  • Collections: Seven years from the original delinquency date.

  • Charge offs: Seven years from the original delinquency date, no matter if late payments were made.
    NOTE: The original creditor can sell your debt to a collection agency if they feel they won't get a cent from you in the near future. Some collectors claim that by making a payment or contacting them, an individual has reset the time limit to zero. This is not true! This practice is called "reaging". The Federal Trade Commission (FTC) has declared reaging invalid.

  • Lost Credit Card: Two years with no delinquencies. Seven years with delinquency.

  • Child Support: Seven years from date the judgment is filed.

  • Closed Accounts: Seven years from date of closing with delinquencies.

  • Liens: Fifteen years for unpaid tax liens. Seven years for paid liens.

  • Credit Inquiries: Two years.

  • Small Claims and Civil Judgments: Seven years from date judgment is rendered.

  • Paid Positive Accounts: Ten years.

  • Positive Credit Data: No time limit.

Depending on the extent of damage on your report, a thorough credit repair should take between three to six months from start to finish. Do not expect the credit reporting agencies to make this process easy for you or your lawyer. Above all, DO NOT apply for credit in any way or form during this time.

Be patient, stick to your guns and the prize will be yours.