Is it illegal for creditors to take a negative, accurate listing off my credit report? They tell me that the law requires that these items remain on the credit report for at least seven years and that they won't repair my credit.
It is quite difficult to repair your credit without somehow satisfying your outstanding debts. However, the act of paying off a debt will not improve your credit rating much, if at all. Negative credit is allowed to stay on the credit report for a maximum of seven and one half years, except for bankruptcy which may remain on the credit report for ten years. Under the old Fair Credit
Reporting Act (FCRA), the seven year clock began ticking on "the date of last activity" or, in other words, when the last action took place on the account. Under the revised FCRA, the credit bureaus must start the seven year clock on the first payment that you missed that led to the collection or charge off status. Now, creditors and collection agencies aren't allowed to extend the reporting period by passing the account back and forth between agencies.
However, by paying an outstanding, delinquent debt you will change the account status to "paid collection," "paid was late," or "paid was charged off" - which will still stand out as a very negative listing. When you have outstanding debt, it is almost always prudent to seek professional help so that you may settle your debts without further damaging your credit. In some cases, it is even possible to negotiate the deletion of negative credit as part of the payoff.
The credit bureaus have cleverly spread this myth through the news media and government agencies to discourage credit repair. In truth, the credit bureaus will sometimes temporarily delete a negative listing if they haven't heard from the credit grantor after approximately thirty days. If the credit grantor reports late, say after six weeks, and then verifies the negative listing, the credit bureau will often reinsert the negative listing on the credit report and reverse the credit repair. This is often known as a "soft delete." Usually, though, the creditor simply fails to respond and the negative listing is permanently deleted and repaired. If the item is verified by the credit grantor, either before thirty days or after, the account may still be repaired again at some future time.
Under the new Fair Credit Reporting Act (FCRA), the credit bureaus must follow strict procedures to notify you if they decide to re-report an entry on your credit report. These new procedures have reduced the frequency of the re-reporting of listings, and they have increased the risk of lawsuit for the credit bureaus when they do it.
There is no type of negative listing that hasn't been reparied and removed from a credit report thousands of times. Negative items, such as bankruptcy or unpaid debts, are certainly more difficult to repair and remove from the credit report, but this has more to do with the operational systems of the credit bureaus than with the severity of the bad credit item. For example, judgments and tax liens are severely negative listings, yet are, overall, easier to repair.
Disputing the credit report is easy. Getting results (and actually repairing bad credit) is amazingly difficult, complex, and infuriating. It isn't a coincidence that the Federal Trade Commission receives more complaints against credit bureaus than any other type of business. If you call the FTC today to report a complaint about the credit bureaus, their phone mail system will ask
you if to press one if your complaint is about the credit bureaus, and press another number if your complaint is about anything else. Clearly, this situation evolved out of deep consumer frustration with the uncooperative nature of the credit repair process.
Remember, the credit bureaus are primarily interested in protecting their profits. Investigating your challenge consumes these profits. Short of sparking a large number of lawsuits, the credit bureaus seem to do everything in their power to discourage consumers from making progress with their credit repair. Repairing your own credit is like repairing your own transmission or
representing yourself in court; it is possible, but you must decide if your are willing to take the time and assume the risks of doing it yourself.
Unless you hire a professional to help
you, credit repair will have to become a full-fledged hobby.
Many bankruptcy attorneys do not
adequately understand or explain the effects of bankruptcy
to their clients. Stated simply, bankruptcy is to the credit
rating what the atomic bomb is to the battlefield.
When you file for bankruptcy, every
credit account that you decide to include in bankruptcy will
become an "included in bankruptcy" item.
Additionally, a bankruptcy filing and bankruptcy discharge
listing will appear in the court records section of your
credit report. Because so many negative items are attached
to the bankruptcy, it becomes very difficult to remove all
trace of the bad credit. If at all possible, you should
No known creditor considers
information given in a 100-word statement. It makes one
wonder why they included this meaningless stipulation into
the Fair Credit Reporting Act.
Most creditors will not even look at
the credit report when a credit application is made. Rather,
they will simply take a numerical score from the
credit report and make a determination as to whether or not
they should extend the credit. This score
does not take into consideration the contents of a 100-word
The statement does, however, verify
that some of the negative listings on the credit report are
technically accurate. This just makes your credit repair job
more difficult. Make 100-word statements the first things
you delete from your credit file (if you ever added one in
the first place.)
Many credit repair operators have
promoted this scheme, known as "file segregation".
Technically, we have seen some few people that have
succeeded in using a false Social Security Number and have
fooled the credit bureaus into giving them a new identity.
The scheme is complicated: one must change almost all
identifying information about oneself and be very careful
never to use the old information again. Most often, we've
seen people embark on these schemes only to slip and, at
some time, provide the old information mixed with the new.
Then, both credit reports merge and the consumer is left
with a tangled mess of deception and suspicious credit
In the worst cases, people have been
charged with crimes, or terminated from jobs, for using the
This scheme has proven to be complex,
difficult, and (according to the FTC) illegal. Lying about
any personal information on a credit application is usually
a federal crime. Using these "file segregation"
credit repair schemes requires an enormous amount of
coordination, not to mention personal risk.
Recently, the FTC has gone out of its
way to shut down any credit repair company that promotes
literature discussing file segregation. It remains to be
seen if they will be successful under the First Amendment.
If asked for our recommendation as to
whether a person should try a file segregation credit repair
program, our answer is always, "No, it is too risky,
difficult and legally problematic."
Any amount of bad credit is
devastating to your chances of being approved by a credit
grantor. Most credit grantors never actually look at your
credit report. A computer pulls your credit report, rates
your credit standing, income, indebtedness, and stability,
generates a number (or FICO score,) then spits out an
acceptance or denial. Even one or two slow pays will usually
trigger a credit card or personal loan denial. The slightest
amount of negative credit will cause the interest on an auto
loan to skyrocket. You will probably find that even a little
bad credit, regardless of how much good credit you have, is
an unacceptable barrier to credit approval.
Consumer Credit Counseling Service or
CCCS is a nonprofit debt counseling service that assists
consumers who are over their heads in debt. CCCS is funded
and controlled by the credit grantors and the credit
Often, CCCS provides a beneficial
service to the consumer. Because of the obvious allegiance
between CCCS and the credit bureaus, you cannot reasonably
expect CCCS to do anything that the credit bureaus would
frown upon, such as help you repair your credit.
In fact, if you decide to leave CCCS
before you have finished their program, they can list your
failure to complete the process as a negative listing on
your credit report (though this is rare.) When you are
participating in the CCCS program, your creditors will often
note it on your credit report. If you have perfect credit,
and wish to keep it, you may not want to use a credit
counseling service. These services usually create negative
listings because their process will generally make you late
on your bills at least 30 days.
The fact that you resorted to a debt
counseling program is a red flag for prospective credit
grantors. Remember, paying off your debts is a step in the
right direction, but it does not repair your credit.
With these factors in mind, consumer
credit counseling can be a life-saver if you're over your
head and need some help and some breathing room.
When you speak with credit grantors,
collection agencies, or credit bureaus, their typically
under-educated staff may tell you all manner of such
pseudo-legal nonsense. The law demands that negative
listings appear on your credit report for no longer than
seven years. The credit grantor or the credit bureau can
choose to delete the negative credit listing whenever they
Repairing your credit by yourself is
possible. But remember, the credit bureaus are committed to
the failure of credit repair efforts, and the credit bureaus
have far more experience in discouraging hopeful consumers
than you have in beating giant credit bureaus.
Yet, some consumers have achieved
results in repairing their credit without professional
assistance. The following is a guide to help you determine
whether or not you should seek professional assistance in
your credit repair efforts.
Attempting to repair your own credit
while failing to dedicate sufficient time or attention can
result in further damage to your credit rating and may make
it impossible for anyone to repair your credit for you. For
this purpose, we'll give you a preview of the time
commitment required to repair your credit. Examine very
carefully your capabilities and your schedule before
deciding to repair your own credit.
a Month's Activities in Restoring Your Credit (for a
daily to check deadline of each of six credit bureau
|Drafted six new
original credit bureau query challenges
|Visited post office
six times to mail correspondences by Certified
Mail/Return Receipt Req.
|Carefully analyzed and
marked six credit reports to find
negatives/deletions/ positive changes
|Drafted 4 tardy credit
bureau response follow-up letters
|Visited post office 4
times to mail follow'up letters by Certified
Mail/Return Receipt Req.
|Responded to 2 credit
bureau stall letters by providing further
information/ challenging time loss
|Visited post office 2
times to mail stall responses by Certified
Mail/Return Receipt Req.
|Responded to 2
"frivolous or irrelevant" credit bureau
rejection of dispute letters
|Visited post office 2
times to mail "frivolous or irrelevant"
claim Certified Mail/Return Receipt Req.
|Requisitioned six new
credit reports at $8.00 each through local credit
creditors and made creditor-direct challenges
|Drafted 20 letters to
creditors (one per spouse) to challenge and demand
|Visited post office
once to mail letters to creditors Certified
Mail/Return Receipt Req.
creditors by telephone to negotiate deletion of
|Carefully analyzed ten
responses from creditors with billing histories and
|Contacted six state,
federal, and licensing organizations to locate
addresses and forms for complaints
|Prepared complaints to
six state, federal, and licensing organizations
|Visited post office to
mail complaints Certified Mail/Return Receipt Req.
|Total hours per month
This chart shows liberal estimates of
time required to repair your own credit. If you are a single
person working on his/her credit alone, you can subtract 25%
from the total time required. This time investment will
continue on a monthly basis, gradually shrinking as
creditors agree to delete their listings. On the average,
you can expect the process to take between twelve to
eighteen months, unless you have very little negative credit
(meaning, one negative item per report.)
Each response to a creditor or a
credit bureau must be an original and must pertain
specifically to your present situation or you may be
red-flagged as a frivolous credit repair troublemaker or be
ignored altogether. There are no effective "form
letters" or "fill in the blank" responses
that yield results. Credit bureau checkers spot form letters
easily as the sign of someone attempting to repair their
credit. As such, these letters generally earn a swift
"frivolous and irrelevant" response.
Dueling with the credit bureaus and
credit grantors requires an aggressive and tenacious
personality. You must be willing to wade through rejection
after rejection until you achieve your desired credit
The credit bureaus will shoot down the
majority of your claims and disputes. They will treat you
like a disreputable person and a liar. You must take this
rejection without becoming discouraged. If you are the kind
of person who tires quickly from an emotional struggle, you
should seriously consider hiring a professional to repair
your credit. If you are the kind of person who becomes angry
when dealing with the slow, bureaucratic employees of big
bureaucracies, you will not fare well. Patience is an
absolute requirement. If you are thick-skinned and have the
fortitude to fight the credit bureaus and your creditors for
as long as it takes, then you may have the proper
disposition to repair your own credit.
In the process of repairing your
credit, you will have to track and monitor dozens of
communications at once. This will require organized,
disciplined habits. Every day, you must check up on each of
these communications to make sure that the credit bureau or
credit grantor hasn't overextended their time limit. You
must spend at least one-half to one hour per day tracking
your responses, results, and taking appropriate actions.
Remember, you will be dealing with three credit bureaus per
person, plus you will be communicating with each credit
grantor appearing on each credit report. In most cases, the
number of simultaneous communications will exceed twenty or
thirty. If you are not a very organized person, you are
definitely not in a good position to attempt to repair your
own credit. Click Here To Learn More About Credit Repair.