Credit Repair Illustrated (continued)
Negative entry #4: When Mary fell behind making her Discover credit card payments several years ago, Discover closed her account and made a notation on her credit report that her account was once "90 or more days delinquent" and the account was "closed by creditor". Mary had obtained a credit union loan two years ago which she used to pay the account in full; however, the account still showed a balance due and owing of about $4,000. The credit card company had not reported any information regarding the account in two years.
Mary disputed the entry with the credit bureau, arguing that the account wasn't reported fairly because there was not a notation made that she had paid the account in full almost two years ago. She enclosed a copy of the cancelled check she had sent to the credit card company paying off the debt. When Mary disputed this entry with the credit bureau, it then attempted to verify this with the credit card company, who never responded to the re-investigation request. Why? Perhaps having received payment in full, Discover chose not to dispute Mary's challenge. In any event, they never responded and as a result, the credit bureau not only removed the negative late payment notations, but removed the entire record of the Discover account from Mary's credit report.
Explanation: The FCRA requires that information in credit reports be reported fairly. This particular entry made it appear that Mary had not paid this debt, when in fact, she had. A lender reading Mary's credit report could assume that the $4,000 debt might have been charged-off or was still due and owing since the credit card company had failed to update it. This has a very negative and unfair impact on Mary's credit rating; therefore, it is in violation of the FCRA.
Credit bureaus are also required by federal law to remove disputed entries from credit reports when the reporting company fails to respond in a timely manner to a request for re-verification. Although this credit card company never responded and the record was never added back to Mary's credit report, the record could have been added back to Mary's credit report if the credit card company re-verified it at a later date (but not after a period of seven years had passed beginning from the date of first delinquency).
Note: If the credit card company had responded by updating Mary's account, e.g., by adding a notation that the account had been "paid in full", there is nothing Mary could do to get rid of the negative late payment notations short of writing the company a letter and asking them to remove the negative information, which they are not obligated to do and unlikely to do. If they had re-verified the account as accurate without updating it (as some credit card companies have been known to do), Mary should insist that the account be reported fairly since she has proof that payment was made.
Negative entry #5: Mary found that one of the credit bureaus had her birth date wrong, another one listed her former employer as her current employer; and the third one listed a completely inaccurate address as her former address.
Mary sent proof of her true birth date (a copy of her driver's license) and current employer (a copy of a paycheck stub), and disputed the "former address" entry, and all the information was subsequently corrected and updated by the three credit bureaus.
Explanation: Although wrong personal information doesn't seem like a big deal, it actually is. Whether you lease an apartment, apply for insurance, a home or auto loan and sometimes employment, your credit report is checked. Any information submitted on the application that doesn't match what is contained in your credit report sends up red flags with a prospective lender and can delay your application, or result in you being denied credit or housing. Whenever information you submit on a credit application is in conflict with what appears on your credit report, most lenders will believe the credit report is correct and that you are a liar. This is ironic, since most lenders, unless they've been living in a cave; know that credit reports contain numerous errors and mistakes. This is why you should make sure all personal information on your credit report is spelled correctly, is accurate and up-to-date. In addition, always apply for credit, insurance, housing, etc. using the exact name as it appears on your credit report(s), e.g., John Lee Jones, John T. Doe.
Summary. Mary went from having a very poor credit rating to having a perfect one in just three months. All of the negative entries have been removed, her personal information is correct and old, abandoned accounts had been officially closed. Her credit score jumped from 642 to 820 in eight months.
Credit repair is not complex; however, it does require some time and patience. It can also take weeks to complete -- anywhere from two months to a year for very dire cases -- so it should be started well before the time you plan to apply for any type of major loan. Don't assume everything is okay with your credit report. Mary thought she had decent credit until she looked at her credit reports and discovered otherwise. In fact, a recent study conducted by Consumers Union (a consumer group) found that there are lots of people like Mary out there. Their research has found that a significant number of credit reports contain at least one error serious enough in nature to result in the denial of credit.
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