LEGAL PERSPECTIVE

Unfortunately today we live in a society that determines what things should cost us (house, car, etc) by our credit file. If your credit report is good, chances are you will partake in many of the better things in life. The complete opposite is true if your credit report is bad.

Very few creditors will extend fair credit to you with blemishes within your credit history.

Our credit system is not set up to allow people to make mistakes -or even have bad luck.  What if you had to make the simple choice between eating and making a car payment? What if a job lay-off, medical emergency, or some other personal crises prevented you from making a timely payment? Should you be forced to pay added intrest for this for the next 7 to 10 years… serving a credit prison sentence?

How is a system like this allowed to operate in our democracy? The credit bureaus have placed themselves in the position of both judge and jury in relation to your credit file. Do not forget one very important difference… A judge will give you a chance to defend yourself BEFORE ruling. We are supposed to have the opportunity in America to face our accusers BEFORE judgment is passed. This is entirely untrue when it comes to your credit records.

The truth is creditors and credit bureaus have been swapping information about you behind your back and without your permission for a long time. In effect, it is hearsay and it can cause you severe economic hardship.

The current system does not give you the opportunity to defend yourself before inscribing your credit file with negative and damaging information (even if it is not yours). Their perspective is that you must prove to them that the negative information on your credit report is incorrect, invalid, erroneous, or otherwise non-verifiable before they will remove it. In other words, in the eyes of the credit bureaus… you are guilty until proven innocent.

We are brought up to believe that one is innocent until proven guilty. Why we are not extended the same courtesy by the credit bureaus? Why do they not give us a chance to defend ourselves before they place negative information on our report? Fact is, consumer rights cost them money.
The sole focus of credit bureau companies is profit.

Your credit file is their product. The credit bureaus have no government affiliation (except for spending millions on lobbying efforts). These private corporations sell your personal financial information to anyone that will pay for it…who generally accepts it as gospel. (Although it has been proven many times that mistakes do happen all too often.)
Creditors then reciprocate by giving back to the bureaus any information that they may have on you.

What can be done?

• a democracy, everyone is entitled to a defense.

• Consumers have the right to obtain representation and face their accusers armed with their legal rights.

• The credit bureaus should have to back up the information that they sell about you. Congress and the law agree. If your defense is presented properly, whether your credit report is accurate or not, it is usually more difficult and costly to prove the information is correct than to simply remove it.

• It should require more than just a form letter to validate my credit. It does. If the bureaus state the information was only verified, our attorneys will increase the intensity of the challenge and request validation until it is permanently removed.

Legal Links

Equal Credit Opportunity Act – ECOA

Credit Repair Organizations Act – CROA

Fair and Accurate Credit Transaction Act

Fair Credit Reporting Act – FCRA

Fair Debt Collection Practices Act – FDCPA

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1. Did you know that the credit report YOU see as a consumer is different than the ones your potential creditors might see? You see, your credit report is assembled “on the fly” its not stored information on some database at the credit bureau. When your credit is pulled a computer program searches a network for information with your social security number, name, date of birth and so on.

Did you know that when a CONSUMER pulls his or her own credit report the search criteria is different than, say, a mortgage broker? A consumer has to have all matching socials with matching DOB and so on. There are 18 different search criteria that have to match in order for an item to populate on a credit report when a consumer looks at their credit report BUT when a potential creditor pulls your credit they lower the criteria! This results in more items on your report when you are trying to get approved for financing. For Example:

-         When a creditor looks at your credit report, only the month you were born has to match? The day and the year are irrelevant; this results in more items on your report and probably lower scores.

-         For something negative to populate when a creditor pulls your credit under your social, the address doesn’t have to match, It doesn’t even have to be close – you just have to live in the same “region”

-         For a negative item to make it on to your report, your name doesn’t even have to match, just 2 letters in the name. David and Dan are the same to the credit bureaus.

This is simply not fair, why should the rules be different? What this means is that when a creditor pulls your credit to decide whether or not to extend you credit – the credit bureaus allow your potential creditors to cast a wider net than they do you…. Why is that? Could it be because they don’t want to spend the time and the money it takes to fix their records?

2. Did you know that paying off a collection can LOWER your credit score? Paying off a debt can actually hurt your credit. Negative items on your credit report are allowed to stay on your credit report for a maximum of seven (7) years, except for bankruptcy that can stay for up to ten (10) years. This 7 or 10 year clock begins ticking at the date of last activity. Making a payment represents new activity and restarts the clock. When paying an outstanding debt, you will change the account status to paid collection, paid charge-off, satisfied judgment, or “paid was xxx days late”. This is still considered very negative and appears as though you had to be strong-armed by the creditor to pay the account. It is almost always prudent to have professional help so as to not further damage your credit by trying to do the right thing.

3. Did you know that one 30 day late on your mortgage THIS month will most likely be reducing your score more than a bankruptcy that is 5 years old.

4. Did you know that two people with the same income, wealth and credit history could both have 10,000 in debt but will have drastically different scores because of that $10,000 in debt? Why? Because it’s not how much debt you have, its how much debt you have in relation to how much credit you have. Example:

If person A has in 10,000 in credit card debt but only $12,000 in available credit limit that ratio will drastically suppress the score. Meanwhile client B also has the same amount of debt but has $40,000 in available credit looks much more responsible with their credit and therefore has a higher credit score. So pay attention to the ratios, not amounts owed. This is a good reason to never cancel a credit card without a yearly fee. Rip it up; throw it away but leave it open.

6. Did you know that the United States court systems DO NOT trade information with the credit bureaus? They courts do not tell the credit bureaus about bankruptcies and tax liens. So how does this public information make it onto your credit report? Contractors are paid by the credit bureaus to find the information and upload it to your report. These for profit companies must be following the law when doing this, many times they do not.

7. Did you know that your zip code affects your credit score?

8. Did you know that the bill paying habits of your neighbors can suppress your credit score?

9. Did you know that using a P.O. Box can suppress your credit score?

10. Did you know that your previous address suppress your credit score? Previous addresses imply that you have “vagabond blood” and therefore less stable lifestyle than someone who stays put. Real Estate investors – beware!

10. Did you know that the types of companies you deal with affect your credit score, even if you pay on time? Did you know that having a capital one card can hurt your credit? Well not just capital one, any bank that has a reputation for high interest rates will look worse than a bank that has, in the eyes of the bureaus,  a more stable clientele. Since the credit bureaus cant see the interest rate you have on your credit report the look less favorably on the “cheesy banks” these are the banks that are more likely to charge higher interest rates. These look worse than banks that have a reputation for charging lower rates.

Did you know that capital one has admitted under oath that they purposely do not report your available credit limit in order to suppress your credit score? If you have a $10,000 limit and are only using $2,000 they will report your balance owed and your credit limit to be the same thing! (or close to the same) This is to reduce your score and your ability to make a balance transfer to another card less likely for you. Yikes.

11. Did you know that 4 out of 5 credit reports contain errors? According to the independent Public information research group credit reports in the united sates

- 3 out of 10 credit reports contain false delinquencies and/or accounts that didn’t even belong to consumer.

- 1 in 4 reports have accounts labeled “closed by credit grantor” even though the accounts were closed by the consumer. “Closed by credit grantor” although similarly the same it actually implies that the line of credit was taken from you, actually hurting your credit score.

12. Did you know that when you dispute an item online you are 5 times more likely to have that information verified than if done in writing? Conversely, if an attorney sends in your dispute it is 7 times more likely to not be outsourced to another offshore company for verification and therefore much more likely to result in the disputed item being removed from your credit repot.

Did you know that wealthy people have been hiring attorneys to reduce their debt and credit blemishes for years? The laws are written in your favor, you just need to take advantage of them.

Long story short the credit bureaus do not have your best interest in mind. You must always keep in mind that you are not the credit bureaus customer, you are their product. They sell your personal information behind your back without any regard for your sell being for a profit. Learn how to right these wrongs and beat the credit bureaus at their own game.

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