Credit Fixes

Paul Jerome asked:


The magician waves his wand and an astonished crowd sees a rabbit come out of a hat. A woman is sawed in half on stage and then magically reappears unscathed. Whether it is deception or entertainment is beyond the scope of this article, but either way I’m sure you’ll agree, that the magicians of old would rather not share their secrets lest their livelihood vanish. A parallel exists in the credit repair industry. They promise to cure your bad credit (for a fee, of course) and unlike the sawed-off woman or the appearing rabbit, nothing really happens. Your credit score remains unchanged and in many cases further disarray occurs. You might also risk a potential misreading or deliberate misrepresentation of the law by inexperienced or perhaps unscrupulous personnel who are involved in this business, thus adding to your credit woes. The purpose of this article then is to inform you how to repair your credit – without any cost, and further to make apparent what is considered illegal or at least unethical conduct on the part of credit repair companies.

First on The Federal Trade Commission’s (FTC’s) list of “tell-tale signs of a scam” is a warning to beware of “companies that want you to pay for credit repair services before they provide any services”. Receiving ‘payment in advance’ is a violation of the Credit Repair Organizations Act. Unfortunately, it seems to be a common practice among many credit repair companies who regularly collect these advance payments.

Another unsavory activity among some credit repair companies is for them to instruct you to dispute all derogatory information in your credit report regardless of its timeliness or accuracy. Their strategy is to bombard the credit bureau with these dispute letters in the hopes that these items will be removed because they are not verified in the thirty-day time frame. Not only is this strategy unethical, it’s also ineffective. The Credit Reporting Agencies (CRA’s) have created an Automated Consumer Dispute Verification (ACDV) system that is designed to speedily handle a tremendous volume of disputes. Once verified, all future disputes can be labeled “frivolous” under a provision of the Fair Credit Reporting Act (FCRA). This labeling effectively ends the investigation process by the CRA’s on your behalf.

The final topic to discuss is what the FTC refers to as “File Segregation”. This involves applying for an Employer Identification Number (EIN) from the Internal Revenue Service and then using it in place of your Social Security number to apply for credit. Misrepresenting your Social Security number is a federal crime. If a credit repair company instructs you to do this, then you could face fines or even a prison sentence.

At the risk of sounding simplistic, I must assert that the best credit repair is free – meaning you can do this yourself. No one knows your personal credit file better than you and Congress enacted the FCRA to protect your rights, not the rights of the credit repair company. All that is necessary to fix your credit is some free information and a little patience. There are some good websites that can be found on the net (the Broken Credit Blog included) that have compiled free information on the subject of credit repair. Be sure that the site you choose has been updated to reflect the 2003 FACTA amendment to the FCRA.

We all want good credit. Without it, life becomes very difficult. Unfortunately, occasions arise, quite often through no fault of our own, that causes our credit standing to take a downward spin (sickness, loss of job, etc.) Many of us have been through such an ordeal and during this period, discouragement sets in. But all of us have the opportunity to repair this negative credit and we should take advantage of such an opportunity.

We hope this article will offer some practical advice in the restoration of your good credit as well as point out some of the pitfalls to be aware of in this attainable pursuit of a healthy credit life.

Stuck in the Middle Ages asked:


What happens to one’s credit when the person’s sole credit card is taken and used illegally? We’re not sure how this will affect efforts to refinance, as this is my wife’s only credit card. She will be receiving a replacement in the next week and will have an affidavit indicating that the charges were not hers.

Any suggested approaches to ensuring that her credit info is considered before the card was stolen and the account closed?

John Cena asked:


There are a number of legal and effective credit repair techniques that have been used by individuals and credit repair companies to improve credit scores. Number one is removing negative items from credit reports is Credit Repair Software.

Personal credit report repair is a major concern for many people. It can be a long and frustrating process. There is no really quick fix. A leading credit repair company will advise you that it take time. There are techniques used by individuals and professional companies to achieve results. This article briefly covers one of the most frequently asked questions about personal credit report Software which is; how do I repair my credit.

The answer to the question; how Can I repair my credit; seems to depend on who you ask. If you ask Fair Isaac or one of the credit bureaus, they will tell you that it takes time and patience. Some “experts” say that only time can repair bad credit. A leading credit repair company says that bad credit can be deleted. In response to disbelief, they show tens of thousands of deleted listing, including bankruptcies.

When you ask; how Can I repair my credit, the most common answer is review the information on your credit report. Due to a recently enacted law, consumers can view and print copies of their credit reports at no charge by visiting www.creditrepairsoft.com. If information on your credit reports is inaccurate, obsolete, misleading or unverifiable, you can dispute the items with the credit bureau. You can write to the creditor that made the report and ask that the information be removed. You can do this on your own or you can hire a leading credit repair company to do it for you.

Often depending on the products that they sell, different companies will give you different answers to the question; how do I repair my credit. For instance, companies that offer credit cards to people with bad credit tell people that these credit cards will improve their credit. However, this may not be the case. Typical unsecured credit cards for people with bad credit charge fees that are nearly as high as the initial credit limit. According to Fair Isaac, inventors of the FICO credit scoring process, amount of “available” credit is a big determining factor in your credit score. Simply having a credit card will probably not improve your credit score. A leading credit repair company says that removing negative items from your credit reports will have the single biggest impact on your FICO credit score.

Disreputable credit repair companies may advise you to apply for an EIN, if you ask them; how do I repair my credit. This is a technique that is not recommended by a leading credit repair company. An EIN or employer identification number is a number used by the IRS to designate a business. If you do not own a small business, you should not apply for one. Some companies which advertise personal credit report repair recommend that a person apply for an EIN and use that number instead of their social security number when applying for credit. It is illegal to provide false information on a credit application.

So, after you look at the many answers to; how Can I repair my credit, you will probably see that there are many ways. Some work. Some do not. Some are illegal. You can choose to do it yourself or you can hire a leading credit repair company to do it for you. If you wait for bad credit to be removed from your personal credit report, then it will take a long time and you will not improve your credit scores. Even people with the worst credit can obtain a secured credit card, have a friend or family member with good credit list them as a co-applicant and work to achieve personal credit report repair. If you do nothing, your scores will not improve. There are companies that sell software programs, credit repair kits, books, CDs and DVDs on the subject of credit repair. You are not the only person asking; how do I repair my credit. There is also a lot of free information. It will take time and patience if you try to do it on your own, but it can be done. You may see quicker results if you hire a leading credit repair company and for certain problems a credit repair software is best.

Having good credit is important to everyone. People that have good credit may say that there are no effective credit repair techniques. People who have once had bad credit and now have good credit, because of the credit repair techniques used by the credit repair law firms would disagree. Credit repair is possible and it can be effective. Credit repair techniques that are legal and effective do exist.

David Kamau asked:


You’ve seen them in advisements. Credit repair, remove negative items, reduce or eliminate interest, open a brand new credit file, lower your payments and other similar promises. Can it be done?

The promise of credit repair is alluring indeed. Scam artists know this and have been cashing in on it. Credit restoration scams and schemes are galore.

Many have fallen victim to these scammers and schemers. This is sad, as the people who get scammed are obviously in debt and financial trouble already. Some may have even lost their homes or automobile(s). Talk of heartlessness.

So, is it possible to fix your credit and remove adverse information? Well, as you probably know, there are three major credit reporting agencies in the US. This means that the task of information removal gets three times as difficult.

Credit repair companies (also known as credit repair clinics) often promise to clean up your file for a hefty or monthly recurring fee. Now let’s take a look at how these companies operate in order to have a better understanding.

The credit clinics use three main strategies. One is to dispute everything on your credit file in the hopes of overwhelming the bureaus, such that they cannot verify the information within the legally required time frame. Does it work?

Well, credit bureaus know this tactic and will often dismiss such disputes as “frivolous”. And, even if the information does come off, it could still be re-entered somewhere down the road once verified.

The second strategy is to advise you to stop making payments until a point where the creditor or debt collector gives up. At this point, the creditor or collector might be willing to accept a fraction of the original debt. But there are problems to this too.

One problem with this technique is that it can wreak havoc on your credit report for years to come. Credit repair companies might promise to negotiate removal of the negative items on your behalf as part of the bargain, but this is not a guarantee.

Another problem to this is that the amount of forgiven debt is often considered income, for which you have to pay tax. Say hello to (potential) tax problems.

Even if a collection agency agrees to remove negative information from your report in exchange for payment, it can only remove what it has reported. Since accounts may have exchanged hands several times, any previous information will still show, and hurt your credit score.

The third strategy that credit repair clinics use is advice you to establish a new identity by obtaining an employer identification number (EIN). You then build a new credit report using that number as your social security number. This is tantamount to creating a false identity and could open you up for legal problems.

But don’t lose hope. Bad credit information removal is possible. The time it takes depends on your particular situation and personal effort.

Most reputable credit repair consultants agree that self credit repair is the best way to go. And it costs you nothing but your own time and effort. You may actually be doing yourself a great favor by avoiding credit repair companies.

How to get started? You need to learn and use certain strategies, and some plain old guts. Though not rocket science, credit repair (remove negative information) strategies are beyond the scope of this article.

Tim asked:


I have only have one revolving credit card, and I have a very high credit score. Because of this overall score they subsequently increase my credit line, even though I don’t ask for or use this revolving line of credit. Question? I have been told if you ask for a credit line decrease they lower your overall credit score? Why? What can you do to minimize a lowered credit score?