America, the land of the free and the home of the brave – oh, and let’s not forget, a nation of debtors. That’s right – you’re not alone! Most people in the U.S. are waist-deep in debt, owing more than $10,000 just on credit cards. And most of them have made mistakes big enough to have damaged their credit rating at one time or another, resulting in penalties, fees and higher interest rates.
So if you’re like the average American with a credit score in the 600’s or lower, it’s time for you to learn how to make your life a little easier and a lot less stressful – by learning the rules of the game and how to improve your credit score. Whether you’re new to the game or simply have too much “experience” with a poor credit rating, you can “correct” many of your past mistakes and implement a better plan for the future.
American Credit Repair is designed to teach you to understand everything you need to know about credit reporting and how to play the game to achieve the highest score. The goal of this book is to prepare you for the times when you need to count on your credit report – whether to earn a credit card, an automobile, a home or even a job!
Creditors who let you use their money in the form of credit cards and loans want to be able to determine your creditworthiness ahead of time and they also want some way of disciplining if you don’t pay them back. So the idea of selling credit “report cards” on consumers came into play. Hence thousands of these credit reporting agencies bloomed like desert cacti in the olden days (actually, the 1960s) in response to the wagonload of local and national lending companies feeding on the blossoming credit boom and the new computer technology of the decade. Today, after years of mergers and buyouts, there are three main credit reporting agencies that compile your reports. You may have heard of Experian (formerly known as TRW), Equifax and TransUnion.
Credit reporting agencies are profit-making companies that gather and sell information about consumers, especially their financial history. Early on, these organizations somehow gained their titles as “agencies” and “bureaus” – and their continuing self-promotion as such only perpetuates the unfounded (but common) view that these organizations are in cahoots with the federal government. The reality is – they’re not! They are private companies – and for that reason, they are loosely labeled in this volume as credit reporting “agencies,” or CRAs.
CRAs historically furnished information to just about anyone who would ask and who was willing to pay for it. Back in the heyday, needless to say, technology was not like it is today. The unpopular reputations of all CRAs stemmed from their low concern for accuracy or completeness when dealing with the files of thousands of consumers, yet they continued to grow at an incredibly fast pace. Horrendous mistakes were plentiful and most of the 50 state lawmakers didn’t see any big concern until more recently. The federal government got involved to correct a barrelful of problems by legislating requirements for these CRAs and drafting some laws.
The law of the land was finally enacted by Congress in 1971 – the Fair Credit Reporting Act (FCRA). This law is rather lengthy, but in a nutshell, it sets forth two main objectives:
The FCRA enables consumers to obtain a report of their personal financial history from CRAs by simply requesting it.
The Act requires both the CRAs, and those who supply them with information, to follow certain procedures and regulations regarding how consumer information is maintained.
Incidentally, the FCRA applies to consumer credit transactions; it does not apply to commercial credit transactions such as certain business loans and large insurance transactions. You may have heard of commercial reporting agencies, such as Dun & Bradstreet.
The latest version of the FCRA is about 86 pages long and is included for your review (Fair Credit Reporting Act). Also, provided in the next paragraph, is a direct excerpt from the Federal Trade Commission appropriately titled “FCRA Summary of Rights.” It’s worth taking the time to read through it. You may see this document again, more and more when you apply for mortgages and other credit.
In addition to affording you certain rights, the FCRA provides the CRAs with a few rights as well. For example, they are allowed to show your report to anyone who has a legitimate business need. This not only includes your current and prospective creditors – such as mortgage lenders, banks and credit card companies – it may also include landlords, employers and insurance companies. Disturbingly, CRAs will even sell access to your credit file to strangers (solicitors who can pull your credit report in a moments notice and without your permission or knowledge). Ever wonder where all that junk mail comes from?
If you want to stop most of the unsolicited financial offers (e.g., credit cards and insurance products) you receive in the mail, you can choose to look on the solicitation itself for a toll-free number (as required by law) or better yet, you can preemptively stop these strangers from accessing your credit file and sending you junk mail by calling the following toll-free number serviced by all three credit reporting agencies: (888) 567-8688. You can even submit your request online by visiting www.OptOutPrescreen.com and choose from one of two options: 1) You can opt-out of receiving firm offers for five years using their website or 2) you can opt out permanently by using their mail-in form.
Even today, the CRAs are not held responsible for simply reporting inaccurate information as long as they follow certain basic procedures. And they are not required to inform you of any negative information that is being reported about you (in fact, they found a way to make money from notifying consumers when negative information is being reported – by selling them monitoring services). So, now you know you are entitled to see your report – and so are many others with whom you don’t even do business! You also know the CRAs are not responsible for the accuracy of the information in your file and they don’t have to inform you if negative information is being reported about you. It’s no wonder that millions of errors continue to hurt thousands of consumer credit files each year.
In addition to genuine mistakes that may appear in your credit files, many consumers suffer from intentional blights known as identity theft. According to a 2003 U.S. Federal Trade Commission report, consumers reported 9.9 million cases of identity theft between April 2002 and April 2003, with losses totaling approximately $5 billion.
- Ensure that lenders make decisions on loans based on full and fair credit histories, and not on discriminatory stereotypes.
- Improve the quality of credit information, and protect consumers against identity theft.
- Give every consumer the right to request a free copy of his or her credit report once a year.
The FACT Act simplifies what has been a mounting mess of state laws and regulations on how consumers can and must report such frauds and how banks, credit card issuers and reporting agencies must respond.