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Credit repair reality
check
Dorothy Rosen • Bankrate.com
It finally happened. You're out of work, and your
wife needs surgery. You don't have health insurance, money for next
month's rent or money to pay the minimum balances on your overloaded
credit cards. You've finally hit bottom.
When life deals you a lousy hand, what do you do?
Maybe you pound the pavement until you find a job that lets you
go after those debts like a barracuda after bait fish. Maybe you
go to consumer
credit counseling and slowly but surely pay down the loan balances. Maybe
you file for bankruptcy.
But there are no maybes about this: You will end up
with a nasty credit report that dangles like an albatross around
your neck every time you turn your head. You apply for a mortgage
and you're turned down. You try to get a credit card or a lower
interest rate and you're turned down again. You look like a deadbeat
on paper, and you know you're not.
If only you could get a new identity or find a big
eraser.
The big eraser
Congratulations! You're a perfect candidate for the
pitchman who will offer to help you fix your credit report. He may
even call it a credit repair kit.
Whatever it's called, the pitchman knows he'll catch
your attention with the promise of a big eraser to rid your credit
report of negative marks, so he casts this sort of bait:
| Why let charge-offs, judgments,
repossessions, etc. be on your credit report when there are
new laws in the Fair Credit Reporting Act? |
| You don't have to live with
bad credit! |
| Have you filed a bankruptcy,
lost a home or had a vehicle repossessed? |
| Is there information on your
credit report that is damaging to you as a credit consumer,
making it difficult if not impossible to gain new positive credit? |
| Now you have the power to
correct your credit. |
It's pretty tempting, isn't it? The pitch sounded
good, so Bankrate.com slapped down its 50 bucks and downloaded the
repair kit. Look at the claims vs. the disclaimer and introduction
that came with the material we ordered:
| 70 percent of all credit
files contain errors. |
There's a 48 percent chance
of having a questionable item on your credit report. |
| Produced by a top credit
attorney who charges hundreds, even thousands of dollars to
perform these services. |
Not intended to be a substitute
for services of professional, legal, accounting or other specialized
help. |
| Any information contained
on the credit profile is subject to removal under the sub-sections
of the federally mandated credit reporting laws. |
Disputing accurate credit
information would place the individual at risk of violating
federal and/or state laws. |
| A simple and effective system
for removing items such as bankruptcy, tax liens, repossessions,
foreclosures, charged-off accounts, collection accounts and
most importantly, erroneous information. |
This system is intended for
use only in disputing inaccurate credit information and expressly
should not be used to remove accurate credit information. |
New identity crisis
If you're trying to escape the shadow of your past
credit mistakes, some pitchmen may even offer to help you establish
a new identity for a fee -- paid upfront, of course.
Here are some of the claims that a pitchman might
toss you and how they measure up to reality:
| You can have a new Social
Security number and a brand new identity. |
You can file a Form
SS-4 with the Internal Revenue Service and get a new 9-digit
identification number called a federal employer identification
number (FEIN). |
It is a federal crime to
get a FEIN under false pretenses. |
| There is no law against having
two identities. |
It's legal if you have two
separate entities -- yourself (your Social Security number)
and your business (your FEIN). |
Using two identification
numbers to identify one entity -- that is you -- is called "file
segregation" and is illegal. |
| This plan uses legal government
forms. |
The government form is the
Form SS-4 mentioned above. |
Misrepresenting yourself
on the SS-4 is fraudulent. Think wire fraud, mail fraud and
civil fraud. |
| The seller of this information
will not be held legally responsible for how the purchaser might
choose to use it. |
It is illegal to use the
seller's information to establish a new identity. |
You could go to jail. |
How to repair mistakes on your credit report
There's no magic eraser that can get black marks off
your credit report when you're guilty as charged.
If, however, you're not guilty and the black mark
is a mistake, the Fair Credit Reporting Act says the reporting company
has to take it off your credit report. If there's a dispute over
the item and the reporting agency refuses to remove it, it has to
let you include your side of the story on the report. What the program
above is actually selling is help in the "often tedious process"
of challenging errors on your credit report.
The process is tedious all right, with or without
a $50 program. There is plenty of free help on the Web if you need
to correct errors on your credit report.
The Federal Trade Commission's March 1999 Fair Credit
Reporting article provides answers in plain English to frequently
asked questions about consumer reports and consumer reporting agencies.
How to live with a bad credit report
What if the black marks are no mistake? How do you
live with a blemished credit report?
It's a temporary thing, like a broken leg, and you
do whatever you can to make it better as quickly as possible. Your
credit history may whisper "bad risk" to a potential lender, but
your current actions will eventually reduce that whisper to a whimper.
Live within your means, pay your bills early, start
saving and keep trying to find
lower interest rates for your credit card debt (real lower rates,
not teaser rates). Don't count on winning the lottery, and don't
expect to find a viable way to borrow yourself out of debt.
Do the right thing one day at a time, and before you
know it you'll be handing that albatross right back to the Ancient
Mariner.
-- Posted: Feb. 16, 2000
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