Xem mẫu

CHAPTER 7 REBUILDING YOUR SCORE AFTER A CREDIT DISASTER 109 usually when trying to warn people away from the many scam artists who promise to erase all of the bad information on your credit report in exchange for a fat fee. I’ve since learned that sometimes—not always, but sometimes—you can get accurate information removed from your file, especially if it has to do with an old collection account. Now, the bureaus and Fair Isaac will tell you that this isn’t “playing fair”—that the integrity of the credit system depends on credit reports reflect-ing the most complete picture possible, including all available negative and positive information. Unfortunately, the bureaus are still allowing far too much erroneous data to seep into their system, and that’s hurting consumers. The credit-reporting process is still weighted heavily in favor of lenders and collectors. That steams Jim Stephenson, a Realtor in Branson, Missouri, who has watched several of his clients struggle with inaccurate credit information: “If I’m a subscriber [to the credit bureaus], all I need is your Social Security number and I can tell them anything derogatory about you I want. Without question or hesitation, this info goes onto your credit file. It can be extremely difficult to prove a negative. How do you prove that you don’t owe me money?” Jim wrote. “Time and again I have witnessed firsthand the inability of a client to have misinformation that is irrefutably not my client’s debt removed without a protracted and costly fight. Why is this? It’s because the burden of proof is on the accused, not the accuser.” The issue of re-aging can be particularly troublesome. The seven-year limit on reporting most negative items was designed to give consumers some protection against relentless creditors. In effect, lawmakers were trying to prevent collection agencies from creating a sort of perpetual debtors’ prison for people who had made mistakes. Congress even strengthened the law in the mid-1990s to prevent collectors from endlessly extending the seven-year period time just by passing an account from one agency to the next (as Beth’s collection agency was threatening to do). Instead of using the “date of last activity,” as was common before 1997, the 7-year clock now starts 180 days after the account first became delinquent. To get around the limit, some collection agencies are now simply flout-ing the law and pretending an old debt is a new one. I’ve received numerous letters from consumers who had long-forgotten delinquent accounts sudden-ly pop back up on their credit reports with a new and phony date. One of the largest collection agencies, NCO Financial Systems, agreed in early 2004 to settle a lawsuit with a group of borrowers over this very issue. From the Library of Melissa Wong 110 YOUR CREDIT SCORE Unfortunately, the type of collector that would actually post false infor-mation to a credit bureau file might not be the type that will back down in the face of a validation demand or a credit bureau investigation. You’ll still need to make the validation demand, of course, and follow up with a credit bureau dispute if you don’t get the response you want. But it might take a lawsuit to get the falsely incriminating information out of your file. There’s another issue. Plenty of consumers are like Beth and Dave in Chapter 6, “Coping with a Credit Crisis,” in that they let spats with merchants get out of hand and wind up with collections on their reports. These collec-tions—even for small amounts—can have an outsized effect on a credit score. The thinner or younger your credit file, the worse a collection can hurt. Although mortgage lenders tend to ignore these small accounts, credit-scoring formulas might not. Getting rid of collections can create a more accu-rate picture of your credit habits. It’s also not uncommon to have two, three, or even more collection accounts reported for the same debt. That amplifies the damage to your cred-it score and reflects the collection industry’s practice of selling and reselling the same debt to different companies. Weeding out some of these extraneous collection accounts provides a more accurate picture of your credit situation. Besides, I’m going to assume that if you care enough about your credit to read this book and spend the time necessary to clean up your credit report, you’re demonstrating the kind of dedication and responsibility that should make you a good credit risk in the future. You shouldn’t assume, however, that you can get every piece of negative information removed—far from it. The more recent the negative mark, the less likely you’ll get it to budge. Your chances of success will improve as the “sin” gets older. You also have no guarantee that getting rid of a collection action will help your score much, if at all. The scoring formula generally weighs what the original creditor had to say about you more heavily than what any subse-quent collector reports. In other words, delinquencies and charge-offs report-ed by the original creditor can still hurt your score even if the subsequent col-lections disappear. Okay, that’s enough background. If you’re trying to get rid of a collec-tion action, credit repair veterans suggest first disputing it as “not mine,” rather than starting off with a validation demand. Sometimes, the collection agency simply won’t bother to verify the account, particularly if it’s old or small. If that’s the case, the collection will be dropped from your report—no muss, no fuss. From the Library of Melissa Wong CHAPTER 7 REBUILDING YOUR SCORE AFTER A CREDIT DISASTER 111 If the credit bureau verifies the account, go directly to the collection agency and demand validation. You can find sample letters at Web sites such as CreditBoards.com, CreditInfoCenter.com, or CreditInsider.com. Essentially, you need to tell the collection agency that under the Fair Debt Collection Practices Act, it must prove that you owe this debt. Demand copies of documents such as the signed account agreement that created the debt and the agreement with the original creditor that gives the agency the right to try to collect the debt. If the collector fails to respond or can’t provide sufficient evidence that you owe the debt, it’s supposed to remove the collection from your report. If that doesn’t happen, you can bring the matter to the attention of the credit bureaus and ask for reinvestigations. Make sure you make it clear to the bureaus that this is not a repeat of your earlier request; provide the evidence that you asked for validation, and let them know that the collector didn’t comply. If the account doesn’t disappear at this point, you have both the bureaus and the collection agency on the hook for credit-reporting violations and potentially could pursue a lawsuit. What You Need to Know About Statutes of Limitations Before we go any further down this path, however, you need to know about one more factor that will affect your credit repair efforts: statutes of limita-tions. You already know that credit bureaus have a limited time (seven to ten years) in which they can report negative information. The statutes of limita-tions I’m talking about, however, curb the amount of time that a creditor can sue you over a debt. Statutes of limitations vary widely by state and might depend on the type of debt involved. In Alaska, for example, creditors can’t sue you after 3 years have passed since the delinquency. In Kentucky, the statute is 15 years for written contracts, and 5 for oral contracts. Depending on the state, open-ended contracts—such as credit cards—might be considered a written con-tract, an oral contract, or have a different statute of limitations altogether. From the Library of Melissa Wong 112 YOUR CREDIT SCORE State Statutes of Limitations in Years State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware DC Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico Oral Agreements 6 6 3 3 2 6 3 3 3 4 4 6 4 5 6 5 3 5 10 6 3 6 6 6 3 5 5 4 4 3 6 4 Written Contracts 6 6 6 5 4 6 6 3 3 5 6 6 5 10 10 10 5 15 10 6 3 6 6 6 3 10 8 5 6 3 6 6 Promissory Notes 6 6 5 6 4 6 6 6 3 5 6 6 10 6 10 5 5 15 10 6 6 6 6 6 3 10 8 6 3 6 6 6 Open Accounts 3 6 3 3 4 6 6 3 3 4 4 6 4 5 6 5 3 5 3 6 3 6 6 6 3 5 5 4 4 3 6 4 From the Library of Melissa Wong CHAPTER 7 REBUILDING YOUR SCORE AFTER A CREDIT DISASTER 113 State New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Oral Agreements 6 3 6 6 3 6 4 15 10 6 6 4 4 6 3 3 5 6 8 Written Contracts 6 3 6 15 5 6 6 15 10 6 6 4 6 6 5 6 10 6 10 Promissory Notes 6 5 6 15 5 6 4 10 3 6 6 4 6 5 6 6 6 10 10 Open Accounts 6 3 6 6 3 6 6 10 3 6 6 4 4 6 3 3 5 6 8 Source: CardReport.com. That’s not the end of the complexities and vagaries. What if you incurred the debt in one state but now live in another? Typically, the creditor or col-lector can choose to use the state with the longer statute. Also, you can restart an expired statute of limitations in some states by making a payment on an old debt, or just by acknowledging that you owe the money. Now, you don’t have to worry about any of this if the item you’re trying to get deleted is a paid collection and is listed that way on your credit report. If it’s an unpaid collection, or any unpaid account for that matter, you’ll want to do some legal research to make sure that you understand the statutes that apply in your situation: From the Library of Melissa Wong ... - tailieumienphi.vn
nguon tai.lieu . vn