How to Deal With Lousy Credit Reports?:
Why Knowing What Your Creditors are Saying About You Can Help You Take Charge

Media Contact: Richard E. Weltman 212.684.7800 or 201.794.7500
E-mail: rew@weltmosk.com

Often people with less than perfect credit scores are surprised that locating one standardized credit profile or a “uniform” credit report is more myth than reality. Judgments, repossessions, slow payment history, tax liens--as well as bankruptcy filings--are reported to a varying degree by creditor filings or with public record databases maintained by one of the three largest consumer credit reporting agencies (“CRAs”). Sometimes adverse information is reported by other sources as well. In order to learn how badly your credit rating may have been damaged, you must first identify what personally identifiable credit information has been reported about you to the CRAs.

Start self-help by obtaining copy of one or more of your credit reports.

To obtain your most up-to-date credit data, begin by visiting www.annualcreditreport.com. All three CRA reports will typically be available to you to download without charge. Simply decline the many fee-based offers and proceed to access your free data. You may also directly contact each or all of the following CRAs used by most credit issuers:

Experian
http://www.experian.com
TransUnion
http://www.transunion.com
Equifax
http://www.equifax.com

These and others may be found on the Internet searching Google or Bing for “credit reporting agencies.”

Most CRAs require your signed letter requesting the credit report, along with a check or money order (unless you qualify for a free report). Provide the following information:

• Your complete name, including initials, alternate spellings, Jr., Sr., III, etc.
• If you are married, provide your spouse’s name.
• Any address where you resided during the last five years.
• Your birth date.
• Your Social Security (for identification only; limit to last four digits if permitted).

Remember, you are legally entitled to a free copy of your credit report if demanded within 60 days of being denied credit. Some CRAs may provide a free copy of the credit report for other reasons. You may call 888.524.3666 to confirm eligibility.

FCRA entitles you to know why you are rejected for credit. If the report contains errors, you may request a disputation statement to be added to your file, but only your creditor can remove a negative entry unless it is proven to be incorrect or cannot be verified. CRAs must reinvestigate any information you dispute, usually within 30 days of the date you call the dispute to their attention, unless your dispute is frivolous. You can then instruct them to send corrections to creditors who looked at your file during the prior six months. In case of unresolved disputes, you have the right to insert a short written statement of your version of the facts into your credit profile. If, for example, you were a victim of fraud or mistaken identity, creditors are likely to investigate your claim and may ask you to sign a fraud affidavit before removing the disputed entry.

There are other procedures for correcting errors in credit reports. In fact, the Federal Fair Credit Reporting Act (“FCRA”) provides a measure of protection for consumers. Yet there is no single, centralized source to deal with correcting mistaken entries across the board. Many consumers do not know the United States contains more than 1,000 independent CRAs which share credit data with major issuers for a fee. Improving or re-establishing credit can be a time-consuming process -- requiring some investigation and detective work on your part -- but you can accomplish it if you are willing to work at it. Beware of credit repair companies making unrealistic promises to “fix bad credit.” Often substantial fees are charged and little is done. You can learn more and read the entire FCRA text at the Federal Trade Commission website (http://www.ftc.gov).

Focus on FICO. Many lenders, including bank and Credit Union credit issuers, use FICO credit scores developed by Fair Isaac Corporation. These scores range from a low of 300 to a high of 850 points. A single unpaid credit card account can lower your score by 80 to 150 points. A short sale or foreclosure can drop a 770 score to 570 overnight. Go to www.myfico.com for more information or to obtain your actual score.

Adverse credit information may be reported for seven to ten years. While new credit is not off-limits, it will likely be harder to come by at first. Being aware of the information reported by your creditors is powerful.

Be strategic but start small. One way to begin to improve your poor credit is by obtaining a co-signer with good credit. Alternatively, secured credit cards are another way to re-establish credit while permitting a credit-challenged consumers or business owners the ability to have available a Master Card or Visa account. You may establish these accounts with one of a growing number of banks or Credit Unions issuing secured accounts.

Two to consider are CitiSecured Master Card, which pays interest on the secured deposit, and Orchard Bank Secured Master Card, which waives the first year’s fees and charges annual interest of 7.9 on outstanding balances. Ask around. Some secured card issuers are willing to lend 150% or more of the funds on deposit.

Pay early. Another strategy is paying back the account in full before actually due. Another suggestion is to re-establish credit with a federally chartered credit union or regional bank. Speak to the lending officer even if you do not otherwise qualify. Explain your history and consider applying for a small personal loan, secured with a savings account. Again, you will do well to repay the account before the due date, or at least on time, and then have the positive payment history reported. Follow up with each of the three major CRAs and verify how the issuer reports credit payment information. Remember that some credit issuers report to one or two but not all three of the major CRAs. Ask about reporting practices. In addition, this is why obtaining and comparing all available credit data from the big three agencies is a worthwhile effort we highly recommend.

Additional concerns? If you are a creditor or debtor in New York or New Jersey, or have been dealing with unresolved legal, business or bankruptcy issues that keep you awake at night, feel free to arrange a consultation with one of the problem solvers at Weltman & Moskowitz, LLP.

About Richard E. Weltman, Esq. and Weltman & Moskowitz, LLP:

Richard E. Weltman is a principal of the Weltman & Moskowitz, LLP law firm, having offices in New York, New Jersey and Long Island. Mr. Weltman focuses on creditor rights and bankruptcy issues, commercial litigation, shareholder disputes, business divorce and dissolution, business formation, sale and transfer, and other general business concerns, including dispute resolution and transactional matters. He may be reached at 212 684-7800, 201 794-7500, or rew@weltmosk.com.