What is the Fair Credit Reporting Acts in simple terms?
There are rules and regulations that have to passed that protect you and I as consumers, and these creditors and bureaus have to abide by them. One of these is the Fair Credit Reporting Act, this Act was amended in 1971 and it states that if there is anything in your credit that is unverifiable, incomplete, or inaccurate things in your credit can be deleted or can be corrected.
The Factual Verification Process starts with the filing of an attorney drafted dispute with each credit bureau using all required language under the FCRA to ensure complete compliance by the credit bureaus and proper verification of information furnished by creditors.
Using the correct language ensures that the credit bureaus and creditor are legally put on notice that you have:
This process will take 30 days from the date your initial dispute is filled with the credit bureaus. They will then mail you an updated credit report, where some accounts will be deleted and some will be verified. The report should include details on the process used to come to that conclusion.
At this point we will file separate charges with the Federal Trade Commission and Bureau of Financial Protection against each Credit Bureau and each individual creditor. For instance if you have 10 creditors, that would result is 13 separate charges that we file on your behalf against the credit bureaus and creditors for failure to produce a sufficient procedure used to verify the account or failure to produce any description of the procedure used to verify the account.
At this step in process the creditor has 15 days only to respond or remove the negative items from your credit report otherwise they will be assessed and levied fines for noncompliance with the FCRA.
This procedure relies on using the required legal language and then holding the creditors and credit bureaus responsible by filing appropriate charges and providing the requisite evidence that the credit bureaus and creditors had notice but were negligent in following the law.
If you have inaccurate negative information on your credit reports, you can see some big changes to your credit scores as you work to fix them. Credit reporting agencies must respond to disputes within 30 days (some can take 45 days), which is much shorter than the years-long wait you’ll face with accurate derogatory information.
If the credit reporting agency sides with you, they must remove the mistake immediately. In a 2012 Federal Trade Commission study on credit report accuracy, 79% of people who disputed an error on their credit reports were able to have it removed.
Whether you’re applying for a credit card, mortgage, or auto loan, there’s a good chance your lender is using FICO Scores to help make their approval decision. The good news is, your FICO Scores are ultimately in your hands—they’re based on your credit habits and behaviors.
That’s why understanding what goes into your FICO Scores is a vital part of your credit health. Watch this video to learn the five key categories that factor into your scores.
Your credit score is calculated from your credit report. However, lenders look at many things when making a credit decision such as your income, how long you have worked at your present job and the kind of credit you are requesting
The first thing any lender wants to know is whether you've paid past credit accounts on time. This is one of the most important factors in a FICO® Score.
Having credit accounts and owing money on them does not necessarily mean you are a high-risk borrower with a low FICO® Score.
In general, a longer credit history will increase your FICO® Scores. However, even people who haven't been using credit long may have high FICO Scores, depending on how the rest of the credit report looks.
Your FICO Scores take into account:
FICO Scores will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans.
Research shows that opening several credit accounts in a short period of time represents a greater risk - especially for people who don't have a long credit history.
Generally, Chapter 7, 11 and 13 bankruptcies appear as public record items on your credit report for up to 10 years after filing. Chapter 13 bankruptcy records are sometimes taken off sooner, 7 years after filing, depending on the credit reporting company’s policy. When you receive an Order of Discharge in bankruptcy, your creditors should mark those accounts that were discharged as "Included in Bankruptcy" and they will stay on your report for up to 7 years.
Generally, if a delinquent account is charged-off, the charge-off record appears on your credit report for up to 7 years
Generally, negative or derogatory information about delinquent accounts remain on your credit reports for up to 7 years. Positive closed accounts (without late payments or other delinquencies) may appear for longer than 7 years
Generally, accounts sent to collections will be listed on your credit report for up to 7 years, beginning 181 days from the most recent delinquent period before the collection activity. A collection account’s status should change to "paid collection" once you've paid off the entire amount. If you settle with the collection agency for less, your credit report may list the account as "settled for less than full balance.
When a creditor or lender checks your credit in connection with an application, you'll usually see a "hard inquiry" on your credit report. Generally, these stay on your report for as long as two years, and may lower your credit score slightly. When a creditor reviews the credit report of an existing customer, or when you access your own data online, a "soft inquiry" typically shows up on your credit report. Soft inquiries don't lower your credit score or appear to businesses checking your credit.
Generally, most court judgments, including small claims, civil and child support, stay on your credit reports for up to 7 years from the date they were filed.
Generally, if you make a payment late, the delinquency could appear on your credit report for up to 7 years.
Under federal law, city, county, state and federal tax liens could stay on your report indefinitely. Generally, after the lien is paid, the record of it stays on your credit reports for up to 7 years from the payment date.
Credit Coaching is essential
While our clients at Best Texas Credit Pros who have deletions, removals, inaccuracies, discrepancies and items removed off their credit reports do have their scores go up. Those clients who complete our Credit Coaching consultation and put into practice and action the advice given. These clients will have much higher success in maintaining those scores and building a positive credit profile that can ensure their maximum potential.
According to the Federal Trade Commission in 2012, over 79 percent of credit reports contain errors or inaccuracies. We can help identify inaccurate, unverifiable or misleading items that may be hurting your credit score. Disputing such items can result in having them removed from your credit report and improve your score.
Currently one of every five American consumers has an error on his or her credit report and 5 percent of us endure errors so serious that we likely are being overcharged for credit card debts, auto loans, insurance policies and other financial obligations, according to a comprehensive study issued Monday by federal regulators.
The report by the Federal Trade Commission, completed in December but just released, found that 21 percent of a representative group of American consumers discovered a "confirmed material error" in at least one of the credit reports issued by the Big Three credit reporting bureaus -- Experian, Equifax and TransUnion. A "confirmed material error" involves information that, when corrected, changed the consumer's credit report.
The study also reported that 5.2 percent of the representative group found and, with the assistance of the report's researchers, successfully challenged a mistake so serious that it had lowered their credit score substantially enough to burden them with higher interest rates.
The company doesn't promise to raise your credit score a specific number of points. A credit repair company who's had success with other clients can tell you the results that previous customers have experienced, but they cannot tell you how much your credit will improve if you use their services.
The credit repair company consults with you before discussing a strategy for your credit. No company can tell you exactly what they can do for your credit if they're not aware of your credit history. An honest credit repair company will ask questions about your credit history and may even view your credit reports before talking about what it will do.
The company makes sure you know your rights. You can dispute information on your own by writing to the credit bureaus, but many people would prefer to pay a company to do this work for them. That's ok. But, avoid a company who is secretive about their methods or makes it seem like they are the only ones who can repair your credit. An honest credit repair company will have a proven track record of success and can tell you why their services are better than those of other companies.
Credit Builder Account
If you become an authorized user on someone else’s credit card, you’ll be issued a card with your name on it that you can use to make purchases. As an authorized user, you’re not legally obligated to pay the debts that might accumulate on the account. That responsibility lies with the primary account holder.
As an authorized user, you’re not legally obligated to pay the debts that might accumulate on the account.
Because you’re not technically responsible for paying the bills, being an authorized user may not have a huge impact on your credit score. But it helps those with little or no credit history beef up their credit files.
Ask someone who uses a small portion of their credit card limit and has a clean payment history on an account that’s been open for a long time. Make sure the issuer reports authorized users to the credit bureaus. The main account holder should have length of time, less than 30 percent of the credit limit used, and no late payments.
An error on your credit report could cause your credit score to lose valuable points, resulting in higher interest rates or a denial for credit. Checking your report on a regular basis via Best Texas's (3) Bureau credit monitoring improves your ability to pinpoint errors so you can take steps to address them.
Stay on top of your credit report and score to maintain your financial health. Best Texas's credit monitoring service offers real-time alerts so you’ll know right away when an important change has been made to your (3) Bureau credit report.
Identity theft can negatively impact your credit score and possibly prevent you from getting a credit card, mortgage, car loan or other line of credit. Free credit monitoring allows you to keep a closer eye on your credit, to look for and head off potentially fraudulent activity.
Don't already have credit monitoring?