In the USA there has always been a composed, entrepreneurial spirit. It is a sad fact though that not all entrepreneurial endeavors are of a good nature. An example of this in early days was the pharmaceutical industry, which was not regulated, as they were known for giving false hope to the public with the sale of “snake oil” remedies that was supposed to cure all ailments form hangnails to cancer. It is not surprising that in modern times the snake oil practice still occurs in the credit industry. There are many companies that are legitimate but given the usual boasts made by those who state that they can clear your file of anything negative and better your credit score in as little as two days it is not easy to differentiate who is legitimate and who is not.
The key for consumers, much like the snake oil in the past, is to look further than the claims to find out what can be and what cannot be done to repair your credit. What is just as important to know is whether or not they can accomplish these results by themselves. Myth #1. Companies that promise to clean up a consumer’s credit report so that consumer can get credit are always bombarding consumers that do not have good credit history. Truth be told, after demanding money for fees many of these types of companies do not do one thing to clean up a consumer’s credit report.
The reason being that in spite of the talk saying otherwise, the Fair Credit reporting Act dictates what can and cannot be reported and what situations reports are required to be corrected or changed. But there are some things that can be accomplished in order to get rid of accurate and timely information that is negative from a credit file. Despite what the FCRA states, there are a lot of operators that still make the claim they can get the ball rolling to remove negative information from a person’s credit report. Typically the way they go about doing this is to file a dispute with every negative piece of information on the credit report and it does not matter if it is legitimate or not.
This way of disputing everything can short change the system for a short period of time and can remove some negative information on one’s credit report. But this is only a temporary fix. "Oftentimes, a creditor simply fails to finalize their investigation in time, which can result in legitimate information being removed by the reporting companies," notes Michael Bailey, a Miami-based credit and wealth advisor. "While this may seem like a victory for the consumer, it is generally short-lived.
Once the creditor finishes their investigation and notifies the reporting agency that the information is correct, that information is then re-entered into the consumer's files. By the time that happens, the repair operator has been paid and the consumer is back at square one."
If this is the case what can you do when it comes to negative information on a credit report? It all depends on if the information is correct or not. When the information is accurate, only time passing can ensure that the negative information is removed. A company that specializes in consumer reporting can report most negative information for the time period of 7 years and 10 years for bankruptcy information. Any information about unpaid judgments that has been provided by credit card company can be reported for 7 years or until the time when the statute of limitations runs out, whichever time period is longer.
Conversely the law gives the consumers the ability to request an investigation by the reporting bureaus if they dispute any of the information that is contained within their file as not being accurate or incomplete. At the time when the dispute is initiated the reporting bureau is required to investigate the item that is in question unless they see the dispute as having no merit.
This is generally done within 30 days. Because of this it is up to the credit company to investigate and either prove the claim or disprove it. If the credit company does find information they are reporting that is not accurate, they have to notify the three nationwide credit bureaus in order for them to correct any inaccuracies in the consumer’s files.
This all may seem complicated but the consumer actually does very little. Also for initiating a dispute there is no charge. This leaves the consumer with the decision if they are going to pay a company to do something that they can do paying little or nothing at all.
Myth #2. The second trick operators use is to make the claim that a consumer can just walk away from a credit report that is bad and start a new one without the negative information. Getting a new credit identity is also referred to as “file segregation.” This is where the consumer will apply for an Internal Revenue Service “Employer Identification Number.”
This number has the same number of digits as a person’s Social Security number and the consumer is told to give their Employer Identification Number instead of their Social Security number when they apply for credit.
Considering that the new number that is given is not linked to the consumer’s previous credit report it will not show up when a credit check is performed.
File segregation is a crime, as you can be prosecuted by lying on a credit application or loan application. It is also a federal crime to incorrectly represent your Social Security number. In any case your new file with the Employer Identification Number will not contain any credit history, therefore it will be a red flag with creditors.
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