Credit Fact or Fiction?

FICTION: There is nothing further from the truth. There is no law that states that bad credit must remain on a credit report for seven to ten years. In fact, there is no law that states that creditors must report your credit history at all. The law states that accurate credit may remain on your credit report for seven years. Bankruptcies may remain on your credit report for 10 years.

FICTION: The paying off of an old debt actually harms your credit. Negative credit is allowed to be reported for a maximum of seven years. The seven-year clock begins ticking on “the date of last activity”. By paying an outstanding delinquency account you will change the status to “Paid Collection” or “Paid Charge Off” and the seven-year old status begins again. By trying to do the right thing, you just bought yourself additional years of bad credit.

FICTION: The Fair Credit Reporting Act clearly states that if an item is not verified within a 30-day period that such item must be permanently deleted from the credit report. Although not common, items sometimes reappear. However, when they do they can be removed instantly by notifying the credit bureau of their previous deletion.

FICTION: There is no type of negative listing that hasn’t been removed from a credit report thousands of times. In fact, there is not a court in the land that reports to the credit bureaus. The credit bureaus send employees to the different court houses on a periodic basis to take down current information and add it to consumer files. When a Public Record item is disputed, the credit bureaus must send an employee to the court house to verify such information. Many times this cannot be done within the 30-day time period and the items are permanently deleted from the credit file.

FICTION: Disputing the credit report is easy. Getting results from the credit bureau is amazingly difficult, complex, and infuriating and if done incorrectly it can do you more harm than good. Because the bureaus are so difficult to work with it is not a coincidence that the Federal Trade Commission receives more complaints against credit bureaus than any other type of business.

FICTION: Many bankruptcy attorneys do not adequately understand or explain the effects of bankruptcy to their clients. It’s difficult – or better yet, impossible – to predict exactly how far your credit score will fall after you file bankruptcy. The impact to your credit score is largely based on where your credit stands now and what information is on your credit report. In 2010, FICO released information about how bankruptcy and other credit mistakes affect your credit score.
Using a mock scenario with two different credit profiles, FICO showed a bankruptcy could cost up to 240 points for someone with a 780 credit score and 150 points for someone with a 680 credit score. While the person with the higher credit score loses the most points, in both examples the individual credit scores end up around the same place, 540 and 530. But, that’s just an example of what could happen to your credit score. Yours might not drop as much or it might drop more. You won’t know unless you actually file.

FICTION: We know of no creditor that will take your 100 word statement into consideration. A 100 word statement only serves to verify the negatives on the report.

FICTION: Consumer Credit Counseling Service or CCCS is a non-profit debt counseling service that assists people who are over their heads in debt. CCCS companies are controlled by the creditors and the credit bureaus. The fact is that if you are in a CCCS program and it is reported to the credit bureau, creditors will treat you as if you were in a Chapter 13 bankruptcy.

FICTION: As stated earlier, there is no law that states that credit must be reported at all and there is no law stating that it can’t be changed or deleted. In fact the law states that it must be accurate and verifiable.

FICTION: Removing derogatory information can help to improve your score however this usually is not enough to get a score in “good standing” status. In most cases you will need to take steps to re-build your credit. Insight Credit Group Inc can help guide you through the process.