Rebuilding Your Credit

Most of the American economy works on credit. Credit cards, once unique and prestigious, are now an everyday fact of life. But when someone has financial trouble the interest and penalties accrue so quickly it becomes difficult to catch up. While unsolicited credit cards only add to the problem, the fact remains many individuals want or need credit and credit cards for their daily financial affairs.

There are a number of nationwide credit bureaus. However, the bureaus do not all contain the same information nor do they all have correct information. Any lender can subscribe to credit bureaus and obtain your credit history. The Federal Trade Commission ruled a consumer should be able to determine the condition of his credit. Anyone can obtain a credit report and correct obsolete, erroneous or outdated information.

The purpose of this federal act is to govern how credit information is collected, used, and distributed. The act is administered by the Federal Trade Commission. Under the Fair Credit Reporting Act you have a right to obtain the information in your credit report. You can get a free report if you have been denied credit in the past 60 days, are unemployed and seeking employment, are receiving public welfare assistance, or believe the credit file has inaccuracies resulting from fraud. You are entitled to a paid report at any time. One of the services from which you may obtain a credit report is:

Equifax Information Service Center
P.O. Box 740241
Atlanta, GA 30374
telephone 1-800-685-1111
cost: $8

If there are problems with your credit report, do not report it by phone. You should register all disputes by certified mail. The credit bureau must verify any disputed item within thirty days after receipt of your complaint or delete it from your report. If you still disagree you can add a statement to your report.

Consumers must beware of credit repair organizations, known as credit clinics, that promise to repair negative reports. Only time and a good track record can fix negative credit reports. Clinics generally charge high fees and may promise to remove such records as bankruptcies and liens from a negative report. Accurate information cannot legally be removed from a credit report. Federal law mandates the time periods that accurate negative information must remain on a report.

The National Center for Financial Education offers a guide to improving your credit. To order, send $10 to NCFE Credit Guide, P.O. Box 3914, San Diego, CA 92163.

The Fair Debt Collection Practices Act is a federal law which regulates independent third party collection agents and controls their method to collect debts. Collectors are prohibited from:

• Calling you at home with such frequency as to be unreasonable and constitute a harassment.
• Unreasonably communicating with third parties.
• Refusing to identify themselves.
• Threat of an arrest.
• Making you pay for the telephone call.
• Abusive, threatening, or obscene language.
• Calling your employer.

Any debt collector who violates this statute should be sent a certified letter demanding the violation stop. If the conduct continues, you should contact an attorney for a possible suit against the collector.

It is very important to remember each lender determines credit in a different manner. There are no hard and fast rules. What is vital to one lender may be totally unimportant to another. However, there are guidelines to help reestablish your credit and they are:

1. Always examine your credit report when applying for credit.
2. Consider a secured credit card. These cards are relatively easy to get because the issuer requires money be deposited in an account and held until the amount of the credit card is paid. Check local banks first. Always ask if the credit card will become unsecured after a certain period of prompt payment.
3. Check into car loans as an easy way to obtain financing and rebuild your credit. Carefully examine not only the price but the credit terms and especially the interest rate.
4. If you are turned down for credit, find out what exactly the problem is. Be courteous and understanding. Ask for advice. Wait a month and reapply.
5. Many credit associations state your good credit will be restored if your payments are made in full and on time for one year.

Good credit is something we earn. Like all things worthwhile, good credit comes only after hard work and patience. Remember you have rights under state and federal law to help reestablish your credit and protect you from discrimination and abuse.