Credit repair make a plan, improve your credit, avoid scams, 13th edition

...39 Getting Your Credit Score ...41 3 The First Step to a Better Credit Score— Cleaning Up Your Credit Report ...49 Common Errors in Credit Reports ...51 Your Right to an Accurate Cred

Written by Bankruptcy and Foreclosure Attorneys

Attorneys Amy Loftsgordon

& Cara O’Neill

• Learn how to clean up your credit report

• Save hundreds of dollars by doing it yourself

• Start building positive credit history today

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Credit Repair

Attorneys Amy Loftsgordon

& Cara O’Neill

L A W f o r A L L

Cover Design SUSAN PUTNEY

Names: Loftsgordon, Amy, author.

Title: Credit repair : improve and protect your credit / Attorney Amy

Loftsgordon.

Description: 13th edition | Berkeley, CA : Nolo, 2017 | Includes index.

Identifiers: LCCN 2017018843 (print) | LCCN 2017031114 (ebook) | ISBN

9781413324297 (ebook) | ISBN 9781413324280 (pbk.)

Subjects: LCSH: Consumer credit United States Handbooks, manuals, etc |

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credit Law and legislation United States.

Classification: LCC HG3756.U54 (ebook) | LCC HG3756.U54 L46 2017 (print) | DDC 332.7/43 dc23

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Please note

We believe accurate, plain-English legal information should help you solve many of your own legal problems But this text is not a substitute for personalized advice from a knowledgeable lawyer If you want the help of a trained professional—and we’ll always point out situations in which we think that’s a good idea—consult an attorney licensed to practice in your state.

Amy Loftsgordon has worked in the area of foreclosure and debt collection for over ten years Her broad experience includes helping people fight collection actions and enforcing debtors’ rights under the Fair Debt Collection Practices Act As part of a national settlement involving the mortgage industry, she has also reviewed servicer records to uncover extensive credit reporting errors.

Amy has authored numerous foreclosure, debt, and real estate articles

on Nolo.com She is the coauthor of Nolo’s The Foreclosure Survival Guide: Keep Your House or Walk Away with Money in Your Pocket and will

be updating the 15th edition of Nolo’s Solve Your Money Troubles.

Amy received a B.A from the University of Southern California and

a law degree from the University of Denver Sturm College of Law and is licensed to practice law in Colorado

Cara O’Neill is a bankruptcy attorney in Northern California and a legal editor who edits and authors several Nolo book titles Prior to joining Nolo, Cara practiced for over 20 years in civil litigation and bankruptcy During that time, she served as an Administrative Law Judge mediating disputes in the automotive industry, taught undergraduate and graduate law courses, and served as house counsel for a large insurance company She earned her law degree in 1994 from the University of the Pacific, McGeorge School of Law, where she served as a law review editor and graduated a member of the Order of the Barristers—an honor society recognizing excellence in courtroom advocacy Cara maintains a bankruptcy practice in Roseville, California at the Law Office of Cara O’Neill

Many thanks to the previous coauthors of Credit Repair, John Lamb

and Margaret Reiter, for whipping this book into excellent shape and adding valuable insights based on their many years of consumer and debt experience

—The Nolo Editorial Staff

Your Credit Repair Companion 1

1 The Elements of Repairing Credit 5

2 Credit Reports and Credit Scores: The Nuts and Bolts 7

How Creditors Evaluate Your Creditworthiness 9

Credit Reports and Credit Scores: What’s the Difference? 10

Your Credit Report 11

Getting Your Credit Report 13

What Is in a Credit Report? 20

Investigative Reports 26

Who Can Look at Your Credit Report 27

Your Credit Score: What It Is and Why It Matters 32

How Credit Scores Are Calculated 33

What Credit Score Do You Need to Get Credit? 39

Getting Your Credit Score 41

3 The First Step to a Better Credit Score— Cleaning Up Your Credit Report 49

Common Errors in Credit Reports 51

Your Right to an Accurate Credit Report 53

Review Your Report for Errors and Incomplete or Prohibited Information 58

Dispute Incomplete and Inaccurate Information 60

Add an Explanatory Statement to Your Credit File 74

Add Positive Information to Your Credit Report 75

Check Your Credit Reports Often 79

Avoid Credit Repair Clinics 80

Determining Your Credit Repair Options Based on Your Financial

Situation 97

5 Reducing Current Expenses and Debts 103

Cutting Expenses 104

Reducing Current Debt Obligations 113

Reducing Mortgage Debt 122

Filing for Bankruptcy 127

6 Finding Money to Pay Your Debts 131

Ways to Raise Money 132

Options to Avoid 144

7 Negotiating With Creditors and Debt Collectors 151

Prepare a Negotiating Plan 152

Negotiating With Creditors and Debt Collectors 159

Dealing With Debt Collectors 168

Tax Consequences of Forgiven Loans 184

8 Getting Help to Negotiate and Manage Debts 187

Avoid Most Debt Relief Services 188

How Does a Debt Management Plan Work? 192

Debt Management Plans vs Chapter 13 Bankruptcy 194

Choosing a Good Credit Counseling Organization 194

After You’ve Chosen an Agency, Monitor Your Plan 200

9 Building Positive Credit History 203

First Steps to Rebuilding Credit 205

Ways to Improve Your Credit History Without Getting New Credit 211

Next Steps to Rebuilding Credit—Getting New Credit 223

Putting It All Together: Preventing Future Financial Problems 232

Be on Guard for Credit Discrimination 234

Using Credit Cards: How to Protect Yourself 248

11 Avoiding and Dealing With Identity Theft 251

The Crime of Identity Theft: The Scope of the Problem 252

What’s in a Stolen Name? 253

How Can an Identity Be Stolen? 254

How to Protect Yourself 256

Protecting Your Social Security Number 261

If Your Identity Is Stolen 263

Identity Theft Protection Products and Insurance 271

Appendixes A Resources 275

Debtors Anonymous 276

Nolo Publications 276

Other Publications 277

Online Resources 278

Where to Complain: Federal Agencies 280

State Consumer Protection Agencies 282

B Forms and Letters 291 Form F-1 Request Credit Report

Form F-2 Request Reinvestigation

Form F-3 Request to Furnishing Creditor to Reinvestigate

Form F-4 Request Follow-Up After Reinvestigation

Form F-5 Request Removal of Incorrect Information by Creditor Form F-6 Creditor Verification

Form F-7 Request Addition of Information Showing Stability

Form F-8 Request Addition of Account Histories

Form F-9 Monthly Income

Form F-10 Your Debts

Form F-11 Daily Expenses

Form F-14 Inform Creditor of Judgment Proof Status

Form F-15 Request Short-Term Lower Payments

Form F-16 Request Long-Term Lower Payments

Form F-17 Request to Pay Nothing Short-Term

Form F-18 Request to Pay Nothing Long-Term

Form F-19 Request Rewrite of Loan Terms

Form F-20 Offer (Delayed) Payment of Past Due Amounts

Form F-21 Offer (Reduced) Lump Sum Payment

Form F-22 Offer Payment Schedule to Pay Off (Reduced) Debt

Form F-23 Cashing Check Constitutes Payment in Full (Some States) Form F-24 Cashing Check Constitutes Payment in Full—

First Letter (California)

Form F-25 Cashing Check Constitutes Payment in Full—

Second Letter (California)

Form F-26 Cashing Check Constitutes Release of All Claims

Form F-27 Offer to Give Secured Property Back

Form F-28 Request Direct Negotiation With Creditor

Form F-29 Request for Verification of Debt/Identity of Original

Creditor/Return of Debt to Original Creditor

Form F-30 Complaint About Debt Collector Violation of Law

Form F-31 Debt Collector: Cease All Contact

Form F-32 Request for Basis of Unfavorable Credit Offer or Action Form F-33 Identity Theft Dispute Letter for Existing Accounts

Form F-34 Identity Theft Dispute Letter for New Accounts

C Additional State Protections Concerning Credit Repair Clinics 365

D How to Use the Downloadable Forms on Nolo.com 375

Editing RTFs 376

Downloadable Forms Available on the Nolo Website 377

Index 381

Your Credit Repair Companion

During tough economic times, it’s easy to fall into debt—and

it can be hard to pay that money back Unfortunately, the consequences of mounting debt, such as missed payments, defaults, repossessions, and even foreclosures and bankruptcy, eventually find their way into your credit report

The consequences of having bad credit can affect many areas of your life You may have trouble:

• getting a loan

• getting a new credit card

• opening a checking account

• renting a home, or

• getting a job offer

If you have open-ended credit accounts, like credit cards, and your credit goes downhill, the creditor is likely to increase your interest rate, decrease your credit limit, or cancel credit privileges And if you are trying to get new credit, you will likely pay much more in interest and fees than those with good credit Having bad credit can even mean paying more for car insurance

This can lead to a repetitive cycle in which bad credit prevents you from doing the very things that will help you get back on your feet financially But it’s a cycle you can break by taking action to repair your credit

Whether you’ve fallen behind on your bills, been sued, faced a repossession or foreclosure, or even declared bankruptcy, this book will help you take simple and effective steps to repair your credit You’ll learn how make a budget, negotiate with creditors, clean up your credit report, and build and maintain good credit going forward As you read this information and decide how to handle your situation, keep these important facts in mind:

You’re not alone Financial problems affect many people Unemployment can still be an issue, and disposable incomes and savings haven’t recovered since the economic downturn Millions of honest, hardworking people—the same ones who receive credit offers almost daily—have trouble paying their bills

You have legal rights. Knowing and asserting your rights will help you get bill collectors off your back and give you a fresh financial start Debtors who stand up for themselves often get more time to pay, have late fees dropped, settle debts for less than the full amount they owe, and get negative marks removed from their credit reports

You can do it yourself. The information and forms in the book are good in all 50 states and the District of Columbia You can follow the instructions on your own; you don’t need to pay for credit repair services (and will be far better off if you don’t) (Chapter 3 explains why you should avoid using credit repair clinics.) Generally, you won’t need a lawyer, either But in some situations, you may need or want to consult with a lawyer This book will suggest when consulting with a lawyer might be a good idea

Nobody’s credit is beyond repair If you’ve been through devastating financial times, you may think you’ll never get credit again That’s simply not true As long as your financial troubles are behind you, you’ll probably qualify for limited types of credit relatively quickly Within about one to two years, you should be able to repair your credit enough to get a major credit card or loan Many creditors are willing to extend credit to people who have turned their financial situations around, even if their credit records are less than stellar

This book provides in-depth information on credit repair Easy-to-use forms help you with the sometimes daunting tasks of assessing your debts, planning a budget, negotiating with your creditors or bill collectors, and dealing with credit reporting agencies (Appendix B contains the forms; Appendix D explains how you can download them from Nolo.com if you prefer to do that.) Using this information, you’ll be able to repair your credit and pave the way for a better financial future

Get Legal Updates and More at Nolo.com

This book’s online companion page contains important updates to

the law, podcasts, links to online articles on debt, credit, bankruptcy, and foreclosure, and downloadable forms To learn how to access the companion page, see Appendix D.

l

The Elements of Repairing Credit

Credit repair is not a quick fix If you are serious about improving

your credit, you’ll have to make a commitment and then follow

the steps discussed in this book Some of these steps require time

and hard work to complete, others you can do fairly quickly And for

some, you may have to wait until your finances are under better control

before you dive in With each step, we walk you through the various

options and warn you away from alternatives that might make your

situation worse And throughout the book, we provide sample letters and

forms that you can send to creditors, debt collectors, credit reporting

agencies, and others to aid in your credit repair efforts

First steps: Learning about your credit report and assessing your financial

situation (Chapters 2, 3, and 4). The first step in credit repair is to get a

clear picture of your current financial situation and how it relates to

your credit history Start by understanding your credit reports and credit

scores: what’s in them (and what’s not), how your credit reports control

what’s in your credit scores, and what’s most important and what’s less

so in credit scoring Chapter 2 tells you how to get your reports and

scores and how to review them Chapter 3 tells you how to fix errors and

other problems in a report, and how to add positive information, so that

the report is as accurate and as complete as possible

At this point, you must also analyze your current debts, income,

and expenses, prioritize your debts and expenses, and start laying out a

budget that will put them in balance With this information, you can

better determine what credit repair strategies to employ, or whether you

need to take care of a financial emergency first

Next steps: Getting your income, debts, and expenses into balance

(Chapters 5 and 6) Often the most important way to improve your credit

is simple: Pay your bills on time But it’s also one of the hardest things

to do after financial problems have set you back The next steps involve

bringing your expenses and debts into balance with your income so

that you can meet your debt obligations, and start saving some money

We look at ways to make major reductions in debts (including your mortgage) and other expenses and ways to find more money to pay down debts You will also learn about other methods of dealing with debts such as foreclosure and bankruptcy—and how each will impact your credit history As you explore these options, the book steers you away from the minefield of scammers ready to take your money and derail your credit repair efforts

Paying and negotiating debts (Chapters 7 and 8).Whether you’re trying

to reduce your debts enough to be able to pay current bills on time, or you are ready to tackle paying off debt, you will likely need to flex your negotiation muscles to achieve your goals By negotiating with creditors and debt collectors, you may be able to settle debts, get better payment terms, and improve how your debts are reported to credit reporting agencies In Chapter 7, you’ll learn how to set negotiation goals, ways

to negotiate, how the debt collection business works, and what debt collectors can and cannot do

If you want help in talking to creditors, or in setting up a debt repayment plan for all or most of your debts, Chapter 8 explains your options You’ll also learn how to find legitimate credit counseling and debt relief services and how to avoid the rest

Stepping toward the future: Rebuilding and protecting your credit profile (Chapters 9, 10, and 11).At this point, we turn the corner and concentrate

on how you can start to rebuild your credit Chapter 9 recommends ways to build (or rebuild) your credit profile that don’t involve getting additional credit And when you’re ready, it helps you figure out how to get and start using credit again, how the different choices may affect your credit history and credit score, and how to avoid credit discrimination Because credit cards are a big part of rebuilding credit for many people, Chapter 10 provides information on how to choose and safely use credit cards and debit cards Finally, Chapter 11 provides infor mation

on how to reduce the risk of identity theft or what to do if you become a victim, so you can keep your credit strong after all your hard work l

Credit Reports and Credit Scores:

The Nuts and Bolts

How Creditors Evaluate Your Creditworthiness 9

Credit Reports and Credit Scores: What’s the Difference? 10

Your Credit Report 11

Getting Your Credit Report 13

Getting a Sample Credit Report 14

Getting Your Free Credit Report from Experian, Equifax, or TransUnion .14

Getting a Free Credit Report from a Specialty Consumer Reporting Agency 16

Getting Additional Free Credit Reports 17

Paying for Additional Credit Reports 19

What Is in a Credit Report? 20

Personal Information 21

Accounts Reported Monthly 22

Accounts Reported When in Default 23

Public Records 25

Inquiries 25

Investigative Reports 26

Who Can Look at Your Credit Report 27

Your Credit Score: What It Is and Why It Matters 32

What Is a Credit Score? 32

Who Uses Credit Scores? 32

How Credit Scores Are Calculated 33

FICO Scores 33

VantageScore 38

Other Scores 39

What Credit Score Do You Need to Get Credit? 39

Fannie Mae 40

The Federal Housing Administration 40

Experian Automotive 40

Getting Your Credit Score 41

When You Can Get Your Credit Score for Free 41

Should You Pay to Get Your Credit Score? 45

Getting a Free Estimate of Your FICO Credit Score 46

People sometimes assume their credit is much worse or better than

it really is Others assume they can improve their credit scores, but ignore their credit reports Knowing what’s in your credit report and how that affects your credit score is essential to improving your credit as well as assessing your financial situation

How Creditors Evaluate Your

Creditworthiness

A potential creditor may want to know whether you are likely to repay

an installment sale contract or loan or make timely payments on a credit card It will evaluate your creditworthiness to decide whether to offer you credit or not, and to decide what interest rates and fees to charge

A current creditor may want to know if your financial situation has changed to determine if it should reduce your credit limit or raise your interest rate

Most of the information creditors want so they can make these decisions comes from your credit report and your credit scores In order to understand how the information used in your credit score and report affect your credit, it’s important to know how creditors evaluate your creditworthiness Although most of what creditors consider is in your report, some things are not Below are some of the factors many creditors consider

How much debt you can realistically pay given your income Creditors look at how long you’ve been at your job, your income level, and the likeli hood that your income will increase over time They also look at whether you’re in a stable job or at least a stable job industry (Employ-ment information may or may not be included in your credit report.) It’s important when you fill out a credit application to make your job sound stable, high level, and even “professional.” Are you a secretary, or are you

an executive assistant or the office manager? Present yourself in the best possible light, but don’t lie In addition, creditors, especially mortgage lenders, often compare the amount you want to borrow to your income

to see if your “debt ratio” is too high A debt ratio can be a comparison

of the particular credit to your income, or a comparison of all your debts

to your income (See Chapter 6, Reducing Your Mortgage Debt, for more information on debt ratios.) Your credit report generally includes information about your debts, but not about your income

Your existing credit and credit limits.Creditors also examine your existing credit relationships, such as credit cards, bank loans, and mortgages They want to know your credit limits (you may be denied additional credit if you already have a lot of open credit lines), your current credit balances and how they compare to your credit limits (are you maxed out?), how long you’ve had each account, and your payment history—whether you have paid late on any accounts and how many times you paid late This kind of credit information is the main part of your credit report

Your assets Creditors like to see that you have assets they can take

if you don’t pay your debt Owning a home or liquid assets (such as a mutual fund) may offer considerable comfort to a creditor reviewing

an appli cation This is especially true if your credit report has negative notations in it, such as late payments Although your credit report will probably not tell a creditor what assets you own, the creditor can figure out if you own a home or car and how much you owe on them if your loan and payments are reported

Your financial stability Creditors develop a feeling of your financial character through objective factors that show stability These include how long you’ve lived at your current residence, how long you’ve held your current job, whether you rent or own your home (you’re more likely to stay put if you own), and whether you have checking and savings accounts

Credit Reports and Credit Scores:

What’s the Difference?

You can’t turn on the TV or browse the Internet without seeing or hearing

an ad about getting your credit score A credit score is simply a number that represents a current evaluation of your credit history that is contained

in your credit report Creditors use credit scores to decide quickly if you are likely to repay an account or loan, without having to carefully review the credit report on which it is based If your score is high, you are likely

to be offered credit at good rates If your score is below the creditor’s threshold for routine approval, it might reject you or charge you higher rates or fees

You probably have more than one credit score A variety of companies use their own formulas to analyze credit reports and come up with their own evaluation models Some companies offer a wide variety of different scores for different uses and different creditors And those credit scores can change over time, getting better or worse

Because credit scores are based on your credit reports, even more important than knowing your credit scores is knowing what is in your credit reports If you want a better credit score, you need to deal with what is in your credit report

Your Credit Report

Credit reports are statements credit reporting agencies make to someone else about a consumer Reports may include information about a consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living

Some creditors will review one or more of your credit reports directly, others may only review a credit score based on your report, and still others may review both your credit report and one or more of your credit scores Credit reporting agencies are generally for-profit companies that gather and sell information about a person’s credit history They get most

of the information they collect about you from your creditors Almost all creditors supply information about their accounts using a standard electronic reporting system You may hear it referred to as “Metro 2.”

It has a number of “fields” (that is, boxes or blanks) in which a creditor may insert information about you and your credit

Credit reporting agencies turn around and sell the credit infor mation they have collected from a variety of creditors and other sources to banks,

mortgage lenders, credit unions, credit card companies, department stores, car dealers, debt collectors, insurance companies, landlords, and employers These companies and individuals use the credit information to supplement applications for credit, insurance, housing, and employment.Credit reporting agencies may also provide identifying information and credit reports to government agencies for their use in extending credit, reviewing the status of an account or attempting to collect a debt, granting

a license or other benefit, or investigating international terrorism

The three nationwide credit reporting agencies are:

• Equifax

• Experian, and

• TransUnion

There are also regional and small credit reporting agencies, many

of which get their information from one of the three nationwide credit reporting agencies Finally, nationwide specialty reporting agencies gather and report only particular types of information, such as bad check writing or rental or medical histories

Terminology: Credit Bureau, Credit Reporting

Agency, or Consumer Reporting Agency?

You may hear about “credit reporting agencies,” “credit bureaus,” or

“consumer reporting agencies.” Those are three names for the same thing Sometimes you will hear about “credit reports” or “consumer reports,” again, the same thing “Consumer reports” and “consumer reporting

agencies” are the terms used in the federal law that protects consumers in connection with their credit reports, the Fair Credit Reporting Act (FCRA) (15 U.S.C § 1681 and following) But most people refer to them as credit reports and credit reporting agencies.

Getting Your Credit Report

Getting a copy of your credit report is an essential part of credit repair Even if your credit is strong, you should get and review your reports once every year Under the Fair Credit Reporting Act (FCRA), credit reporting agencies that collect and maintain files of public record information and credit account information about consumers nationwide are required to give you a free copy of your credit report every 12 months, if you ask for

it You can also review a sample report on several of the credit reporting agencies’ websites

Specialty credit reporting agencies (explained below) also must provide you with a free report every 12 months, if you ask for it And there are ways to get additional credit reports in certain circumstances or to pay for a credit report

Where Do Your Rights Related to Credit

Reporting and Scoring Come From?

Most protections for your credit reports and scores come from federal law: the 1970 Fair Credit Reporting Act (FCRA) (15 U.S.C § 1681 and following), amendments to it over the years, regulations federal agencies have developed

to enforce it (including Regulation V, Fair Credit Reporting), and enforcement actions by federal and state agencies The original FCRA specified what could and could not be included in your credit reports and your rights to correct errors

The 2003 Fair and Accurate Credit Transaction Act (FACTA)

amendments to the FCRA allow you to get free credit reports each year The 2010 Dodd-Frank Act requires creditors, in many cases, to give you the actual credit scores they used in denying you credit or offering you credit with unfavorable terms

Getting a Sample Credit Report

If you don’t want to get your own credit report yet, you can get a sample report to review Why would you want to wait to get your report? To get your own credit report, you have to provide the credit reporting agency with personal information, including your address If debt collectors

or creditors do not have your current address and it’s not yet in your report, you may not wish to make your address known In that case, you can view a sample credit report on the Experian website Go to www.experian.com/credit_report_basics/pdf/samplecreditreport.pdf

Viewing the sample report is free, but it is not always easy to find The numerous advertisements for paid credit report services are much more prominent If this URL changes after the publication of this book, you’ll have to use the website’s search box to find the sample

Getting Your Free Credit Report from

Experian, Equifax, or TransUnion

To get your free report from any or all three nationwide credit reporting agencies (Experian, Equifax, or TransUnion), contact the Annual Credit Report Service Here’s how:

• online at www.annualcreditreport.com

• by phone at 877-322-8228, or

• by mail at Annual Credit Report Request Service, P.O Box

105281, Atlanta, GA 30348-5281 (you can download the form at www.annualcreditreport.com/gettingReports.action)

If you get your report online, you will need to enter your state and some personal information, such as your full name, date of birth, Social Security number, current address, and previous addresses if you’ve been

at your current address less than two years

The Annual Credit Report Service will then direct you to choose which of the three nationwide credit agency reports you want You’re entitled to receive all three, though it’s often best to start with just one The service will then transfer you to that company’s website and you’ll have to answer a few security questions (such as, how much is your

mortgage payment?) Note the reference number of your report so you can later access and print it if you need to correct errors (See Chapter 3.) Don’t get sidetracked if you are bombarded with advertisements for additional services (such as credit monitoring or paying for a credit score) Just get your annual credit report for which there is no charge

If you prefer, you can call or write to request a copy of your credit report (See above for contact information.)

TIP

Review your report as you read this book A good way to review

the information about credit reports in this chapter is to get one of your credit reports now, and use it to follow along.

CAUTION

Beware of imposter websites Be sure to use the exact URL to

reach the Annual Credit Report Service (www.annualcreditreport.com) Some businesses use similar names and URLs to try to get you to pay for a credit report

or other services If a website says it provides free credit reports, beware The

“free” report often comes with strings attached, such as a service that you have

to pay for when the introductory period ends, and some sites collect personal information Don’t respond to an email or click on a pop-up ad claiming to offer free credit reports The official Annual Credit Report Service website will never send you an email solicitation for your free report, use pop-up ads, or call you

to ask for personal information Although the law requires advertisers to clearly disclose that they are not offering the free annual credit report that you are likely looking for, some may not comply, so you still have to be on guard.

Getting a Free Credit Report from a

Specialty Consumer Reporting Agency

Besides the three nationwide credit reporting agencies, there are also a number of nationwide specialty credit reporting agencies These agencies keep records on particular types of transactions, such as tenant histories, insurance claims, medical records or payments, employment histories,

or check writing In addition to your yearly free credit report from each

of the regular nationwide credit reporting agencies (see above), you are also entitled to a free credit report each year from each of the nationwide specialty credit reporting agencies

To get your report, you must contact each agency individually—you may even need to call different phone numbers for different types of reports from the same agency Unfortunately, you may not know which reporting agency a landlord, an employer, or an insurance company uses Listed below are some of the main nationwide specialty credit reporting agencies and their contact information

LexisNexis Personal Reports. LexisNexis compiles various reports on insurance claims, among other things It then provides the data to various businesses or the government for certain purposes, such as insurance underwriting and credit transactions To get all the information the agency has on you (called a “Full File Disclosure”) mail in the request form available on its website at https://personalreports.lexisnexis.com

Experian RentBureau RentBureau is a specialty credit reporting agency owned by Experian that allows participating property owners and managers to provide positive and negative rent payment information directly to the agency In the past, RentBureau concentrated on the multifamily rental industry, which meant that tenants who rented from smaller-volume landlords or property management companies typically weren’t included in the reports Now, however, the service offers

property managers, individual landlords, and independent rental owners with 500 or fewer units, the ability to report rental payments by signing

up (along with their tenants) for a rent payment service To request a copy of your rental history report, download a form at www.experian.com/rentbureau/rental-payment.html or call 877-704-4519

Medical Information Bureau For a medical history report if you have private health insurance, go to www.mib.com or call 866-692-6901

ISO.For an insurance claims report, go to www.iso.org, and search for “A-PLUS loss-history report” or call 800-627-3487

Telecheck.For a check writing report go to www.firstdata.com/telecheck or call 800-366-2425

ChexSystems.For a check writing report go to www.consumerdebit.com or call 800-428-9623

Certegy For a check writing report go to www.askcertegy.com or call 800-237-3826

In addition, you can find a list of most credit reporting agencies in the country and their contact information, divided by type (medical, employment, tenant, insurance, and the like), on the Consumer Financial Protection Bureau’s website at www.consumerfinance.gov Search for “how many consumer reporting companies are there,” and follow the link to the list (Not all of the companies on the list provide free reports If a company, such as a nationwide credit reporting agency

or a specialty credit reporting agency, does provide one free report per year, the list will say so.)

Getting Additional Free Credit Reports

In addition to your free annual reports, you are entitled to another free credit report if any one of the following is true

One of the following happened because of information in your credit report:

• You were denied credit, insurance, employment, or a government benefit or license

• An unfavorable action was taken related to your employment, insurance coverage, or a government benefit or license

• You were granted credit, but not nearly the amount or on the terms you requested

• Your credit account was terminated

• A creditor made unfavorable changes to your account (but did not change the terms of all, or substantially all of the other consumer accounts of the same type)

• A creditor or another user of your credit report took an action

or made a determination in connec tion with an application or transaction you initiated that is adverse to your interests

If a creditor takes any of these unfavorable actions against you, but does not give you notice of your right to a free credit report or tell you the identity of the credit reporting agency that supplied the report, you can use Form F-32, Request for Basis of Unfavorable Credit Offer or Action, to request that information (see Appendix B for a copy of this form and Appendix D for instructions on how to download it from Nolo.com) You can also adapt Form F-32 to send to an insurer, an employer, a government agency, or another user of your credit report if

it takes action unfavorable to you (based at least in part on something in your credit report), but does not provide you with the required notice

You are unemployed and planning to apply for a job within 60 days following your request for your credit report. You must enclose a state ment swear ing that this is true It might also help to include a copy of a recent unemploy ment check, layoff notice, or similar document verifying your unemploy ment You are entitled to one free report from each agency in any 12-month period

You receive public assistance Enclose a statement swearing that this is true and a copy of your most recent public assistance check as verification You are entitled to one free report from each agency in any 12-month period

You reasonably believe your credit file contains errors due to some one’s fraud, such as using your credit cards, Social Security number, name,

or something similar Here, too, you will need to enclose a state ment swearing that this is true You are entitled to one free report in any 12-month period

You are a victim of identity theft or fraud or think that you may be

The FCRA gives consumers the right to request free credit reports in connection with fraud alerts If you suspect in good faith that you are,

or may be, a victim of identity theft or another fraud, you can instruct the three nationwide agencies to add a “fraud alert” to your file You can request a free copy of your report from each agency once it places the

fraud alert in your file (To learn more about identity theft, fraud alerts, and how to get additional reports in this situation, see Chapter 13.)

TIP

How to request an additional free report If you check the correct

box, you can use Form F-1, Request Credit Report, to request an additional free credit report (See Appendix B for a copy of this form and Appendix D for instructions on how to download this form, and all other forms in this book, from Nolo.com.)

Paying for Additional Credit Reports

There are so many ways to get your credit reports for free, you will probably never need to buy a copy But if you do need another copy—or if you don’t qualify for a free copy—you’ll have to pay about $12 to get a credit report from one of the nationwide credit reporting agencies Be careful Many websites hide the charge for ordering one credit report and advertise a low cost or a free copy with a 30-day or longer trial membership for one of their services, such as credit monitoring If you don’t want the service, be sure to cancel it within the 30 days to avoid the high monthly fees Fees can be as much as $10 to $20 per month—which can add up to a staggering $240 a year This is definitely not worth the money

To order additional credit reports after you’ve gotten your free annual report from the Annual Credit Report Service, you must contact the credit reporting agency directly The credit reporting agencies encourage people to order reports from their websites

However, if you choose to order your report by mail, use Form

F-1, Request Credit Report (see Appendix D for instructions on how to download it from Nolo.com) Or, you can call (For contact information, see “Contact Information for Equifax, Experian, and TransUnion,” below.) Just as when you requested your free annual credit report, you will have to provide some personal information so the credit reporting agency can identify you

Contact Information for Equifax, Experian, and TransUnion

To get your free credit report every 12 months from Experian, Equifax, and TransUnion, contact www.annualcreditreport.com.

To contact the three nationwide credit reporting agencies directly:

What Is in a Credit Report?

Information in your credit report can be broken down into five main categories:

• personal information about you

• accounts reported monthly

• accounts reported when in default

• public records, and

• inquiries

Generally, most negative information in your credit file may remain there for seven years, but bankruptcies may remain for up to ten years (See Chapter 3 for details.) Sometimes credit reports separate and highlight the negative items in your credit report

Credit reports may also contain a credit score, but that is usually not included with your free copy Some special credit reports, called investigative reports, contain even more information.

Credit reports do not contain information about race, religious preference, medical history, personal lifestyle, political preference, friends,

or other information not related to credit Typically, ordinary credit reports do not contain information about your income, investments, or bank accounts

Whether you are married, separated, divorced, or single, your credit report should contain information only about you Information about your spouse should appear in your report only if you are both permitted

to use or obligated to pay an account For example, information about joint accounts should appear on both spouses’ credit reports

CAUTION

What accounts are you obligated to pay when you are (or have been) married? The answer to this question often depends on whether your

state is a community property law state or a common law state For details, get

Solve Your Money Troubles: Debt, Credit & Bankruptcy, by Robin Leonard (Nolo).

The bulk of information in your credit report is your credit history (see “Accounts Reported Monthly” and “Accounts Reported When

in Default,” below) Typically, creditors use automated systems and standardized terms to communicate the account information about consumers to credit reporting agencies

Personal Information

A credit report usually includes your name and any former names, past and present addresses, your Social Security number, and your telephone number, and may include your employ ment history (including salary) Credit reporting agencies get this information from creditors, who get it from you every time you fill out a credit application For this reason, it is very important that your credit applica tions be accurate, complete, and legible

Accounts Reported Monthly

Certain creditors (see below) provide monthly reports to credit reporting agencies showing the status of your account with them Each of these accounts is reported separately Your credit report will typically contain the following informa tion on each of these accounts:

• name of the creditor (which may be the original creditor or another creditor to which the account was transferred, including

a transfer to a debt collector)

• type of account (for example, mortgage or revolving)

• account number

• when the account was opened

• your responsibility on the account (for example, individual, authorized user, or joint account)

• your payment history—that is, for each payment within the most recent 24 to 48 months, whether you paid on time or were 30,

60, 90, or 120 days late; whether the account has been “charged off” or placed for collection, and the date the delinquency began; whether the account has been turned over to a collection agency; whether the account has been discharged in bankruptcy; or whether you are disputing any charges

• your credit limit or the original amount of a loan

• your current balance, and perhaps

• your highest balance on revolving accounts

Keep in mind as you review your report that even if you pay your account in full each month, your balance may not appear as zero This

is because the outstanding balance listed is likely the amount you owed during the month, before you paid the balance at the end of the billing period

Creditors who provide monthly reports generally include:

• banks, savings and loans, credit unions, finance companies, and other commercial lenders that issue credit cards and make mortgage, personal, car, and student loans

• nonbank credit and charge card issuers (such as American

Express and Diners Club)

• large department stores

• oil and gas companies, and

• other creditors receiving regular monthly installment payments

Why Are So Many Accounts Listed in Your Report?

Information on each account is reported separately in what creditors

often refer to as a “tradeline.” If an account is transferred to a different creditor, that new creditor’s information is reported in a new tradeline So, you may have more than one tradeline that deals with the same debt For example, if your mortgage is transferred to a different creditor or if a past due bill is sold to a debt collector, a separate tradeline will be established to show the information about the account after its transfer Similarly, if you report your credit card lost or stolen and the creditor closes that account and sends you a new credit card with a new account number, your credit report will likely report the old credit card number and the new number as separate accounts or tradelines

Accounts Reported When in Default

Many businesses provide information to credit reporting agencies only when an account is past due or the creditor has taken collection action against you, including turning the account over to a collection agency In these situations, your credit report will generally include the following:

• name of the creditor (which may be the original creditor or another creditor to which the account was transferred, including transfer to a debt collector)

and the date the delinquency began; whether the account has been turned over to a collection agency; whether you’ve been sued; or whether the account has been discharged in bankruptcy.

Creditors who generally report accounts only when they are past due

• magazines and newspapers

• doctors and hospitals, and

• lawyers and other professionals

What Happens When Accounts Are Charged

Off or Placed for Collection?

For accounting or tax purposes, creditors “charge off” debts That means they no longer count the money you owe as a source of profit, but instead, count it as a loss Usually, creditors charge off a debt about six months after you stop making payments on the account But this doesn’t mean the creditor will stop collection efforts The creditor will often place the account for collection at about the same time When an account is “placed for collection,” either the creditor acts as its own collector, or the creditor turns the debt over to an outside collection agency

When a creditor reports to a credit reporting agency that an account was charged off or placed for collection, it must tell the reporting agency the date your delinquency began That date is very important for figuring out how long the debt can continue to show up on your credit report on any tradeline (See Chapter 3 for information about how long negative information can appear in your report.) That date should not change if the account is transferred from

a creditor to a collection agency or from one collection agency to another, if you make a payment, or if you dispute the account.

While creditors tend to report these accounts only when they are past due, credit reporting agencies increasingly gather monthly infor-mation from utility companies, phone companies, and local retailers to add to credit reports Their goal is to increase the data contained in files

of individuals, such as young people and immigrants, who don’t have much traditional credit history

Public Records

Public records are maintained by govern ment agencies and are accessible

to anyone Local, state, and federal court filings are public records So

is the data kept at land records offices Credit reporting agencies use private companies to search public records for information such as:

• lawsuits (including divorces and evictions)

• court judgments and judgment liens

Credit inquiries usually fall into two categories The first category contains inquiries that show up only on the report that you see, not

on the report that creditors get There are several types of inquiries

in this category, including creditors that request your credit report for promotional purposes (think of all those preapproved credit card applications you get in the mail), current creditors that review your

report periodically to check up on you, and notations when you’ve requested a copy of your own credit report These are often called “soft” inquiries They do not affect your credit score.

The second category of inquiries appears on the report sent to prospective creditors and employers (they also appear on the report you get) These inquiries—often called “hard” inquiries—consist of creditors that have requested your report after you have applied for credit with them See below for their impact on your credit score

Investigative Reports

Some special credit reports, called investi gative reports, have even more personal information than regular credit reports The big differ ence is that they include information on your character, general reputation, personal characteristics, or mode of living, gathered from interviews with third parties such as your neighbors or friends Creditors do not usually request these investigative reports Insurers and employers are the most likely to ask for them

Because this information is personal and invasive, additional rules apply to these reports If a business or person requests an investigative report, it must:

• tell you it has requested an investigative report

• have a legitimate reason to request the report

• tell you, in writing, that you have a right to request a description

of the nature and scope of the investigation

• disclose the nature and scope of the investigation if you request this information, and

• in some situations, get your consent (For example, businesses that procure employees for prospective employers, such as head-hunters, must get the consumer’s consent before conducting the investigation and again before telling the employer the results.)However, if an employer requests a report to investigate employee misconduct or violations of law (rather than creditworthiness, standing

or capacity), it does not have to give you advance notice of its request for the report

Who Can Look at Your Credit Report

We expect credit card issuers and other lenders to conduct a credit check before approving an application But employers? Insurance companies? You might be surprised by the businesses and agencies that are allowed

to, and increasingly do, check your credit report

The federal Fair Credit Reporting Act (FCRA) (15 U.S.C §§ 1681 and following) and state credit reporting laws restrict who can access your credit report and how it can be used Any company or agency requesting your credit report is governed by the FCRA

The people and entities that can request your credit report include those shown below

Creditors and potential creditors (including credit card issuers and car loan lenders) are allowed to review your report when you apply for credit

or to monitor your credit once they have given you a loan or credit Although this is a broad category, there are some restrictions For a new transaction, you must have made an offer or otherwise initiated a credit transaction before the creditor can look at your report It is important

to be careful when you are shopping around, especially for cars Dealers will try to get you to sign an authorization so that they can look at your report and size up your financial situation before beginning their sales pitch This request will then appear on your credit report and may negatively affect your credit (See Chapter 3 for more information about credit inquiries.)

Mortgage lenders can be expected to scrutinize your report very carefully before offering to lend you money to buy a home If you are seeking to borrow $150,000 or more, older information will be provided

to the lender So mortgage lenders often see information that wouldn’t

be provided to other creditors

Landlordsmay get a report from a specialty consumer reporting agency that tracks rental histories, including evictions

Utility companies can request your credit report However, there are often state rules that prevent utility companies from denying you service in many circumstances, even if you have bad credit Negative marks generally should matter only if you owe money to the particular

utility company from which you seek service Even then, most utility companies are required to offer special payment plans and programs for people with low incomes that allow you to get affordable utility service.

Student loan lenders As of July 1, 2010, all federal student loans are made directly by the government—they are not offered by private lenders Generally, you cannot be denied a direct federal student loan based on your creditworthiness But credit will be checked for parents applying for PLUS loans Also, you cannot get a new federal loan if you are in default on another federal loan unless you have made satisfactory arrangements to repay it (See Chapter 5 for more on payment

arrangements for student loans.) However, lenders of private student loans (those not offered by the government) can use credit reports in connection with making loans or monitoring existing loans

Insurance companies can look at your report if you apply for a policy Usually, they are not interested in your credit history but instead may ask about your medical history or about any insurance claims you have filed A credit reporting agency cannot provide an insurance company a credit report that contains medical information unless you consent

If you are seeking life insurance for $150,000 or more, the life insurance company is entitled to see older information that wouldn’t otherwise be included in your credit report

Car insurance companies often use credit information to help determine how much to charge when offering a new policy According to GMAC Insurance, for example, insurers rely on studies that show “a very strong correlation between a consumer’s financial history and the future

likelihood of insurance losses.”

Employers Tens of thousands of employers review credit reports as part of evaluating job candidates Employers use this information to judge financial honesty and integrity, as well as the risk of bribery of people with a lot of debt And, once you’re hired, employers can use the report for just about anything related to the job, including promotion and reassignment decisions Before ordering your credit report, employers must first get your written authorization and provide certain disclosures Deciding whether to authorize an employer to get your credit report

leaves many employees and job applicants in a bind If you say no, you may look like you’re hiding something and be turned down for the job

If you say yes, and the employer doesn’t like what it sees, you have the right to see your report and dispute any inaccuracies before being rejected for the job (In some states, you can get a copy of your credit report at the same time the employer does.) But what if the contents are accurate? The best you can do is explain that your problems are behind you and have little or no bearing on job performance Keep in mind, though, that many employers never look at credit reports And those that do often will not be concerned about your financial problems If you do have some negative information on your report, you might want to discuss it with the employer before he or she sees the report Older information may be included in a credit report if you are seeking a job that pays $75,000 or more So if you agree to allow the employer to see your credit report, it may include information that others won’t get to see

How to Avoid Credit Report Scams When You’re Job Hunting

Credit report scams are common and one type of scam specifically targets those who respond to job postings on Craigslist The scam works like this After you respond to the job posting, you receive an email that states

all job applicants must submit a credit report as part of the application process The “employer” directs you to a particular “free” service to obtain your credit report However, you actually have to pay for the report As it turns out, the employer is bogus and the scammer simply makes money

on those credit reports If you want a free credit report, only use www annualcreditreport.com

Another type of scam occurs when a scammer sends out a phishing email after you respond to a phony job listing The scammer might ask for your personal information to “check your credit.” However, the scammer actually uses the information to open new accounts in your name

To avoid becoming a victim to these types of scams and others, don’t give your personal information to a potential employer until you meet in person and have thoroughly investigated the company’s background