Should I Use my Savings to Pay Off Debt?

Your Credit Minute Show Notes:

  • 00:01                                   Guys, what’s up? I just parked my car at the office, and, um, I just got off a phone call with a client, okay? Uh, a client that I’m absolutely totally stoked for. A client of mine called me last week and said Nick, I’ve got $27,000. I’ve saved 27 grand, $27,000, guys. This is not a small task, okay, but here’s the dilemma. I got $27,000 in credit card debt. What the heck do I do? Do I pay off the debt or do I keep the money in the bank?
  • 00:35                                   Short answer, pay off the debt. Are you insane? Are you nuts? Are you crazy, okay? Get rid of that money. Get rid of that money, pay off that debt, and guys, it’s simple math. The bank’s giving you zero percent. They’re giving you nothing. You stick it in the bank. I get it, it’s nice. You stick it in the bank. You’ve worked hard. You’ve saved. You’ve done the right things to budget, okay, while you’ve been paying the minimum payments on your credit cards. I get it. You hit that number. It’s in the bank, but they’re giving you nothing. But, they’re turning around and they’re charging you 15%, 20%, 25, 30%, okay? These are insane rates. The equation is broken. You’re getting zero percent from the bank and they’re turning around and lending it to you at 29%. There’s something wrong with that, and you’re going to say, well Nick, I’ve been told cash is king. I need to have the cash handy.
  • 01:26                                   Guys, you have to have faith. That’s what you need. You need faith, number one, that’s it’s gonna be okay to not have that $27,000, and for you guys that are used to servicing debt, you service debt, you pay the minimum payments, you got an Excel spreadsheet where you just monitor your debt. It’s not your friend, okay. Don’t get comfortable with it. They’re sucking the money out of your pocket and you don’t even realize it’s happening, okay? You’re going to be fine when you have less money in the bank, okay, you’re left with a few hundred books or a thousand dollars if you follow the Dave Ramsey system, which I love. Um, you’re going to be fine. Why? Because when you have less resources, you become more resourceful.
  • 02:05                                   We’ve all been there. We’ve all been dead broke. None of us had an anxiety attack from being dead broke. But, if you walk into the ER, I guarantee there are plenty of people walking in there every single day that are having panic attacks and anxiety attacks because of the calls they’re getting from their creditors. I promise you, it’s a packed house and I know this, because I get about 100 calls a minute at Key Credit Repair with these exact same scenarios. You gotta have faith. The numbers make sense guys. Take the cash, pay off the debt. Get rid of the rates, okay? And then guess what? You’re going to be able to accelerate your savings pretty substantially, because now all that cash that’s coming in baby, you’re not servicing debt anymore. Okay? You want to spend it? Do whatever you want, okay? But you’re not sending it off to banks and lenders, because they’re going to spend it, okay?
  • 02:51                                   Um, and again, you gotta have faith that it’s going to be okay. You’ve all been at rock bottom before guys, you’ve all been at zero. We’ve all been there. Let’s say we, and we’ve survived. Why? We had faith. See you guys, this is Nik Tsoukales with Key Credit Repair. By the way, to that client that just paid off $27,000 in credit card debts, you are the man. You are the man. I love you for doing that. And if you are having this dilemma or a debt dilemma, call me guys. My direct line is 617-326-3685. We have about 15 consultants on staff that deal with these issues all day long. But I want to hear from you. If you get my voicemail, leave me a message, let me know that you just paid off a debt. Even if it’s a small debt, leave me that message. Email me, Nik@Keycreditrepair.com.
  • 03:40                                   Let me know that you’re having this dilemma. If you feel like you don’t necessarily have the faith, you feel like you’re feeling, you’re feeling a little weak. I’m not sure if I should pay off the debts, hit me up guys. Let me re-encourage you. I’ve been there personally, okay? That’s why I feel so passionate about what I do, okay? So let me re-encourage you, let me show you the way. Let’s get out of debt, let’s use our money to get wealthy. Let’s grow our credit scores. Let’s use credit to build wealth, and let’s absolutely crush it. Later guys.
Should I use my savings to pay off debt?
Should I use my savings to pay off debt?

Utility Bills – do they show up on my credit report?

Your Credit Minute Show Notes:

  • 00:01                                   YouTubers, what’s going on? This is Nik Tsoukales with Key Credit Repair. So I want to talk to you guys today about utility bills. Check this out, actually. I will show you, I got my electric bill today, okay? So, it kind of inspired me to talk about utility bills. So, big question I get all the time is does my electric bill, do my utility bills report to credit? 99% of the time, they don’t.
  • 00:23                                   There are a few markets like Detroit, Michigan, specifically, um, DTE, um, where you will find, uh, your ongoing utility bill’s going to report to the three credit agencies, okay? It’s not very common though, okay? Most of the time, they will not, okay? But what will report to the credit agencies very quickly is a defaulted, uh, utility bill.
  • 00:47                                   So let’s say you don’t pay your electric bill and it falls 90 days behind. The utility companies are super sophisticated with this, their systems will auto batch that data to the credit agencies and all of a sudden you have a 50, a 100, a $500.00 collection that dings your credit report. I’ve seen some people with absolutely perfect credit. They make great money. There’s no financial hardship. There’s no inability to pay.
  • 01:11                                   There really even, there really even isn’t a question of credibility, but they miss a utility bill, they’re on vacation, all of a sudden their credit is pretty much totally destroyed, um, from a credit score perspective, or they’re losing a quick hundred points. Um, that is something that can be remedied by paying off the debt very quickly, reaching out to the utility company and asking them to lift it from your credit report.
  • 01:32                                   If they’re not willing to, which I would say 75% of the time they’re not going to be willing to, that’s a phone call that you definitely want to make to us and we can help you and approach a strategy on how to get the actual record deleted from the credit report. Guys, this is Nik Tsoukales with your quick credit minute. Have an amazing day, and thanks for checking us out every day. Bye.
Utility Bills - do they show up on my credit report?
Utility Bills – do they show up on my credit report?

Build Credit –  So you wanna know how to build credit

Your Credit Minute Show Notes:

  • 00:01                                   YouTubers, what’s goin’ on?
  • 00:03                                   So you wanna know how to build credit. I get it. You’re new. You’re brand new to credit.
  • 00:08                                   Or you’ve taken a credit hit over the years, and you’re just making your financial comeback. You haven’t used credit in a while.
  • 00:15                                   Or you’re just new to the country and you wanna know, “How do I re-establish credit?”
  • 00:18                                   Well let’s show you. I’m gonna jump on the whiteboard real quick, guys. Let’s jump on the white board real quick, and let’s do this together, okay? And let’s show you how to build up some credit.
  • 00:29                                   Okay, remember the rule of three, guys. Most banks and lenders, well, what do they wanna see? They wanna see that you have at least three active trade lines on your credit report. So what’s Nick’s rule of three? Um, or what’s Nick’s strategy, in terms of an actual, and if you’ve ever done a consultation with us, is three active trade lines. That’s mandatory, that’s how many we wanna have on the credit report.
  • 00:48                                   So the first thing you wanna do is make a note. Grab a notebook, grab a piece of paper.
  • 00:53                                   By the way, a credit action plan should only encompass one piece of paper. It does not require a notebook. Don’t waste your money on notebooks. Grab a sheet of paper, okay?
  • 01:01                                   Um, so we want the rule of three, okay? We want a good mix of “Revolving,” “Installment,” okay, and then eventually “Real Estate Credit.”
  • 01:12                                   Why? ‘Cause 15 percent of the credit score is types of credit, having a healthy mix of different types of credit, okay? Um, but in this case, to build credit, obviously, we’re not gonna get real estate credit, okay? My suggest is one credit card, two credit cards, okay, and one secured loan, okay? Let’s talk about this.
  • 01:43                                   Now, the question you’re gonna ask is, “Nick, how do I get a credit card when I don’t have credit?” Okay, it’s pretty simple actually. Something called a secured credit card, okay?
  • 01:52                                   You can go to a website called bankrate.com, I don’t know if you guys can read this. Bankrate.com
  • 02:02                                   So bankrate.com is gonna give you a list, there’s actually a drop-down in the credit card selection section where you can search credit cards, where you can search starter credit cards and secured credit cards.
  • 02:13                                   The concept of a secured credit card is fairly simple, okay? You’re going to take $500, okay, and you are going to put that $500 or give that $500 to the credit card company, okay? They’re gonna hold that $ 500 as collateral, okay? It’s collateral. This is not a prepaid credit card. This is collateral. They’re just holding it, okay?
  • 02:38                                   And what they will then do, in turn, is issue you a credit card with a $500 credit limit, sometimes a little lower as well. Sometimes a little higher.
  • 02:47                                   Why do they do this?
  • 02:48                                   Well, they have no risk. You have no credit, so you’re considered a higher risk for them, especially when you’re re-establishing credit, okay? But when you’re putting up that collateral, there’s no risk. If you don’t pay on that credit card and you go into default, guess what? They’re gonna take your money.
  • 03:02                                   Now, the good thing is, a lot of these secured credit cards, after you’ve established credit, they’ll offer you unsecured credit cards, and you can actually get your security depots released. Some of them will do it, um, right up front, they’ll actually tell you, in six months of on-time payments, they will release, uh, that security, okay?
  • 03:20                                   So we wanna get two of these secured credit cards, okay? And then we want to get a secured loan.
  • 03:27                                   So, remember, we want a good, healthy mix of active accounts. We have revolving accounts, which are credit cards. We have installment accounts, which are personal loans, student loans, or car loans. But again, the dilemma is, we don’t have credit, how are we gonna get these things?

03:41                                   Well, this same concept here, with the secured credit card, where you put $500 into a, um … or you give it to the bank as collateral and they give you a credit line for $500, you can actually do that with an installment loan. Usually they’re a little pricier, okay? Most banks will do it for about a thousand dollars in the form of a CD. So they’re gonna take that thousand dollars, and they’re gonna put it into a certificate of deposit, okay? Don’t get caught up in the fancy talk, it’s a savings account, okay? But the savings account is locked, typically for a 6, 12, 24, 36 month period, okay?

  • 04:20                                   They will then, in turn, give you … we’ll go over here, we need a little space … a loan for a thousand dollars. They will give you … remember what we talked about? Having a mix of different types of trade lines? They will give you an installment loan for a thousand bucks, okay?
  • 04:37                                   So there we go, guys. We got a credit card, our two secured credit cards, then we have a secured loan, okay? We have that healthy mix of three active trade lines. We’ve done it without a credit score, okay? Most of your local banks, lenders, um, credit unions will offer you these two products. Secured credit card, secured installment loan.

04:58                                   If you need any help, or you need some direction on where to access the-these types of products, um, we have full access to all this stuff in our client portal if you Sign Up for $0 Today with us. Um, aside from that, you can access through our blog. We have a million and one resources. You can actually reach out to one of our consultants, um, Sign Up for $0. We’ll actually direct you on where to go to get these products.

  • 05:18                                   Guys, this is Nick Chucales. This is Rebuilding Your Credit 101, and if you have any questions, give us a call. Bye.
Build Credit-  So you wanna know how to build credit
Build Credit-  So you wanna know how to build credit

Consumer Credit Counseling – Why I love this program!

Your Credit Minute Show Notes:

 

  • 00:00                                   What’s up, YouTubers? So, for those of you that are looking for a way to get out of debt, okay, obviously we’re not a debt relief company here, but a lot of our clients and a lot of inquiries we get here are looking for this type of help. So, I’m gonna give you an example of one program that I’m a big, big fan of and I’m gonna break down really what it is, give you the kind of, the bare bones um, or kind of the structure of what it is and then I’ll uh, make some suggestions in terms of if maybe that’s the right program for you. So, what we’re gonna talk about today is something called CCC. Another acronym. [inaudible 00:00:34]. Consumer Credit Counseling, guys. Consumer Credit Counseling I think is one of the better programs out there to help you get out of debt. Why? Number one, it is credit score neutral. Doesn’t hurt your credit score. Okay? Um, you’re not required to fall behind on the debts. Okay? It’s not a settlement program, it’s not a debt relief program. It’s a way to get out of debt. It’s a money management system. It’s a budgeting system.
  • 01:01                                   So, let me break down for you really kinda how it works because it’s pretty simple stuff actually. Okay? Let’s make a little room here. So, you owe a bunch of debt. Okay? You owe a Amex for $20,000. You owe a Capital One for $10,000. You owe, I don’t know, Visa o- Walmart for $5,000. Okay? So, you have $35,000 in credit card debt right now. Okay? You’re in this debt, you can’t get out of it, you’re not sure what to do. Okay? Also, you got minimum payments of $1,500 baby. Interest (laughs) only. Guess what? Every time you send that $1,500 none of it’s going towards principal. So, you’re stuck. You’re just literally burning $1,500 every month. Why? Because uh, you were five minutes late on making these payments one month. And, guess what? Your interest rate’s 30% on this, 28% on that, 18% on this. And, keep in mind, these are fictitious and examples, okay? Don’t quote me exactly. But, your interest rates are super, absolutely insane sky high. So, you got, you’re sending $1,500 right now and you’re just kinda sending it out into the wind. Okay? So, how do we remedy this?
  • 02:22                                   Okay, well, Consumer Credit Counseling might be the way. So, Consumer Credit Counseling agencies are typically nonprofit organizations. They’re nonprofit organizations, okay? Um, they should be fully licensed in the state that you live in to do business there. Usually, you are able to meet with someone face to face locally to sit down and do one of these programs as well. So, keep that I mind when you’re doing a Consumer Credit Counseling program. Okay? And, usually what the CCC is going to do is they’re gonna meet with you and they’re gonna come up with a budget. Okay? First thing they’re gonna do is they’re gonna say, how much do you make? Income. What are your expenses? Okay? Typically, the income is the issue. Most people that have gotten ems- gotten themselves into debt and qualified for CCC are people that have either had their hours cut at work, they’ve lost a job, or a spouse has lost a job. Okay? So, when they fill out one of these budgets, they’re gonna notice that. And, they’re gonna see that by, quickly, your expenses have gone up since then as well because, guess what? Um, the interest rates have gone up on all your credit cards too, so you just can’t afford this. Okay?
  • 03:24                                   What they’re gonna do, and typically what they already have arranged um, is interest rate deductions. Okay? So, you see these 30- 30% interest rates? These are gonna get reduced. Okay? Usually, the CCC has arrangements with Amex, with Capital One, with Walmart card, or whatever they’re gonna be. Okay? And, they have arrangements with them that if someone does fall behind, they come through one of these programs and they’re gonna offer you a lower interest rate, as long as the CCC is managing the disbursement of the payment. So, let’s say right away they approve you for a CCC program and you get all your interest rates down to a fixed 5%. Okay? Um, but, let’s say you can still continue making this $1,500 payment. Well, instead of this having the interest only, all of a sudden, you know, you got $1,200 out of the $1,500 quickly going towards principal. So, what does that do? It really just drives down these amounts. The principal balance here, uh, they start to drop pretty significantly pretty quickly and you start getting yourself out of debt. Okay? Other times, the payment is just so outrageous um, that you can’t afford this at all. So, they’ll actually reduce the payment. They’ll get you back on your feet.
  • 04:33                                   That way you have a little free money to put towards um, to put towards paying these things down, and really just quite simply to, to live and survive at this point, until you get that next job. What’s nice about this is it is credit score neutral. Okay? But, keep in mind, there will be a comment on your credit. Okay? There’s a comment section on the credit report. Okay? And, it will say something along the lines of managed by a CCC, Consumer Credit Counseling agency. Okay? That comments there, it’s a credit s- uh, it’s a credit score neutral comment. Okay? But, it’s placed there so if you try to get some credit card debt while you’re in one of these programs, they’re not gonna approve you. They’re gonna see the comments um, and they’re not gonna give you a new loan, which it really isn’t something you should be worrying about, you know, if you’re in debt and you’re trying to get more debt, don’t complain about that. It’s not a big deal. Okay? Um, also what’s nice is the disbursement. So, instead of you making payments to each of these creditors every month, they’re gonna do it for you.
  • 05:40                                   So, this is you. Happy, happy, joy, joy. Okay? And, you’re gonna be sending money to the Consumer Credit Counseling agency um, each month and they will then do the disbursements. Okay? Um, the CCA will do the disbursements for you every single month. So, you’ll only have to pay one company each month. The companies will not be calling you. They’re not gonna bug you. They’re not gonna harass you. Um, it really makes life a lot easier. You have kind of a, an extra layer of protection from your creditors. Okay? So, Consumer Credit Counseling guys, um, check out some Consumer Credit Counseling agencies. You can check out the Better Business Bureau, bbb.org. You can find a list of them local to you. I would advocate you try to get into the Consumer Credit Counseling agency’s office if they have one local. If they don’t have one near you, not the end of the world, but I think there’s a huge benefit um, you know, sitting down with the agent, going through the budget together, and really taking a hard look at what your finances are. Guys, this is Nikitas Tsoukales with Key Credit Repair, and have a great day.
Consumer Credit Counseling

FCRA – What is the fair credit reporting act and why does it matter?

Your Credit Minute Show Notes:

  • 00:00                                   What’s up, YouTubers? This is Nik Tsoukales with Key Credit Repair, and today we’re gonna talk about one of my favorite things in the world; FCRA.
  • 00:08                                   FCRA, FCRA, FCRA. We talk about FCRA a lot here at Key Credit Repair, and if you’re wondering what FCRA, well, let me introduce you to, let me introduce to FCRA. We got the Fair Credit Reporting Act.
  • 00:23                                   This is the fuel. This is what allows us to repair credit. This is what allows you to challenge things on your credit report. This is something that sets the United States apart from, um, really from everyone. There’s a reason why our system is set up in a way where we get a restart button, we can protect ourselves. Um, we have the Fair Credit Reporting Act. Okay.
  • 00:43                                   There’s a reason why credit repair’s so prevalent in the United States, you can challenge things because we have rights enacted by Congress that allow us to challenge something negative on a credit report.
  • 00:52                                   So, I’m gonna give you just some basic facts, but then I’m gonna talk about why this is super beneficial.
  • 01:00                                   So, if you can read my bad handwriting here as always, ah, the Fair Credit Reporting Act, enacted by Congress in 1970. Okay.
  • 01:05                                   And these are some of your basic rights. You have the right to know. You have the right to know what’s on your credit report. Okay. Um, someone can’t mask that information, they can’t hide it from you. If they’ve used that data to make a credit decision and you’ve been declined, they have to share that with you.
  • 01:21                                   Okay. You have the right to a credit score. So, if you’ve been recently declined for something you probably got the letter in the mail referencing the Fair Credit Reporting Act and giving you a credit score, and also a range of credit scores depending on the type of credit score that’s used. They have to give that to you by law. Okay.
  • 01:36                                   Then you have the big one, a right to dispute. Anything inaccurate, incomplete, unverifiable or really just questionable, you have the right to challenge on the credit report. So, it doesn’t need to stay there because it was placed there, otherwise I’d be out of a day job, right guys?
  • 01:53                                   Um, also, last but not least, the right to legal action. So, if you send a dispute letter off to the credit agencies and you’re challenging something that’s just obviously inaccurate and they refuse to remove it or properly investigate it, you have the right to legal action. You have the right to take these guys to court, you have the right, um, to get paid, ah, to get, to get paid for damages. Okay. So, keep that in mind.
  • 02:16                                   This is the leverage that you have when you’re doing credit repair. Okay.
  • 02:20                                   Also, the FCRA is, um, something that is, um, administered and monitored by the Federal Trade Commission. Okay. So, we have a government agency that oversees this. You also have the Consumer Financial Protection Bureau that’s heavily involved in making sure that no one violates the FCRA anymore. Um, and also you have advocacy groups like Key Credit Repair and other credit repair companies that can help you challenge things that could be an obvious violation of the Fair Credit Reporting Act.
  • 02:45                                   Now, keep in mind there’s gonna be a follow-up video to this explaining FDCPA, another fancy acronym we use here a lot, which is the Fair Debt Collections Practices Act. So, for those of you with that, that’s gonna be the acronym that you wanna follow, especially if it’s questionable debt.
  • 03:01                                   The Fair Credit Reporting Act is quite clear. Also keep in mind with the FCRA, something to think about is, you know, you have the right to challenge these things but it doesn’t have to be vague. Okay. And when I say vague it means we have some clear guidelines for how long these companies have to respond.
  • 03:19                                   So, when you send out a dispute letter, you’ll probably hear the rule of thumb that we have 30 days, we have 30 days for an investigation. Where does this 30 days come from? Well, it’s actually in the Fair Credit Reporting Act. Okay.
  • 03:33                                   I’m gonna supply the link for you guys, um, to Wikipedia, okay, where you can actually see a history of the Fair Credit Reporting Act, see why it was created and why. Okay, you can see some of the furnisher information, um, some of the uses of consumer credit reports, of permissible purposes as well. Okay. So, someone just can’t pull a credit report because, ah, they want to. They have to have permissible purpose.
  • 03:54                                   So, I’m gonna list that out for you, as well as giving you a link for a free PDF download at, um, keycreditrepair.com/credit-laws. Okay. You can actually download a full PDF version of the Fair Credit Reporting Act. Especially for you, for those do-it-yourselfers, if you wanna get some ammunition when you’re, when you’re creating those letters, you can get them right there.
  • 04:16                                   Thanks guys. This is Nik Tsoukales with Key Credit Repair. Have a great day.

Important Links: FCRA download & FCRA Wikipedia 

Feds Crack Down on “Phantom Debt Collection” Scheme

Many elderly Americans scammed with Hundreds of thousands of Americans have received phone calls from people purporting to be either debt collectors or police pursuing delinquent debt. The callers contact people at work and at home. Many calls come in the middle of the night. The victims are threatened with harassment or imprisonment. The scammers have collected at least $5 million from people who did not owe them money.

These scams are persuasive because the callers usually have a great deal of personal information about the victims. They often know when a loan was made, the loan amount and other details. Because of the amount of information they have and in an effort to avoid trouble, many people pay up.

Phantom debt is debt that is old, defaulted, paid or otherwise not owed by the debtor. While phantom debt can sometimes appear on credit reports as an error, the current case involves individuals deliberately trying to collect money that is no longer owed.

The Federal Trade Commission has frozen the bank accounts of Kirit Patel, a front man who set up the California company behind the scam. The FTC and the state of Illinois are suing six companies and three people who have used a number of business names in the scam, including Stark Recovery, Stark Law and Capital Harris Miller and Associates. While the calls originate in India, the scam is supported by the participation of people in the U.S. American corporations are set up to collect the information that is used when calling the alleged debtors.

This is not the first case of widespread phantom debt fraud. In November 2015, the FTC reported on a company called Delaware Solutions or Clear Credit Solutions that allegedly purchased payday loan debts. The debts were not valid, but, the company proceeded to call and harass people to intimidate them into paying.

What should you do if you are contacted about phantom debt?

There are a number of laws that protect people from unfair pursuit of debts. Knowing your legal rights can help protect you against scammers. If someone contacts you about a debt that you do not think you owe:

  • Ask for a validation notice. This is a document that confirms, in writing, how much you owe and what the debt is for. By law, it must be sent to you within five days of contacting you.
  • Remember that it is illegal for a debt collector to threaten or harass you.
  • Know that a debt collector cannot put you in jail.
  • Know that you can tell a debt collector must, if you ask, only contact you in writing.
  • If a debt collector does not validate a debt or threatens or harasses you, report them to the FTC and your state’s Attorney General’s office.

Knowledge of your rights can help protect you and preserve your good credit. Do you need help improving your credit score and erasing phantom debt? Contact Key Credit Repair today.

FCRA

What’s the Role of the FCRA? – Credit Tip #6

What’s the Role of the FCRA? The FCRA, or Fair Credit Reporting Act, serves as the greatest protection for a consumer in regards to their credit score reporting. Written by Congress as a set of laws and bylaws, the Fair Credit Reporting mandates what is fair and accurate among reporting by a credit agency. For a consumer interested in credit repair, the Fair Credit Reporting is their first line of defense against erroneous credit scoring. By providing the ability for credit report investigations, the Fair Credit Reporting goes above and beyond the call of duty for consumers. Without the support of FCRA, consumers are unable to do anything about flawed credit reporting.

For additional information on how to repair your credit, please Sign Up for $0 Today.

fair credit reporting act

Fair Credit Reporting Act (FCRA) – Repairing Your Credit

What is the Fair Credit Reporting Act?

Established in 1970, the Fair Credit Reporting Act (FCRA) restricts businesses from freely accessing an individual’s personal credit information by contacting one or more of the big three credit bureaus: Experian, TransUnion and Equifax. Under the Fair Credit Reporting Act, a company must have “permissible purpose” before requesting information from a credit bureau. In other words, a business cannot access someone’s credit record unless the query achieves a lending decision. Intended to protect individual privacy, the FCRA makes it illegal for anyone who is not involved in a lending situation with a potential client to contact a credit agency and request information about that person’s credit history. For example, insurance agencies and employers must get permission from the individual they are interacting with before contacting Experian, Equifax or TransUnion to request copies of that person’s credit score.

How the FCRA Helps Ensure Credit Repair

When the FCRA was passed in 1970, it not only supported privacy rights of consumers but also enacted rules by which all credit bureaus must abide. These include:

  • Removing all data that is obsolete within a pre-set time period (debt type dictates the time period; for example bankruptcies remain on a person’s credit report for seven to 10 years).
  • Removing the majority of closed accounts within seven years regardless of debt type.
  • Giving consumers the legal ability to dispute errors on their credit score as reported by one or more credit agencies. When confronted with possible errors by a consumer, the credit agency must investigate the issue fully until it has been resolved with supporting documentation.
  • Entitling consumers to legal recourse if they discover someone has deliberately provided erroneous information to a credit bureau regarding their credit score. In fact, consumers can sue the company or individual who gave false information to a credit agency for up to $1,000 per infraction.
  • Granting consumers the right to sue anyone who accesses copies of their credit score (FICO) by falsely representing themselves and their intent.

By giving consumers the right to protect their credit score from inaccuracies that could significantly impair their ability to receive loans, purchase homes or obtain credit cards, the FCRA can help repair credit and increase FICO scores when misinformation and errors are damaging a person’s credit.

Why is My FICO Score So Important?

Credit repair involves raising your FICO score, or the number representing your credit “grade” that appears on your credit report. FICO numbers are always between 300 and 850, with 300 being the lowest score you can have. FICO is an acronym for Fair Isaac and Company, a business that created software during the 1980s to assist lending companies in determining whether an individual was a credit risk. FICO based its software algorithms on the ability of a person to make payments on time while avoiding defaults or bankruptcies. Other factors contributing to a FICO score include how much money the person owed to lending institutions and the length of his or her credit history.

Credit Repair with the Help of the FCRA and FACTA

In addition to the provisions provided by the FCRA, the Fair and Accurate Credit Transactions (FACTA) Act of 2003 offers even more protection for consumers by setting additional standards to which individuals and businesses must adhere or face litigation. According to guidelines established by the FACTA Act, consumers are allowed to ask for free copies of their credit scores from any one of the three credit reporting agencies if an adverse action has been taken due to information contained in that report. Additionally, creditors must inform you of any negative comments placed in your file by them so that you know such comments exist. FACTA also allows you to insert a statement of no more than 100 words in your file to describe any extenuating circumstances that may have contributed to a negative entry or in support of an ongoing dispute.

Rebuilding Your Credit Score Using FCRA and FACTA Laws

If you have been denied a loan, credit card, apartment lease or other similar action because you were informed your credit score was too low and you have blemishes, possibly in error, on your FICO score, you can either perform the necessary investigations into why your credit report is damaged, or you can consult a professional credit repair agency experienced in dealing with unresponsive credit reporting agencies that often do not want to admit they are wrong. Unfortunately, credit bureaus and lenders are in a position to profit financially from keeping consumer credit scores low, an unethical motive prompting the establishment of the FCRA and FACTA laws. For example, to fulfill underwriting requirements, lenders need credit scores that are just average or below average to label customers as “high-risk” borrowers so they can extract extra fees and inflate interest rates. Alternately, TransUnion, Equifax and Experian earn a lot of money selling credit data to lenders interested in people with credit scores between 500 and 600, or those who may be tempted to borrow much-needed money at high rates of interest.

Confronting Credit Agencies

Don’t be intimidated by big-name credit agencies that tend to ignore or minimize complaints of error or wrongdoing concerning consumer credit reports. If you think your payment history does not warrant a denial of credit and understand you may need credit repair, use the benefits provided by the Fair Credit Report Act as well as the FACT Act and start taking back control of your credit score.

Credit Repair Mistakes

Online Credit Disputes – Top reasons to stay away.

Top Reasons To Write Your Disputes

Reason #1:- As most of you know, one factor you have on your side when disputing credit is time. The legal thirty-day limit is not a lot of time for a credit bureau, creditor, or collection agency to properly investigate a dispute. The Credit Bureaus online dispute system is set up in such a way that when you use it, it makes their job not only that much easier but cost efficient. The information you put into their limited dispute fields falls right into their electronic verification system. The online dispute system is making the process easier for the credit agencies therefore cutting down your chances of deleting the record drastically.

Reason #2: Zero Paper Trail: Any good attorney will tell you that “documentation beats confrontation”. By challenging something online you do not have a paper trail of the correspondence. This does not help you when the response you receive is not favorable and you need to challenge it again.

Reason #3: When the FCRA was amended a few years ago a few provisions were added in for our friends (me being ironic) at the credit agencies called “Expedited Dispute Resolution” Section 611a(8) the on-line dispute system. See below….

“…the agency shall not be required to comply with paragraphs 2, 6 and 7 with respect to that dispute if they delete the tradeline within 3 days.” You are probably wondering what this means so let me explain….

Paragraph 2 requires the CRA to forward your dispute and all related documentation you provide to the furnisher. This rarely happens and is a violation of the FCRA. This is additional ammunition that we can use to challenge something.

Paragraph 6 requires the CRA to provide you with written results of the investigation.

Paragraph 7 requires the CRA to provide you with the method of verification on request from the consumer.

Have you heard of something called a “Soft Delete”???

The Credit Reporting Agency (CRA) can delete a disputed trade line for 30 days, then, the trade line can reappear when the furnisher (creditor or collector) reports it again in the next cycle. That is because the CRA is not required to tell the furnisher you disputed it thanks to section 2 being omitted. This is sometimes called a “soft delete” and it is not permanent. This can be a major shock right before a mortgage refinance or purchase closing for many consumers when their credit is pulled right before a closing.

In addition, the consumer loses their right to request a “Method of Verification” (MOV) so you lose this powerful tool in the dispute process thanks to Paragraph 7 being omitted.

As always feel free to contact our office with any questions regarding the prospect of repairing your credit.

Nikitas Tsoukalis, President

Key Credit Repair