You hear about the great credit cards rewards programs available today and are tempted to apply. Mortgage rates have never been lower. However, you may have a vague knowledge pricking the back of your mind that your credit is not quite up to snuff. Or maybe you know about your bad credit, but the discovery was an unpleasant surprise: your credit circumstances are not your fault or were outside of your control. Credit repair is not just for the irresponsible or debt ridden; it is often a necessity for an American of average circumstances. There are many reasons why credit can become damaged other than the non-payment of bills.
Mistakes on Your Credit Report
Credit bureaus, the data repositories holding the information on which credit reports are based, are prone to mistakes based on human error. In February 2013, the FTC released a study revealing that one in four people has mistakes on their credit reports. 5% of all credit reports had mistakes on them so severe that a consumer could be denied credit. For those unlucky 5%, the lowered scores had the effect of dropping the consumer’s score by 25 points or more. It gets worse: one in 250 people had their credit scores drop 100 points or more due to mistake on their credit reports.
Identity Fraud occurs when someone’s personal information is used to access money, identity theft occurs when personal information is accessed, even if it isn’t used for personal gain. A report from Javelin Research revealed that in 2014 fraudsters stole 16 billion from 12.7 million U.S. consumers. Identity fraud is estimated to occur every 2 seconds in this country. Much of the identity fraud happened as a result of data breaches from major retail stores. Some of the better-publicized breaches in the last couple of years were from Target, Neiman Marcus and Home Depot.
Fraud accounts that have been opened in your name and appear on your credit report are most likely not going to have stellar payment histories as most fraudulent accounts are opened, charged up and then abandoned with the thieves moving on to the next counterfeit credit card account before the crime is discovered.
While the FACT Act of 2003 (which amended the Fair Credit Reporting Act) provided more protections for people who have suffered from identity theft or fraud, once thieves have opened accounts in your name, it can take months or even years to untangle the mess. One of the requirements for invoking the identity theft provisions in the Fair Credit Reporting Act (FCRA) is to provide a police report. While some city and county police departments provide online forms that you can fill out to file an identity theft report, others require a phone call or even an in-person visit to a police station. Speaking from personal experience, filing an identity report is a hassle and you do not always get the attention you feel you deserve to make the report efficient and hassle free. These barriers to obtaining a police report can often serve as a deterrent to people trying to clear up the mess of identity theft.
The Fallout from Divorce Can Hit Your Credit Report
Despite that fact that a divorce is supposed to legally divide up martial debts, if your ex decides not to pay his or her share, you could be stuck with the repercussions credit-wise. Despite the fact that divorce decrees are legal documents, lenders will not recognize these court documents, firmly asserting that the responsibility of joint accounts remains joint even after divorce. Their reasoning: they were not in the court room when your divorce proceedings took place; they did not agree to amend the original agreement to divide up responsibility. If your spouse decides not to pay on your joint account, or goes bankrupt, it will be you left holding the bag of late payments or defaults on your credit report.
Can you cancel joint credit cards once you get divorced? Sure. However, if there is a balance on the cards, joint account liability is still in effect. Banks will not remove a person off an existing account until the balance is paid off. Can you quit claim your interest in a home to your spouse? Absolutely. However, the responsibility for the mortgage payments remains yours until your spouse refinances the house in his or her own name alone.
Why Credit Repair Now?
While it’s true that bad credit eventually falls off your credit report with no effort on your part, most people don’t have or are not willing to wait the 7 years that it takes for this to occur. Having good credit is the key to many good things in the American lifestyle: low insurance rates, the promise of a good job, low interest rates on mortgages and auto loans. Bad credit can cost you a lot of money, to the tune of hundreds or thousands more dollars a year in increased costs.
Disputing Items on Your Credit Reports on Your Own Might not Have the Desired Effect
In order to remove mistakes or clear up inequities in your credit report, the information must be disputed, which is every consumer’s right under the FCRA. However, disputing errors on your credit report the wrong way could be damaging or ineffective. The most common credit disputing errors:
- Disputing only with the furnisher. Since you know the credit bureau has gotten the information from the financial institution that has issued you credit, it may seem faster just to go to the source. While this is your right under the Fair Credit Reporting Act (FCRA), you miss the opportunity to take legal action with the creditor if you did not dispute with the credit bureaus first.
- Getting caught in hidden arbitration clauses. If you buy your credit report online, there is hidden fine print that says that if you don’t send an opt-out letter to the credit bureaus, you exclude yourself from potential class action lawsuits and individual suits if the credit dispute is not handled correctly. You should always get your credit report for free from the government-sanctioned annualcreditreport.com.
- You don’t include enough information to prove your dispute. If you dispute the information over the phone or online, you can miss out on the opportunity to provide supporting information to the credit bureaus, information that the credit bureau is required by law. All of the credit bureaus allow you to attach one document to your online credit disputes, however, this information is not passed on to the furnishers of the original erroneous information. Even if you do provide supporting information, the explanation may not be robust enough to make much difference in the dispute process.
- Extenuating circumstances might not be argued correctly. In the case of the unfairness over joint accounts which have turned negative because of the non-payment by ex-spouses, the facts of the court case might not be argued correctly. FLYY Credit Solutions has successfully removed these types of unfair negatives from consumers’ credit reports.
Schedule your consultation to discuss your options.