Money Saving Advice
There's more than one way to get most for your money. For more than 20 years, Gary Foreman has worked to manage money effectively. He's been a Certified Financial Planner and Purchasing Manager. He currently edits The Dollar Stretcher Web site and several newsletters. His mission is to help people "Live Better for Less."
The Dollar Stretcher: Correcting Your Credit Report
My student loan went into default. I called the collection agency in
January 2000 to make payment arrangements, which I have been making
religiously. I was told that after 12 months of payments I could be
considered for financial aid programs. I called about two months ago and
asked them about my account and they said that it was being rehabilitated
and that the credit bureaus will be notified so it wouldn't show that the
loan is still in default.
We decided to buy a car and finance it. We couldn't because the student
loan still showed in default. I called the collection agency for an
explanation. They said a payment back in July 2000 was two days early so
the loan was reported late a second time. I didn't receive any letters
from them about this. Any suggestions? What should I do?
Connie has found out just how important your credit report is. It's used
when you apply for a mortgage, car loan, credit card, or want to rent an
Credit reports are kept by Credit Reporting Agencies (CRA's). They collect
information from lenders like the people who hold Connie's student loan.
The CRA's organize the information so that when you want to borrow money, a
potential lender (like Connie's car dealer) can request your history from
the CRA. A federal law called the Fair Credit Reporting Act (FCRA) controls
how your information is collected, used and corrected.
The three major credit reporting agencies are:
Equifax, PO Box 740241, Atlanta GA 30374-0241; 800-685-1111
Experian, PO Box 2002, Allen TX 75013; 888-experian
Trans Union, PO Box 1000, Chester PA 19022; 800-916-8800
Independent studies indicate that about 70 percent of all credit reports contain
errors. And about one in four reports have an error big enough to cause
credit to be denied. In fact, the Federal Trade Commission advises checking
your credit report before making any major purchase. That will allow you to
correct any errors before a potential lender asks for your report.
So what should Connie do? First, she'll need to gather some information. Is
her report showing her late once and still in default? Late once and now
current? Or is it showing her late twice?
Since Connie was denied credit because of her report, the company that
denied her the credit must tell her which CRA they used to obtain her
information. And because she was denied credit, Connie has a legal right to
a free copy of the report as long as she asks for it within 60 days.
Unfortunately, the credit reporting agency is not required to seek out
errors in her report. Their only responsibility is to list what's reported
to them by creditors, include any statements about errors from borrowers
and correct any errors found. So Connie is going to have to take the lead
to get things straightened out.
Once Connie receives the credit report she'll need to determine whether the
entries are correct or not. Accurate information will stay on her report
for years. Most items will remain on file for 7 years although bankruptcies
show for 10 years.
If Connie's payment was received early, then it cannot be reported as late.
But she'll need to be able to prove it. She'll want to contact the credit
reporting agency by phone and by registered or certified mail. Her
correspondence should state specifically what the error is and provide
proof to support her claim. The agency is required to investigate the claim
within 30 days. They must also forward any relevant info to the lender
Connie will also want to notify the lender by phone and by mail. The lender
must also investigate the claim. Both the company providing the inaccurate
information and the CRA are responsible for correcting any errors. And, if
an item is incomplete, the CRA must include additional relevant information
in Connie's file. For instance, if she was late but is now current the
report can't just show her account as delinquent.
Once the investigation is complete the credit reporting agency must send
Connie a copy of the report. If there was an error and Connie asks, they
must also send revised copies to anyone who has received Connie's report in
the last six months. Like the car dealer.
If Connie feels either the lender or credit reporting agency isn't
responding, she can report them to the Federal Trade Commission. To register
a complaint with the FTC call 1-877-FTC-HELP. Connie shouldn't get their
hopes up. The FTC will only look at complaints if they find a pattern of
abuse. They will not arbitrate individual complaints.
Hopefully Connie will be able to get any errors cleared up with a minimum
of difficulty. Unfortunately if she disagrees with either the CRA or the
lender there isn't much that she can do that's not expensive and time
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Gary Foreman is a former purchasing manager who currently edits The Dollar Stretcher Web site www.stretcher.com. Contact Gary at email@example.com. You'll find hundreds of free articles to save you time and money. Visit today!