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October 2008Credit Repair: How To Help YourselfYou see the advertisements in newspapers, onTV, and on the Internet. You hear them on theradio. You get fliers in the mail, and maybe evencalls offering credit repair services. They all make thesame claims:Recognizing a CreditRepair ScamEveryday, companies target consumers who havepoor credit histories with promises to clean uptheir credit report so they can get a car loan, ahome mortgage, insurance, or even a job once they“Credit problems? No problem!”pay them a fee for the service. The truth is, these“We can remove bankruptcies, judgments, liens, andcompanies can’t deliver an improved credit report forbad loans from your credit file forever!”you using the tactics they promote. It’s illegal: Noone can remove accurate negative information from“We can erase your bad credit —your credit report. So after you pay100% guaranteed.”them hundreds or thousands ofNo one can remove dollars in fees, you’re left with the“Create a new credit identity —legally.”same credit report and someoneaccurate negativeelse has your money.The Federal Tradeinformation fromreport.Commission (FTC) says doyour credityourself a favor and save somemoney, too. Don’t believe theseclaims: they’re very likely signs ofa scam. Indeed, attorneys at the nation’s consumerprotection agency say they’ve never seen a legitimatecredit repair operation making those claims. The factis there’s no quick fix for creditworthiness. You canimprove your credit report legitimately, but it takestime, a conscious effort, and sticking to a personaldebt repayment plan.nIf you see a credit repair offer,here’s how to tell if the companybehind it is up to no good:The company wants you to pay for credit repairservices before they provide any services. Underthe Credit Repair Organizations Act, creditrepair companies cannot require you to payuntil they have completed the services they havepromised.n Thecompany doesn’t tell you your rights andwhat you can do for yourself for free.
2 FTC Facts For Consumersn Thecompany recommends that you do notcontact any of the three major national creditreporting companies directly.n Thecompany tells you they can get rid of mostor all the negative credit information in yourcredit report, even if that information is accurateand current.incomplete. There is no charge for this. Some peoplehire a company to investigate on their behalf, butanything a credit repair clinic can do legally, you cando for yourself at little or no cost. According to theFair Credit Reporting Act (FCRA):entitled to a free report if a companytakes “adverse action” against you, like denyingyour application for credit, insurance, orn The company suggests that you try to invent aemployment. You have to ask for your report“new” credit identity — and then, a new creditwithin 60 days of receiving notice of the action.report — by applying forThe notice will give you thean Employer Identificationname, address, and phoneNumber to use insteadAnything a credit repair number of the consumerof your Social Securitycompany. You’re alsoclinic can do legally, you reportingnumber.entitled to one free report acan do for yourself atyear if you’re unemployed andn The company advisesplan to look for a job withinyou to dispute all thelittle or no cost.60 days; if you’re on welfare;information in your creditor if your report is inaccuratereport, regardless of itsbecause of fraud, including identity theft.accuracy or timeliness.If you follow illegal advice and commit fraud,you may find yourself in legal hot water, too: It’s afederal crime to lie on a loan or credit application,to misrepresent your Social Security number, and toobtain an Employer Identification Number from theInternal Revenue Service under false pretenses. Youcould be charged and prosecuted for mail or wirefraud if you use the mail, telephone, or Internet toapply for credit and provide false information.Your Rights RegardingCredit RepairNo one can legally remove accurate and timelynegative information from a credit report. The lawallows you to ask for an investigation of informationin your file that you dispute as inaccurate orn You’ren Eachof the nationwide consumer reportingcompanies — Equifax, Experian, andTransUnion — is required to provide you witha free copy of your credit report once every 12months, if you ask for it. The three companieshave a central website, a toll-free telephonenumber, and a mailing address for consumersto order the free annual credit reports thegovernment entitles them to. To order, click onannualcreditreport.com, call 1-877-322-8228,or complete the Annual Credit Report RequestForm and mail it to:Annual Credit Report Request ServiceP.O. Box 105281Atlanta, GA 30348-5281
FTC Facts For Consumers 3Sample Dispute LetterYou can use the form in thisbrochure, or you can print itfrom ftc.gov/credit. You mayorder reports from each ofthe three consumer reportingcompanies at the same time,or you can stagger yourrequests, ordering one fromeach company throughoutthe year from the centraladdress. Don’t contact thethree nationwide consumerreporting companiesindividually or at anotheraddress because you mayend up paying for a reportthat you’re entitled to get forfree. In fact, each consumerreporting company maycharge you up to 10.50 topurchase an additional copy ofyour report within a12-month period.DateYour NameYour Address,City, State, Zip CodeComplaint DepartmentName of CompanyAddressCity, State, Zip CodeDear Sir or Madam:I am writing to dispute the following information in my file.The items I dispute also are encircled on the attached copy of thereport I received.This item (identify item(s) disputed by name of source, suchas creditors or tax court, and identify type of item, such as creditaccount, judgment, etc.) is (inaccurate or incomplete) because(describe what is inaccurate or incomplete and why). I amrequesting that the item be deleted (or request another specificchange) to correct the information.Enclosed are copies of (use this sentence if applicable anddescribe any enclosed documentation, such as payment records,court documents) supporting my position. Please investigate this(these) matter(s) and (delete or correct) the disputed item(s) assoon as possible.Sincerely,Your namedoesn’t cost anythingto dispute mistakes orEnclosures: (List what you are enclosing.)outdated items on yourcredit report. Under theFCRA, both the consumer reporting companyHelping Yourselfand the information provider (that is, theStep 1: Tell the consumer reporting company, inperson, company, or organization that provideswriting, what information you think is inaccurate.information about you to a consumer reportingInclude copies (NOT originals) of any documentscompany) are responsible for correctingthat support your position. In addition to providinginaccurate or incomplete information in youryour complete name and address, your letter shouldreport. To take advantage of all your rights under identify each item in your report you dispute;the FCRA, contact the consumer reportingstate the facts and the reasons you dispute thecompany and the information provider.information, and ask that it be removed or corrected.You may want to enclose a copy of your report, andn It
4 FTC Facts For Consumerscircle the items in question. Send your letter bycertified mail, “return receipt requested,” so you candocument that the consumer reporting companyreceived it. Keep copies of your dispute letter andenclosures.company is not permitted to put the disputedinformation back in your file unless the informationprovider verifies that it is accurate and complete.The consumer reporting company also must sendyou written notice that includes the name, address,and phone number of the information provider.Your letter may look something like the one onIf you ask, the consumer reporting company mustthe previous page.send notices of any correction to anyone whoConsumer reporting companies must investigate received your report in the past six months. Youthe items you questionalso can ask that a corrected copywithin 30 days — unlessof your report be sent to anyonethey consider yourwho received a copy during theA consumer reportingdispute frivolous. Theypast two years for employmentcompanycanreportalso must forward all thepurposes.relevant data you providemost accurate negativeIf an investigation doesn’tabout the inaccuracyresolve your dispute with theinformation for sevento the organizationconsumer reporting company,that provided theyears and bankruptcyyou can ask that a statement ofinformation. After theinformation for 10 years. the dispute be included in yourinformation providerfile and in future reports. You alsoreceives notice ofcan ask the consumer reportinga dispute from thecompany to provide your statement to anyone whoconsumer reporting company, it is required toreceived a copy of your report in the recent past. Youinvestigate, review the relevant information, andcan expect to pay for this service.report the results back to the consumer reportingcompany. If this investigation reveals that theStep 2: Tell the creditor or other informationdisputed information is inaccurate, the informationprovider, in writing, that you dispute an item. Beprovider has to notify the nationwide consumersure to include copies (NOT originals) of documentsreporting companies so they can correct it inthat support your position. Many providers specifyyour file.an address for disputes. If the provider reports theitem to a consumer reporting company, it mustWhen the investigation is complete, theinclude a notice of your dispute. And if you areconsumer reporting company must give you thecorrect — that is, if the information is found to beresults in writing, too, and a free copy of yourinaccurate — the information provider may notreport if the dispute results in a change. If an itemreport it again.is changed or deleted, the consumer reporting
FTC Facts For Consumers 5Reporting AccurateNegative InformationWhen negative information in your report isaccurate, only the passage of time can assure itsremoval. A consumer reporting company canreport most accurate negative information for sevenyears and bankruptcy information for 10 years.Information about an unpaid judgment againstyou can be reported for seven years or until thestatute of limitations runs out, whichever is longer.To calculate the seven-year reporting period, startfrom the date the event took place. There is notime limit on reporting information about criminalconvictions; information reported in response toyour application for a job that pays more than 75,000 a year; and information reported becauseyou’ve applied for more than 150,000 worth ofcredit or life insurance.n performany services until they have yoursignature on a written contract and havecompleted a three-day waiting period. Duringthis time, you can cancel the contract withoutpaying any fees.Before you sign a contract, be sure it specifies:n thepayment terms for services, including thetotal costnadetailed description of the services thecompany will performn howlong it will take to achieve the resultsn anyguarantees the company offersn thecompany’s name and business addressHave You Been Victimized?Many states have laws regulating credit repaircompanies. State law enforcement officials may beThe Credit Repairhelpful if you’ve lost money to credit repair scams.Organizations ActDon’t be embarrassed to reportCredit repair organizationsa problem with a credit repairmust give you a copy of theJust because you have company. While you may fear“Consumer Credit File Rightsthat contacting the governmentUnder State and Federal Law”a poor credit reportcould make your problemsbefore you sign a contract. Theydoesn’t mean you won’t worse, remember that laws arealso must give you a writtenin place to protect you. Contactcontract that spells out yourbe able to get credit.your local consumer affairsrights and obligations. Readoffice or your state Attorneythese documents before you signGeneral (AGs). Many AGs haveanything. And before signing, know that a credittoll-free consumer hotlines; check the Blue Pages ofrepair company cannot:your telephone directory for the phone number orn make false claims about their serviceswww.naag.org for a list of state attorneys general.n chargeyou until they have completed thepromised services
6 FTC Facts For ConsumersIf You Need HelpJust because you have a poor credit report doesn’tmean you can’t get credit. Creditors set their ownstandards, and not all look at your credit history thesame way. Some may look only at recent years toevaluate you for credit, and they may give you creditif your bill-paying history has improved. It may beworthwhile to contact creditors informally to discusstheir credit standards.If you’re not disciplined enough to create aworkable budget and stick to it, to work out arepayment plan with your creditors, or to keeptrack of your mounting bills, you might considercontacting a credit counseling organization. Manycredit counseling organizations are nonprofit andwork with you to solve your financial problems. Butremember that “nonprofit” status doesn’t guaranteefree, affordable, or even legitimate services. In fact,some credit counseling organizations — even somethat claim non-profit status — may charge high feesor hide their fees by pressuring consumers to make“voluntary” contributions that only cause more debt.Most credit counselors offer services throughlocal offices, the Internet, or on the telephone. Ifpossible, find an organization that offers in-personcounseling. Many universities, military bases,credit unions, housing authorities, and branchesof the U.S. Cooperative Extension Service operatenonprofit credit counseling programs. Your financialinstitution, local consumer protection agency, andfriends and family also may be good sources ofinformation and referrals.If you are considering filing for bankruptcy, beaware that bankruptcy laws require that you getcredit counseling from a government-approvedorganization within six months before you filefor bankruptcy relief. You can find a state-bystate list of government-approved organizations atwww.usdoj.gov/ust, the website of the U.S. TrusteeProgram. That’s the organization within the U.S.Department of Justice that supervises bankruptcycases and trustees. Be wary of credit counselingorganizations that say they are governmentapproved, but do not appear on the list of approvedorganizations.Reputable credit counseling organizations canadvise you on managing your money and debts, helpyou develop a budget, and offer free educationalmaterials and workshops. Their counselors arecertified and trained in the areas of consumer credit,money and debt management, and budgeting.Counselors discuss your entire financial situationwith you, and can help you develop a personalizedplan to solve your money problems. An initialcounseling session typically lasts an hour, with anoffer of follow-up sessions.Do-It-Yourself Check-UpRegardless of your credit history, financial advisorsand consumer advocates recommend reviewing yourcredit report periodically for three important reasons:1. The information in your credit report affectswhether you can get a loan or insurance —and how much you will have to pay for it.2. It’s important to make sure the information isaccurate, complete, and up-to-date before youapply for a loan for a major purchase like ahouse or car, buy insurance, or apply for a job.3. It can help you deter, detect and defendagainst identity theft. That’s when someoneuses your personal information — like your
FTC Facts For Consumers 7name, your Social Security number, or yourcredit card number — to commit fraud.Identity thieves may use your informationto open a new credit card account in yourname. Then, when they don’t pay the bills, thedelinquent account is reported on your creditreport. Inaccurate information like that couldaffect your ability to get credit, insurance, oreven a job.For More InformationTo learn how to improve your credit worthinessand find legitimate resources for low or no-costhelp, please see the following publications atftc.gov/credit.Access to Free Credit Reports — Explainswhy it is important to monitor your credithistory, how to request a report, and how todispute errors.n Yourto Dispute Credit Report Errors —Explains how to dispute and correct inaccurateinformation in your credit report. Includes asample dispute letter.n Howa Better Credit Report — Learn howto legally improve your credit report, how todeal with debt, how to spot credit-related scams,and more.n BuildingDeep in Debt — Discusses options to helpyou get back in the black, including: realisticbudgeting, credit counseling from a reputableorganization, debt consolidation, or bankruptcy.n KneeFitness: Choosing a Credit Counselor —Defines debt repayment plans, explains thedifferences between secured and unsecured debt,and offers questions to ask credit counselingagencies if you consider using their services.n FiscalThe FTC works for the consumer to preventfraudulent, deceptive, and unfair businesspractices in the marketplace and to provideinformation to help consumers spot, stop, andavoid them. To file a complaint or to get freeinformation on consumer issues, visit ftc.gov orcall toll-free, 1-877-FTC-HELP (1-877-382-4357);TTY: 1-866-653-4261. The FTC enters consumercomplaints into the Consumer Sentinel Network,a secure online database and investigative tool usedby hundreds of civil and criminal law enforcementagencies in the U.S. and abroad.Federal Trade CommissionBureau of Consumer ProtectionDivision of Consumer and Business Education
Annual Credit Report Request FormYou have the right to get a free copy of your credit file disclosure, commonly called a credit report, once every 12 months, from each ofthe nationwide consumer credit reporting companies - Equifax, Experian and TransUnion.For instant access to your free credit report, visit www.annualcreditreport.com.For more information on obtaining your free credit report, visit www.annualcreditreport.com or call 1-877-322-8228.Use this form if you prefer to write to request your credit report from any, or all, of the nationwide consumer credit reporting companies. Thefollowing information is required to process your request. Omission of any information may delay your request.Once complete, fold (do not staple or tape), place into a #10 envelope, affix required postage and mail to:Annual Credit Report Request Service P.O. Box 105281 Atlanta, GA 30348-5281.Please use a Black or Blue Pen and write your responses in PRINTED CAPITAL LETTERS without touching the sides of the boxes like the examples listed below:A B C D E F G H I J K L M N O P Q R S T U V W X Y ZSocial Security Number:0 1 2 3 4 5 6 7 8 9Date of Birth:--/Month/DayYearFold HereFold HereM.I.First NameJR, SR, III, etc.Last NameCurrent Mailing Address:House NumberStreet NameApartment Number / Private MailboxFor Puerto Rico Only: Print Urbanization NameCityStateZipCodePrevious Mailing Address (complete only if at current mailing address for less than two years):House NumberStreet NameFold HereFold HereFor Puerto Rico Only: Print Urbanization NameApartment Number / Private MailboxCityStateShade Circle Like This Not Like This I want a credit report from (shadeeach that you would like toreceive):EquifaxExperianZipCodeShade here if, for securityreasons, you want your creditreport to include no more thanthe last four digits of yourSocial Security Number.TransUnionIf additional information is needed to process your request, the consumer creditreporting company will contact you by mail.Your request will be processed within 15 days of receipt and then mailed to you.Copyright 2004, Central Source LLC31238
calls offering credit repair services. They all make the same claims: "Credit problems? No problem!" "We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!" "We can erase your bad credit — 100% guaranteed." "Create a new credit identity — legally." The Federal Trade Commission (FTC) says do
