Credit Bureaus and Clearing Your Credit

A direct result of credit problems is a poor credit report. If you want to reestablish credit after having a poor credit history, you must clear your credit report of the poor credit items. Let me state right up front, there is no real sure way to clear a bad credit file. That is a fact! What I do know is that the Credit Bureaus are franchised out and the membership of the credit bureau does not take lightly to bad credit items removed from a file. A bad file that conceivably turned good poses a risk to the credit companies. That person can turn around, load up on credit and file a bankruptcy as easily as we could slip on a piece of ice. Did I say membership? That is correct. The local franchises sell memberships to the various business in the area. When a member business needs a report, they get it from that bureau. Now you see why I doubt the claims, by credit clearing companies, that they guarantee you a clean report. The only way I know of is highly questionable in terms of being legal. I am going to show you the only legitimate way, and it cannot be guaranteed. Here is what you need to know.

There are 3 major credit bureaus today. I am not sure on who owns who but in the 90's there were many mergers of smaller bureaus. The 3 big boys on the block are Trans Union, Experian which once was the TRW Credit Bureau and Equifax. What we will tell you, you must do with all 3 bureaus. While each bureau is slightly different, they all perform the same function. To have completely clear credit reports you will have to clear bad credit items with each credit bureau. I must tell you that there may be items on one report that are not on the other because the credit company may not be a member of that bureau.

First things first. You need a credit report to start with. If you buy them it could cost you as much as $15 for each. To get a FREE CREDIT REPORT, you do not need to buy anything. Once a year you are entitled to a FREE credit report from each Credit Bureau. 1-877-322-8228 is the number to this service as of the printing of this e-book. Be careful that you are not ordering a "watchdog service" for your credit. They want to sell you on the FICO scores, which you do not need. You already know your credit is in the dumpster. Otherwise if you are not eligible for the FREE report, what you need to do is apply for a credit card and wait for the rejection. Once you get the rejection letter, look at which bureaus were used. By law, you are entitled to receive a free report from the reporting bureau with no strings attached. You need to get rejected from each of the 3 bureaus in order to get free reports from each. A little hint here to make this easier, local banks tend to use local bureaus, so find out which bureau services your immediate area. Apply there first. Visa and Master Card tend to use Trans Union. The Oil companies tend to use Experian.

Equifax is based in Atlanta so they maybe heavy in the Atlanta Ga. area. The nationally based Credit Bureaus get their information from the local bureaus since they are on the same computer system. If you by chance get the loan or credit card, you then know your credit report is clear. At your local credit bureau a counselor will go over your file with you. Whatever is said will probably be true on all 3 bureaus. Make sure you understand exactly what is on the report. Try to figure out which credit companies are on which system. This will help you. Once you have your 3 reports in hand you are ready to start the process.

The next step is to become a detective. What you need to do is to find out what creditors used the particular system that you were reported from. The object here is to find creditors who do not use this reporting system. To clear your record you must dispute every item on the report which is considered a negative item, EVEN IF THE ITEM IS TRUE!! When you dispute an item on the report, the credit bureau must verify the account. If the bureau cannot verify the account, the credit bureau is required by law to remove the negative item from your credit report. The law states that the credit bureau must remove all unverified information within a reasonable period of time. By reasonable standards the credit bureaus think that means when ever they feel like it.

Reasonable is actually figured out to be 30days. You will have to continually badger the credit bureau to get on the ball and remove outdated and non-verified information. After the credit bureau receives verification, or if they do not receive verification, they must send you an updated report. In most cases you will notice that nothing much was done. In rare cases you will find major changes. At this point you must get tough with them. Remember, they are working for the creditor not you. You must tell them, that if they do not correct the report, you will file a lawsuit against them. At this point they will actually do what they were supposed to do the first time. When you receive the second updated report, you will now see exactly what will remain on your credit report and what was removed. Remember, I told you to hang on to the original reports. This way you will know for sure what is going on. You will be surprised on how many negative items will disappear. It is important to keep copies of all reports that you receive, so that you can always compare them and measure progress. In order to get credit, your report must be 100% free of negative credit information. Even the smallest notation can ruin your chances of getting a loan from any bank.

If there are still bad credit items on your record, keep disputing them even if they are true and keep insisting that the credit bureau verify each item. It is the credit bureaus responsibility to prove the accuracy of the information on your credit record. This should be done in 30 days but it can take much longer.

When your credit record is as clear as possible but there are still some bad credit items, then you must contact the creditor who actually made the report. Remember, any information that is older than 7 years old must be removed and if there is a prior bankruptcy that information must be removed after 10 years. Older items are less likely to remain. Write to each of the creditors with an explanation of why you need to have the item removed. Make up some sorry excuse, do what ever you have to do to get them to oblige. Some will and some will not. If your letter to the creditors sound sincere and like you had a true hardship that could not be avoided like spending the summer in the Bahamas and you just could not make the payments, (just kidding) some creditors will remove the items as a gesture of good will.

If the creditor fails to respond to your request, keep writing again and again to them, until they get sick and tired of hearing from you. The creditor may remove the item because they are tired of receiving letters from you. Clearing credit reports can be frustrating and extremely hard work. Keep accurate records on everything you do when it comes to the credit bureaus. If you have had a bad credit account that was charged off as a bad debt by a creditor, it may be necessary to negotiate with that creditor for removal of the bad credit item. You may have to do that with one of your other creditors that has not been charged off.

For example, you may have to pay a creditor a small percentage of the original debt owed to have the account removed. if your debt was $500.00, you may need to pay the creditor anywhere from $.10 on a dollar to 50% of the original balance in exchange for the removal of the information from your credit record. Old credit information is easier to remove than current items. This process can take as long as 2-3 years. It can be done legally but it takes time and a LOT of patience. Often, as you add new information with good credit items through your secure credit cards etc, you will see that the older items will be dropped from your report. As you reestablish your credit, keep in mind the information on developing good credit habits. Be careful not to get too deep into debt. Clearing your credit report a second time is almost impossible.

Joseph M. Sabol, a graduate of the Pennsylvania State University School of Business with two degrees in business sheds a different light on money, credit and banking. He has written 2 E-books. For further information, go to http://www.creditmoneyandyou.com or http://www.makeyourmoneywork.net.