For some problems, there are no quick
A bad credit record is one of them.
Despite all the ads that promise to
clear up your credit history, there
is no fast way to erase negative information
in your files if the information is
" 'Credit repair' is really
a misnomer," says Paul S. Richard,
RFC, executive director of the San
Diego-based nonprofit Institute of
Consumer Financial Education. "If
something is genuinely broken, you
don't fix it. The only thing that
works is time."
Deanne Loonin, staff attorney with
the National Consumer Law Center in
Boston and co-author of the book "Credit
"If there is bad information
on your report that is accurate,"
she says, "there is little you
can do except wait until the information
Some San Diegans, however, have learned
this lesson the hard way after wasting
money on fraudulent credit-repair
Unfortunately, this is an all-too-common
scenario, according to credit counselors,
attorneys and law enforcement officials
who try to help those with debt and
credit problems. Authorities say such
schemes almost never provide consumers
a service of real value.
That shouldn't be so surprising.
Borrowers themselves are the only
ones who can positively impact their
credit records – by changing their
Many people with credit problems,
however, don't really want to change,
Richard says. That's why they fall
for the false salvation of credit-repair
gimmicks: "All the consumers
want is to continue spending."
For those who do want what a good
credit record can bring – lower interest
rates on credit cards, the ability
to buy a home and even the opportunity
for better jobs – there is hope. But
it will mean learning to live within
a budget and being vigilant about
making payments on time.
"You can do a lot to rebuild
your credit," Loonin says, "but
only if you're back on your feet financially."
Here's how to get started:
your cash flow under control. You
need to know how much money is coming
in each month, how much is going out,
and exactly how you are spending each
dollar. The best approach is to keep
track of everything you spend for
two months. If you seem to have more
"month" than money and you're
having trouble devising a budget,
you can take a class on budgeting
at Springboard Non-Profit Consumer
Credit Management. For information,
call (888) 462-2227 or visit the following
Web site: www.credit.org.
Understand how credit bureaus work.
These for-profit companies gather
information on the credit histories
of consumers, then sell them to lenders,
banks, insurance companies and landlords.
The sources of their information are
usually creditors and collection agencies.
But they also search legal records
for bankruptcies, judgments and property
Your credit history lists your different
accounts, how long you've had them,
how much credit you've received and
your repayment record.
"A company looks at your credit
history to see if they can make money
doing business with you," Richard
says. If your history shows a poor
track record of repayments, companies
will conclude they could lose money
extending you credit.
Order copies of your credit report.
It's smart to order copies of your
credit report from all three of the
major credit bureaus. Reports typically
cost about $9 each or $35 for all
three when you order them all at once
through online sites such as www.qspace.com
Here's how to contact the three credit
bureaus individually: Equifax, P.O.
Box 105873, Atlanta, GA 30348, (800)
Experian, National Consumers Assistance
Center, P.O. Box 2002, Allen, TX 75013,
(888) 397-3742, www.experian.com;
Trans Union, Consumer Disclosure Center,
P.O. Box 1000, Chester, PA 19022,
(800) 888-4213, www.tuc.com.
Federal law entitles you to a free
copy of your credit report if you:
have been denied credit because of
information in the report and you
request a copy within 60 days; are
unemployed and intend to apply for
a job within 60 days of your request;
receive public assistance; or believe
your report contains errors due to
Look for information that is out
of date or incorrect. Negative information
that is accurate becomes out of date
at a certain point, notes Loonin.
After seven years, lawsuits, paid
tax liens, late payments and accounts
sent out for collection should drop
off your record.
Bankruptcies are supposed to fall
away 10 years after discharge, though
most Chapter 13 bankruptcies are listed
for only seven years. Credit inquiries,
or requests to see your report, should
stay on your report no more than two
In addition, check for the following
errors: incorrect name; incorrect
Social Security number; incorrect
account histories; and accounts listed
as open that have been closed. If
you find an error, complete a "request
for reinvestigation" form from
the credit bureau and send it with
a letter explaining what is wrong.
The bureau must look into the matter
and contact you within 30 days. If
you are trying to get a mortgage or
a car loan, you can request a rush
Ask the credit bureaus to include
positive information. If you're making
payments on time to an account and
that information isn't being reflected
on your credit reports, mail your
recent account statements to the credit
bureaus and ask them to include that
Use credit to get credit. You need
to show a history of good credit repayment.
You can achieve this by doing something
as simple as getting a credit card,
making small purchases each month
and paying them off on time.
Be patient. It might take as long
as two years for your credit to recover
to the point where you can get a credit
card, and it can take as long as four
years to qualify for a mortgage.
To order the book "Credit Repair"
($21.99) from self-help publisher
Nolo, visit www.nolo.com or call (800)
728-3555. To order the ICFE's "The
Do-It-Yourself Credit File Correction
Guide," order online at www.financial-education-icfe.org
or send $12.78 to ICFE, P.O. Box 34070,
San Diego, CA 92163.
Perry can be reached at