Category Archives: Fair Credit Reporting Act

Dallas Bankruptcy Attorney: ADD A STATEMENT TO YOUR CREDIT REPORT

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Have you ever had something happen that made you look bad, and you would have liked to explain yourself, but were never given the chance?  This happens on credit reports all the time.  You might have a great credit rating with no bad notations on your report for years, and then you lose your job.  A few months later, you are behind on your credit card, mortgage, and car payments, and your credit rating takes a hit.  After you find a new job and start making payments again, the blemishes on your credit report are still there, and they can stay there for seven years!

 

There is a provision of the Fair Credit Reporting Act that allows you to add a 100-word statement to your credit report.  You can use this statement to explain that a bad notation is a mistake, dispute the information on your credit report, or simply to explain that you just went through a tough financial period but things are better now and you are making your payments on time.  Keep in mind that this explanation will not increase your credit score, but it may give lenders more confidence in your ability and intent to repay debts in a timely fashion.  Make sure that the statement is provided to each of the big three credit agencies which are Experian, Transunion, and Equifax.  Each agency has their own procedure for adding consumer statements to credit reports, so be sure to contact the agency to find out their requirements.

Dallas Bankruptcy: HOW LONG WILL IT STAY ON MY CREDIT REPORT?

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Dallas Bankruptcy: How long will it stay on my credit report? It depends on what Chapter you file under.  Chapter 13 bankruptcy cases will stay on a credit report for seven years from the date the case is filed.  Most Chapter 13 bankruptcy cases last five years, so after the case is completed the bankruptcy will be on your credit report for two more years.  Chapter 7 bankruptcy cases remain on a credit report for ten years from the date the case is filed.

It’s important to understand that having a bankruptcy listed on a credit report doesn’t necessarily guarantee a bad credit score.  Credit reports are made up of many positive and negative notations.  A bankruptcy is just one notation.  Most of my clients tell me that their credit score is higher a year after filing bankruptcy than it was before filing because they have discharged their debts and are better able to pay their bills on time.

FILING BANKRUPTCY MAY IMPROVE YOUR CREDIT RATING

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Many people do not file bankruptcy because they fear that it will ruin their credit score.  The reality is that by the time most people start thinking about filing bankruptcy, they already have a poor credit rating, and for those people, filing bankruptcy may in fact improve their credit rating.

There are several reasons why debtors who file Chapter 13 bankruptcy may notice that their credit rating improves soon after filing bankruptcy.  First, Chapter 13 bankruptcy reorganizes debts through a plan that allows repayment of a portion or all of the person’s debts in a way that they can afford.  By making payments on time, debtors begin to improve their credit score.  Second, many debtors file Chapter 13 bankruptcy in order to stop foreclosures.  A Chapter 13 bankruptcy filing looks much better on a credit report than a foreclosure.  It indicates to creditors that the debtor is trying to repay their mortgage arrears, rather than simply defaulting on their mortgage loan.

 

Chapter 7 bankruptcy will usually improve a debtors credit rating as well.  Chapter 7 bankruptcy cases are generally completed within four or five months after filing the case.  After the debtor receives a discharge, their credit report is largely wiped clean, and the records of unpaid debts and late payments are removed from their credit report.

 

If your goal is to improve your credit rating, bankruptcy should be considered.  I speak with dozens of people each month about their financial situation, and for many of them bankruptcy is not the best choice.  Everyone’s financial situation is different, and it is important to consult a competent bankruptcy attorney before deciding to file bankruptcy.

A funny story from the world of credit…

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Okay, since here at DFW/Denton/Lewisville Bankruptcy we’re always addressing serious topics, I decided to keep it light today.

There’s a story buzzing around the internet that a 3 year-old recently got an American Express Gold Card application in the mail. Also, there are many report of dogs and cats getting credit card offers. If that’s the case, why is it so hard for qualified folks to get the applications??

Credit Repair Companies – Are They A Scam??

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Every time the economy cycles down, businesses taking advantage of the downturn arise. The recent recession (or what some economists have actually labeled, “Depression”) and resulting credit crunch have resulted in credit issues for many consumers, and a related dip in their credit scores. Here come Credit Repair companies to the rescue, right? They can raise credit scores by deleting negative information like it never happened? Late payments? Settlements? Bankruptcies? No problem, right? WRONG.

Federal law, specifically the Fair Credit Reporting Act (FCRA), is very specific as to what can go on a credit report and what can come off the credit report, and when. Most credit repair companies sell a misconception that they can delete negative information off a credit report. Not necessarily true. The FCRA expressly prohibits the removal of a negative item if the other requirements as to the reporting of that item are met (i.e. the reporting is accurate (the late payment really happened), complete and verifiable). If the negative item honestly occurred and is reported correctly, Federal law prohibits its removal. I’m sure I’ll get comments from credit repair folks saying that’s not true, but it is. Read the law.

The lesson here is that consumers shouldn’t pay a company to do something that’s against Federal law. Honest credit repair takes time. Some helpful things to do to repair your credit:

1) Pay bills on time.

2) Don’t max out your accounts.

3) Don’t continue to default.

There is much more detailed info out there on this, but for the most helpful advice on credit repair, visit www.ftc.gov.

Now, all that being said, I am aware of some very good, honest, credit repair companies.  You can do credit repair yourself -  all three credit bureaus have a very easy online dispute process where you can dispute inaccurate items on your credit report. However, credit repair is like anything else you can do yourself – you may want to pay someone with more expertise. Just do your due diligence and don’t get scammed by a company that makes promises they can’t deliver on.