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What are set forth below are some of the more common credit reporting myths. The answers to the myths are not intended as legal advice; but do provide the viewer with a better understanding of what an attorney can do to help "clean-up" your credit report and restore your credit score.

Credit Myth 1

"When I pay off a past-due account, such as a charge-off or a collection account, it will show "paid" and will no longer be negative"

It is quite difficult to restore your credit without satisfying your outstanding debts; but by paying an outstanding, delinquent debt, you will change the account status to "paid collection," or "paid was late," or "paid was charged off", which will still stand out as a negative entry. When you have an outstanding debt, it is almost always advisable to seek professional help so that you may settle your debts while creating a reasonable possibility of deletion of the negative listing at the same time.

Credit Myth 2

"If I succeed in deleting a negative item, it will just come right back on my credit report."

Credit bureaus will often temporarily delete a negative listing if they have not heard back from a credit grantor after approximately thirty days. If the credit grantor responds late, but verifies the negative listing, the credit bureau will often reinsert the negative listing onto the credit report. This is often known as a "soft delete." Usually, though, the creditor simply fails to respond and the negative listing is permanently deleted. If the item is verified by the credit grantor, either before thirty days or after, the account may still be challenged again at some future time.

Credit Myth 3

"There are negative listings, such as bankruptcies and foreclosures, that are impossible to remove from the credit report."

There is no type of negative listing that has not been removed from a credit report at least a thousands times. Negative items such as a bankruptcy and/or a foreclosure are more difficult to remove from a credit report, however, they can still be removed. Additionally, judgments and tax liens are also able to be removed.

Credit Myth 4

"It is illegal for creditors to take a negative, accurate listing off my credit report."

The law requires that these items remain on the credit report for at least seven (7) years. When you speak with credit grantors, collection agencies, and/or credit bureaus, they will typically try to tell you otherwise; but the law demands that negative listings appear on your credit report for no longer than seven (7) years. The credit grantor, and/or the credit bureau, can choose to delete the negative credit listing whenever they see fit; however, they will rarely do so on their own volition. Thus, you need to be the one to take action and demand that entries over the seven year period be removed from your credit report.

Credit Myth 5

"If I declare bankruptcy, I can begin my credit report all over with a clean slate."

Many bankruptcy attorneys do not adequately understand and/or explain the effects of a bankruptcy to their clients. When you file bankruptcy, every credit account you included in bankruptcy will become an "included in bankruptcy" account. A bankruptcy filing and bankruptcy discharge listing will also appear in the court records section of your credit report. Because so many negative items are attached to a bankruptcy, it becomes difficult to remove all traces of the bad credit. If at all possible, you should avoid bankruptcy and try to restore your credit instead.

Credit Myth 6

"If you are not satisfied with the results of your credit bureau challenge, you may file a "100-word statement" on your credit report explaining your side of the story."

Creditors will read your statement and will take it into consideration, for whatever that is worth. That said, the statement only serves to verify some of the negative listings on the credit report. Make 100-word statements the first things you delete from your credit file. Consequently, you should not submit a 100-word statement.

Credit Myth 7

"By changing the numbers in my Social Security Number (SSN), or by using an EIN tax number, or a TIN tax number, I can fool the credit bureaus into creating a completely clean, new credit file under my name."

This scheme has proven to be extremely complex, difficult, and illegal. Lying about any personal information on a credit application is usually a criminal offense. Using these "file segregation" schemes requires an enormous amount of coordination, not to mention personal risk, and is therefore, not an advisable course of action.

Credit Myth 8

"If I build enough good credit, it will offset my bad credit and make me credit worthy."

Any amount of bad credit is devastating to your chances of achieving a good credit score and being approved by a credit grantor. Most credit grantors never actually look at your credit report. Usually, a computer pulls your credit report, rates your credit standing, (otherwise known as a FICO Score), evidence of indebtedness, and stability, then remits an acceptance or a denial. Even one or two slow pays will usually trigger a credit card or personal loan denial. You will probably come to find that a little bad credit, regardless of how much good credit you have, is still an unacceptable barrier to credit approval.

Credit Myth 9

"I can improve my credit score by closing down some credit cards.

For starters, closing down credit cards usually leads to a significant decrease in the credit score. Additionally, consumers focus far too heavily on positive credit instead of negative credit, which still appears on their credit report. Negative credit effectively negates any amount of positive credit when the credit score is calculated.

Credit Myth 10

"Disputing the credit report is easy and any consumer can do it himself for the price of a few postage stamps."

Disputing any credit report is relatively easy; however, getting results from the credit bureaus is a bit more difficult, complex, and oftentimes infuriating. Restoring your own credit report is like repairing your own transmission or representing yourself in court; it is possible, but you must decide if you are willing to take the time and assume the risks of doing it yourself. Hiring an attorney to handle the work is typically the better choice and attorneys are typically able to obtain a better result.

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