Credit Bureau Reports and Your Credit History

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Credit Bureau Reports and Your Credit History
A number of my clients have recently learned about their credit files and in some cases they have learned the hard way. The following story is not intended to point a finger at any one person or gender. I have seen this same story from both sides of the fence and both spouses at fault.

One client going through a nasty divorce needed to refinance his mortgage in order to pay his spouse her portion of the equity in their home as part of their divorce settlement. He had always paid CASH for most items and used credit very little. He had a sizable savings which was about depleted during the divorce. He knew his credit was good because he had very little of it-- or so he thought.

He went to his current mortgage company and requested they refinance his home. They felt there would be no problem based on his payment record with them. As a matter of normal operating procedure they obtained an up to date credit history from him and requested a new credit bureau file from the local consumer reporting agency.

When his credit bureau file was received the mortgage company called him and apologized and stated they could NOT help him at that time. He would need to clear up his credit file and reapply after six months. No way was his "X" going to wait six more months for the divorce settlement.. He was frantic and upset to say the least. What was he going to do? How could he settle the divorce without having to sell his home if he couldn't get the mortgage refinanced? He only owed about $25,000.00 on a home that appraised for $76,000.00. It just had to be a mistake. He only needed $25,000.00 to finalize the divorce. Even if he refinanced the property for $50,000.00 he would still have $25,000.00 worth of equity.

He had no idea about his rights under the Consumer Reporting Act. Little did he know that if turned down for credit he was entitled to a copy of his credit bureau file. Anytime you are rejected by a credit company and they obtained a copy of your credit file, that reporting agency is required by law to supply you with a FREE copy of the report, providing you request a copy within 60 days of your rejection.

He immediately requested a copy of the credit bureau report. He found that not only one agency was used but two reports from different agencies were requested by the mortgage company. This is not unusual. Many mortgage companies will request a copy from the local reporting agency and they will also request a report from "Equifax" which specializes in mortgage applicant reports.

While reviewing both reports he learned some very distressful information. It appeared that several credit card companies had issued credit to him and the accounts had been open for many months. To make matters worse the payment records reflected an "I 2" rating which indicated payments had been paid more than 30 days late but not 60 days late. He couldn't understand this since he had never applied for their credit card and had never purchased anything on credit with them.

In addition to the "I 2" ratings for several credit cards he found there was an existing charge off of a medical bill being reported against him. Several years earlier their infant son passed away and he new all medical bills had been paid by his insurance company.

Immediately he had to begin trying to clear up his credit bureau report. Until he got some things cleared up it appeared he would have no chance in getting a new mortgage loan. He tried unsuccessfully with two different mortgage companies and was turned down by both.

After writing to several companies and requesting copies of the original credit applications, and sending written notice to the reporting agencies things began to get brighter. The credit companies agreed to remove his name from accounts if his former spouse would give them written verification that she opened the accounts without her husband's knowledge. They further had to have a statement from both parties that he had never personally charged any merchandise on the accounts and never made payments personally on the accounts. This would indicate to the credit companies that he had NO knowledge of the accounts in any way.

The credit companies required this from her in writing in order to remove him from their files. After obtaining the required information the credit companies notified the reporting agencies of the corrections and the necessity of removing the derogatory information in his personal file.

The unpaid charged off medical bill was an error totally on the hospitals part. They had in fact been paid in full but had erroneously reported a small balance as being charged off. After he made a special trip to their billing office with copies of their checks and insurance settlements they agreed they had made an error. They immediately notified the reporting agencies of the error and had it removed from his file.

After we had done a lot of letter writing together he was able to clear up all the derogatory information in his credit files. More importantly he reapplied for a new mortgage loan which went through in flying colors. He got the money he needed to pay off his spouse which was a requirement he had to meet to settle the divorce.

The moral of this story is not one thing but several. First of all both spouses should be actively involved in all aspects of the household finances. Secondly, you should occasionally obtain a copy of your personal credit bureau file and make certain what is stated is correct. Many errors have been made on credit files and in many cases there are horrific stories of what people have been through trying to get them corrected. The quicker you learn of any problem on your file the easier it will be to correct it. Thirdly, you should take the time to learn what your RIGHTS and RESPONSIBILITIES are under the consumer protection laws.

Surf the net. There is an abundance of information about the consumer protection laws. It is not that difficult to understand.

You can obtain information about consumer reporting agencies and how to obtain your own credit bureau files. TRW Information Services has a website full of information at (http://www.trw.com/iss/is/isdiv.html). You can order one FREE copy of your personal file immediately. This site gives you all the information you need to avoid having happen to you what has happened to many others regarding incorrect information. TRW is the only agency I've found so far that will send you ONE FREE REPORT.

(editor's note: since the time of this article, TRW has stopped offering a free report. You are still eligible for a free report IF you have been turned down for credit.)

Equifax Information Service can be found at (http://www.equifax.com). It appears you can get a free report only providing you have been turned down recently. This is in compliance with the Fair Credit Reporting Act. If however you have not been denied credit but still wish to see a copy of their report, you can order one for a nominal charge.

If you are wondering is it necessary to obtain a report from more than one agency, the answer is YES. There are several reporting agencies in my area and in many cases I have found different information on the same person being reported through these different agencies. To be sure what is being reported by all agencies you will need to obtain their individual files.

I commend those many readers I've been reading about in the Dollar Stretcher for their ingenious ways of making a little go farther.

I want to encourage everyone to continue stretching in new ways, in new directions. Just like many of you I only knew of one way to pay bills. That was the way I saw my parents struggle and pay their obligations. It wasn't until several years ago I found a different method of paying bills. All my clients say they would never go back to the old way they paid bills now that they have found the creditech way. If you have any questions that I might be able to assist you with I encourage you to email me at (jmann@creditech.com). If you want additional information about this new budgeting approach send your email to (info@creditech.com) and we will be happy to assist you.

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