Helpful Hints on Improving Credit Reports

The Lawyer's United for Debt Relief financial plan enables you to begin to rebuild your credit worthiness as it relates to your credit report. As you know falling behind on bills does adversely effect your credit report, however, as you begin to make payments to your trust account and Lawyers United begins to regularly pay your bills, your credit report should begin to improve over a period of time.

CAN YOUR CREDIT REPORT IMPROVE?

Negotiations with the creditor (or simple payment) can correct the current status of an account. Nevertheless the original delinquency will still appear in the credit history part of the credit report. Special attention must be taken to clear up this older information.

An expert on credit reports recently stated:

"There are two ways of enlisting the creditor's assistance to clean up older blemishes. One way is for the creditor to contact the agency and correct the erroneous or incomplete credit history. For example, the creditor could agree to contact the agency and indicate that there was good reason for the consumer's late payment and the payment had not in fact been delinquent. The other approach is for the creditor to agree not to verify its original information if asked by the reporting industry. Then, when the consumer disputes the item, the information will not be verified on re-investigation or will have to be deleted."

Creditors will have differing views on these two options. Some creditors will refuse to alter earlier information, insisting that it was correct. Consumers in a negotiation will thus have to show to these creditors why the originally reported information was not fully accurate or complete. Of course, a creditor's main interest is recovering as much money from the delinquent account as possible, but some creditors will also be concerned with the integrity of the credit reporting process. An important method of clearing up a credit record is to dispute with the reporting agency negative items appearing in the file. In brief, a consumer can dispute the accuracy or completeness of the items in the file. Unless this dispute is frivolous or irrelevant, the agency must reinvestigate the item, and correct or delete it if applicable, and must also delete the disputed information if it cannot be verified. All future reports must contain the corrected information and must not contain the deleted information. The consumer can also require the agency to notify past report users of the correction or deletion.

Consumers should dispute all items that are inaccurate. The consumer should also dispute any item that is incomplete, that is, it does not tell the whole picture. For example, a creditor may have orally allowed the consumer to make late payments, without disclosing that the creditor would report the amount as delinquent. Or the consumer may have paid late because there was problems with the related merchandise. The consumer did not make payments until the problem was solved.

CREDIT REPORTING

Agencies will usually re-investigate items, and will not delete any item simply because the consumer disputes it. Some times agencies will refuse to re-investigate because the dispute appears to be frivolous or irrelevant. To avoid this, make sure not to use a form provided by a credit repair agency. Reporting agencies often will ignore these forms completely. Instead use the reporting agencies own form or simply a letter drafted by the consumer. Be specific and precise as to the dispute. Do not dispute everything in the file, but specify certain items with clear reasons why the items themselves are inaccurate or incomplete.

If a dispute is not frivolous or irrelevant, the agency must reinvestigate, at least by asking the original source of the information what they think of the consumer's dispute. If the stores cannot verify the original item, the consumer's view must prevail. Thus if the consumer disputes that the loan was ever delinquent (because the creditor had agreed to delay payments, because the consumer was never late in making payments, or the consumer never had an account with the creditor), the agency will have to ask the creditor if that was the case. If the creditor fails to respond, the record of the delinquency must be deleted. In fact, the older a debt, the greater the difficulty the agency is going to have in confirming the information with the original source. The creditor may be out of business or not have saved files going back for five years.

"WHY LUDR FINANCIAL PLANS MIGHT KEEP YOUR CREDIT REPORT"

Part of a consumer's credit report will list current accounts indicating how many days each account is delinquent. This information will be updated, often on a monthly basis, by the applicable creditor. As a result, this portion of the report will continuously be replaced by more current information. Old delinquencies will disappear if the consumer catches up on payments, the amount owing will change, and the summary status of the account will change as payments are made. This portion of the consumer report is usually of especial interest to a creditor or other report user.

Elsewhere on the report, the agency will include historical information on defaults, delinquencies, and the like. For example, the Equifax report lists the current status of each account, and then provides a summary payment history. It lists the number of times any of the consumer accounts were 30, 60 or 90 days past due, the date of the most recent delinquency, and the date of the most severe delinquency.

Because the current status of the listed accounts is generally of greater relevance to potential creditors than the summary of payment history, one straightforward approach to cleaning up a credit record is to clear up the current status of delinquent accounts. The simplest, but not necessarily the best, option for the consumer is to bring the account up to date. Usually, though, the consumer did not pay the account because he or she did not have sufficient income to make the payment or there are more pressing accounts to pay.

A better approach for the consumer may be to negotiate a repayment plan with the creditor for amounts less than the scheduled payments. This is what Lawyers United for Debt Relief have done for you. It may be that the creditor will accept one half or less of the amount due, paid out over a series of months, rather than receive nothing. It is critical though that consumers only agree to modified payment schedules that they can meet, while still being able to keep current on their other loan and financial obligations. A creditor may be less likely to agree to a second repayment agreement if the consumer fails to make payments as negotiated.

Any negotiated repayment agreement should require the creditor to supply updated account information to all relevant reporting agencies indicating the account is now current. Only when the consumer misses a payment pursuant to the repayment agreement can the creditor report the account as delinquent. Sometimes, it may be simplest for the creditor to mark the old account paid in full, and set up a new account with the consumer under a new number, and report that new account status to the reporting agency.

The negotiation with the creditor can occur either before or after the account becomes delinquent. From the point of view of the consumer's credit report, negotiation before an account is delinquent is preferable. Not only will the report show no delinquency in the account's current status, but there will be no history in the file of a default or delinquency relating to the account. Unfortunately, some creditors are not willing to negotiate repayment terms until a consumer is delinquent.

In any negotiation Lawyer's United for Debt Relief is not affected by threats to turn accounts over for collection (collectors cannot do anything to a consumer that the creditor could not). Similarly, the threat to furnish a negative credit report should not be effective because the creditor has already done so, and the issue in the negotiation is what type of payment will the lender accept in return for cleaning up the credit record.

Working out a repayment agreement will not alter the credit history portion of a consumer report, but will only clean up the current status of the account. That is the account will be listed as current, but the report is likely to indicate that at one time the account was delinquent.

As Lawyers United for Debt Relief continues to pay on your debts, on a timely and regular basis, your credit report should improve. You may want to use some of the information referred to above in attempting to correct or delete adverse comments on your credit report. Attached is some information from the Federal Trade Commission, which enforces the Fair Credit Reporting Act, on how to correct inaccurate information appearing on your report.