Can I Legally Clear Bad Debts From My Credit Report?
By Brett Weiss, Maryland Bankruptcy Attorney on Jan 29, 2007 in Maryland
These scams sound great: Increase your credit score by hundreds of points! Remove late payments, bankruptcy, and judgments from your credit record! Qualify for car loans and mortgages! But ask yourself this: since we live in a society based on credit, don’t you think that something that if this sort of thing worked, everyone would do it? Of course, it doesn’t work, at least not for long.
Clean credit scams have been around as long as credit agencies. When people get into financial difficulty, negative information appears on their credit record, their credit scores drop, and it is harder to qualify to receive credit. Fixing this takes time and effort. There really are no shortcuts. As the former director of the Federal Trade Commission’s Bureau of Consumer Protection said, while “there are legitimate, not-for-profit credit counseling services, the FTC has never seen a legitimate credit repair company.”
The most common scams are:
- Getting a “new” social security number. This is touted as getting a brand new credit record. Typically, you apply for an Employer Identification Number and start using it as your social security number. Since you’ve incurred no credit under the new number, your account is clean! Just one problem—it’s illegal, a federal felony. And even if you don’t get caught, most lenders will look on a completely blank credit record for someone in their 30’s or 40’s as very suspect, making it difficult to obtain credit anyway.
- Removing Negative Credit Information. Federal law—the Fair Credit Reporting Act—allows you to dispute incorrect information on your credit report. When you send in a dispute letter, if the information isn’t verified within thirty days, it must be removed. What most “credit doctors” do is dispute all negative information, hope that the creditor won’t respond quickly, pull a copy of your credit report on day 31, and show you that, due to their hard work, all of the negative information has been removed. Unfortunately, in most cases, the creditor eventually responds, and places the correct negative information back on the credit record, making the credit “repair” pretty useless.
Don’t forget: No one can remove accurate negative information from your credit report, and no one has the “secret” ability to remove accurate negative information. Furthermore, you have the right to get a free copy of your credit report once a year with no strings attached. You can (and should) also dispute inaccurate information in your credit report yourself. The form letters and all you need to know are at the FTC website at www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.htm.
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