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Consumer Guide to Good Credit

Consumer Guide to Good Credit

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Published by RedDawn
Credit Education
Credit Education

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Published by: RedDawn on Jan 21, 2008
Copyright:Attribution Non-commercial

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TABLE OF CONTENTS
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4Your Rights Under the Fair and Accurate Credit Transactions Act (FACTA), the Fair
Credit Reporting Act (FCRA), and the Fair Credit Billing Act (FCBA) . . . . . . . . . . . .5How To Obtain a Free Credit Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Warning Signs of Debt Trouble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
What To Do When You Can’t Pay Your Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8What Can Credit Counseling Do for You? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8How is a Debt Management Plan Reported to the Credit Bureaus? . . . . . . . . . . . . . .9Debt Settlement aka Debt Negotiation - What Is It? . . . . . . . . . . . . . . . . . . . . . . .9How is a Settled Account Reported to the Credit Bureaus? . . . . . . . . . . . . . . . . . .10
Take Control of Your Credit History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
The Importance of Having Good Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11What Information is Contained in My Credit Report? . . . . . . . . . . . . . . . . . . . . . .11Future Service Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11Reasons Credit is Denied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12A Word About Universal Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13Causes of Poor Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14You Can Opt Out of Credit Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14Get Yourself on the Do Not Call Registry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Your Credit Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Types of Credit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15Our Rights to Additional Free Credit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . .15Credit Bureau Contact Information for Ordering Your Report . . . . . . . . . . . . . . . .16
Disputing Inaccurate, Incomplete, or Outdated Data on Your Credit Report . . . .17
Dynamics of Disputing Inaccurate Information on Your Credit Report . . . . . . . . . . .17Addresses for Mailing Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17Basics of Disputing Erroneous or Stale Items in Your Credit Report . . . . . . . . . . . . .18What is E-OSCAR? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19Special Alert on Junk Debt Buyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19Types of Fair Credit Reporting Act & Fair Debt Collection Practices Act Violations . .19"Reinsertion" – Why Does It Happen? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20"Split" and "Mixed" Files – What Are These? . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
What is a FICO® or Credit Score? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Items That the FICO Scoring Model Ignores . . . . . . . . . . . . . . . . . . . . . . . . . . . .22Rate Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22How to Improve Your FICO Score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23What is Rapid Rescore? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23Credit Report Monitoring Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Collection Agencies and Credit Repair Clinics . . . . . . . . . . . . . . . . . . . . . . . . .24
The Fair Debt Collection Practices Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24Disputing a Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25Tips for Dealing with Debt Collectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25A Word About Credit Repair Clinics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25Frivolous Bombardment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26File Segregation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26The Law Protects You From Unethical Credit Repair . . . . . . . . . . . . . . . . . . . . . .26
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©2005 Springboard
 
TABLE OF CONTENTS
Identity Theft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Family and Friends – A Common Source of Identity Theft . . . . . . . . . . . . . . . . . . .28How Identity Thieves Operate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28Who is Most at Risk? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28How do Thieves Obtain Social Security Numbers? . . . . . . . . . . . . . . . . . . . . . . . .28How Can You Protect Yourself? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29If Your Identity is Stolen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30Resources for Identity Theft Victims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Practical Advice for Your Checking and Debit Accounts . . . . . . . . . . . . . . . . . .33
Your Checking/Debit History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33Get Checking! A Way To Rehabilitate Your Checking Account Privileges . . . . . . . . .34
Checking Account, Insurance, Tenant (Renter), and Medical "Credit Bureaus" . . .35Predatory Lending and Other Scams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Illegal Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36Advice and Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36How to File a Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36Don’t Become a Victim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37Don’t Be Misled with a Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37Real Estate Property Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37How Can You Protect Yourself? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38Prize Offers – Too Good to be True? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38Pyramid Schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38Pre-Paid Calling Card Scams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Special Problems of Previously Married Individuals . . . . . . . . . . . . . . . . . . . . .40
Frequently Asked Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Non-traditional Credit Reporting for Renters and Others With No Credit History:The New Frontier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43Your Credit Life After Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
The Bankruptcy Reform Act of 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44How Long Are Chapter 7 and Chapter 13 Reported on Your Credit Report? . . . . . . .44Credit Report Problems After Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44Bankruptcy "Relisting" – What It Does . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
More Consumer Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47Sample Dispute Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
Credit Report Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49Sample Dispute Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50Sample Settlement Letter for Collection Agency . . . . . . . . . . . . . . . . . . . . . . . .51Sample Settlement Letter for Original Creditor . . . . . . . . . . . . . . . . . . . . . . . . .52Sample Ceasing Communication Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53Sample Consumer Dispute Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54Sample Debt Validation Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55SCAN Report Order Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
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©2005 Springboard
 
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©2005 Springboard
ALGO ACERCA DE ESTA GUÍA
Siempre manteniendo nuestro compromiso de ayudar a otras personas, Springboard Non-Profit ConsumerCredit Management se enorgullece en presentarles este libreto informativo. Aquí, en SPRINGBOARD creemosen darles a nuestros clientes lo necesario para poder llegar a tomar decisiones financieras inteligentes.Muchos clientes vienen a nosotros pidiendo ayuda para los problemas que provienen cuando tienen deudasagobiantes. Nuestro sistema de pago de deudas ha ayudado a que miles de personas tomen control de susfinanzas. Pero nosotros no nos detenemos allí.Muchas personas contribuyeron con la información contenida en esta guía. Deseamos dejar constancia denuestro aprecio y agradecimiento para ellas y para aquellos que nos ayudaron en su producción.
EDITORES EJECUTIVOS
Dianne L. WilkmanPresident/CEOSpringboard Non-Profit Consumer Credit Management4351 Latham Street, Riverside, CA 92501800-947-3752education@credit.orgwww.credit.orgPaul Richard, RFCPresidentInstitute of Consumer Financial EducationPO Box 34070, San Diego, CA 92163-4070(619) 239-1401icfe@cox.netwww.icfe.info
ASSISTANT EDITORS AND TRANSLATION
Daniel Peña, Education Director, Springboard Non-Profit Consumer Credit ManagementMaria Stevens, Administrative Assistant, Springboard Non-Profit Consumer Credit Management
ACKNOWLEDGEMENTS
Desktop publishing support provided by Sharon Dizon, Education Department AssistantContent review provided by Crispin Luna, Luna Agency, 2531 State St., Suite F, Carlsbad, CA 92008
PRINTING
Dan Conger, T&V Printing, 7101 Jurupa Avenue #3, Riverside, CA 92504 (800) 876-8570 or (951) 353-8470tvprint@inland.netParte de los fondos fueron proporcionados bajo una beca de la Association of Independent Consumer CreditCounseling Agencies (AICCCA). Su Visión:
AICCCA representa los intereses comunes de las agencias que sonmiembros para asegurar que todos aquellos que buscan ayuda con problemas de deudas reciban la mejorcalidad de ayuda.
Su Misión
: Para actuar en sociedad para dar ayuda inigualada a los consumidores conangustia financiera y para que adquieran la sabiduría personal en finanzas. Para colaborar y facilitar unaasociación administrada y apoyada por sus miembros para el avance de los mejores intereses del consumidor,las agencias miembros de consejo de crédito y los compañeros acreedores. Para asegurar que sus miembrosmantengan los más altos criterios de integridad y confianza en colaboración con todos aquellos involucrados.Para representar los intereses de agencias miembros, instituciones que dan prestamos, a los que gobiernanen política, entidades de autorización y los que crean opiniones. Para proveer un foro de personasinteresadas a reunirse para discutir temas del mismo asunto.
AICCCAPMB 62611350 Random Hills Road, Ste. 800Fairfax, VA 22030(703) 934-6118assoc@aiccca.orgwww.aiccca.org
Notice: This publication is copyrighted. All rights are reserved. No part of this book may be used or reproduced in anymanner whatsoever without written permission of the Publisher, Springboard Non-Profit Consumer Credit Management.
La "Guía del Consumidor para un Buen Crédito" is available for customizing for outside companies underseparate license agreement. For customization and licensing information please contact:
EducationDepartment, Springboard Non-Profit Consumer Credit Management, 4351 Latham Street, Riverside, CA 92501. Tel:(951) 781-0114 Email: education@credit.org
 
About This Guide
Always maintaining our commitment to help others, Springboard Non-Profit Consumer CreditManagement is proud to present this informational booklet. At Springboard, we believe in providingconsumers with useful tools and all the necessary information to make wise decisions.Many individuals contributed to the information contained in this guide. We would like to thank allthose that helped in the fulfillment of this project.
EDITOR
Dianne L. WilkmanPresident/CEOSpringboard Non-Profit Consumer Credit Management4351 Latham Street, Riverside, CA 92501800-947-3752 ext. 702Dianne@credit.org
ASSISTANT EDITORS
Melinda Opperman, Southern Area Manager, SpringboardDee Ann Chandler, Education Director, SpringboardMaria Stevens, Administrative Assistant, Springboard
ACKNOWLEDGEMENTS
Content review provided by Paul Richard, President, Institute of Consumer Financial Educationwww.icfe.info, and Jeff Michael, author, “Repair Your Credit and Knock Out Your Debt”
PRINTING AND LAYOUT
Dan Conger, T&V Printing, 7101 Jurupa Avenue #3, Riverside, CA 92504 (800) 876-8570 or(951) 353-8470 tvprint@inland.net
Copyright Notice:
This publication is copyrighted. All rights are reserved. No part of this book may beused or reproduced in any manner whatsoever without written permission of the publisher,Springboard Non-profit Consumer Credit Management. The “Consumer Guide to Good Credit” isavailable for customizing under separate license agreement. For customization and licensinginformation please contact: Education Department, Springboard Non-Profit Consumer CreditManagement, 4351 Latham Street, Riverside, CA 92501. Telephone (951) 781-0114 ext. 750. Email:education@credit.org.
Legal Disclaimer:
Liability claims regarding damage caused by the use of any information providedwill be rejected. Information presented is to the best knowledge of the author and editors correct;however, if the reader intends to make use of any of the information presented in this publication,please verify information selected. No information provided here, or materials referenced, isintended to constitute legal advice. You should not rely on our statements (or materials referenced)for legal advice, and should always confirm such information with your lawyers, who should beresponsible for taking whatever steps are necessary to check all information and personally ensuringthat the advice they provide is based on accurate and complete information and research from anyavailable sources.SPRINGBOARD® and Bankruptcy Relist® are registered service marks of Springboard Non-profitConsumer Credit Management Inc.
ISBN # 0-9763589-2-1
Portions may be reprinted for educational purposes by media, government agencies and non-profitcommunity groups without written permission provided full credit is given.

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