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City of Chicago Richard M. Daley, Mayor
Department of Business Affairs and Consumer Protection Norma I. Reyes, Commissioner
10 Things to know about Credit
This booklet will help you understand your rights when it comes to your credit and how to avoid becoming a victim of fraud.
1 What is credit?
C redit is money that a lender gives to a borrower on condition of repayment over a certain time period. People obtain credit through various forms such as credit cards, mortgages, or car loans. There are many benefits to building a good credit history and obtaining low cost lines of credit. Bad credit can happen to anybody, and unfortunately, there are those who try to take advantage of people in need of credit, or in need of repairing damaged credit.
4 Know the signs of a credit
Beware of companies that: • laim they can rid you of your negative credit inforC mation, even though it is accurate. • ecommend that you do not contact any of the three R major nationwide credit reporting companies directly, or advise you to dispute all the information in your credit report, even though it is accurate. • uggest you create a new credit identity by applying S for an Employer Identification Number (EIN) to use in place of your Social Security Number.
2 Your credit report
Your credit report may contain information about where you live, how and when you pay your bills, and whether you’ve been sued, arrested or filed for bankruptcy. Businesses may use this information to evaluate your applications for credit. Consumers are entitled to a free credit report, when requested, every twelve months, from each of the nationwide consumer credit reporting companies: Equifax, Experian and Trans Union. To request your free credit report visit www.annualcreditreport.com or call toll-free at 1-877-322-8228.
TIP: Credit repair companies must register with the Illinois Secretary of State before conducting business. Charging up-front fees before any services are performed is not allowed without filing a bond with the Illinois Secretary of State. Only a few, regulated professions can charge up-front fees such as banks, lawyers, mortgage or real estate brokers. To check if a company is registered and bonded call the Secretary of State at 217-782-7017.
Do’s and Don’ts
Credit repair companies are required to provide the following:
• written contract outlining your rights and obligations, A payment terms, a description of the services the company will perform, guarantees, and how long it will take to achieve the result. • copy of the “Consumer Credit File Rights Under State A and Federal Law” before you sign a contract. • notice of cancellation that you may use to cancel a A contract within three business days.
3 Dealing with bad credit
Bad credit takes time to repair, but some credit repair companies will make claims that they can erase your bad credit, or give you a new credit identity. Consumers should beware of these claims because they are typical signs of a scam. The truth is that only the passage of time can repair credit. Legitimate credit repair companies typically will not make these claims. Repairing your credit is attainable, but there are no quick fixes. With a conscious effort and sticking to a personal debt repayment plan, a credit report can be repaired. In most cases, negative items are erased from a consumer’s credit history after 7 years, and 10 years for Chapter 11 bankruptcies.
What credit repair companies cannot do:
• ake false claims about their services, such as telling M you that they can remove accurate bad credit from your credit report. • erform any services until they have your signature on a P written contract. • harge up-front fees without the State-required bond. C
9 Protect yourself from
Identity theft is a serious crime and can destroy your credit. There are no guarantees to avoid identity theft but there are steps you can take to prevent it: • btain a copy of your credit report on a regular basis. O • hred any paperwork with your personal information S on it. • lose any accounts that you know or believe have been C compromised and place a free 90-day fraud alert on your credit report by calling 1-888-397-3742. • eport any lost or stolen checkbooks or credit cards R immediately. By law, once you have reported the loss or theft, you have no further obligation for unauthorized charges. Debit cards do not have such protection as they can only be compromised if someone has your PIN or authorization code. • ile a police report and get a copy of it, or at a F minimum the number of the report. This will help you deal with the creditors who need proof of the crime. • ile a complaint with the Federal Trade Commission F by dialing 1-877-IDTHEFT. This helps law enforcement officials track down identity thieves and stop them.
7 Disputing inaccurate information
on your credit report
I f you question the accuracy of your credit report, you can dispute it with the consumer credit reporting company and the information provider at no cost. Both are obligated to investigate your claim and are responsible for correcting inaccurate or incomplete information. Be sure to submit your disputes in writing and provide copies of any documents that support your position. The consumer reporting company must investigate and give you results in writing within 30 days.
8 Dealing with debt collectors
I f you fall behind in repaying your creditors, or an error is made on your accounts, you may be contacted by a debt collector. Debt collectors have to treat you fairly, and are prohibited from certain methods of debt collection. • ou can stop a debt collector from contacting you by Y writing a letter telling them to stop. Sending a letter does not erase the debt; however, once the collector receives your letter, they may not contact you unless the creditor ntends to take legal action against you. i • ebt collectors may not harass, oppress or abuse you or D any third parties they contact. Debt collectors may not use threats, violence, obscene or profane language, or repeatedly telephone to annoy you. • ebt collectors may not state that you will be arrested D if you do not pay your debt. • f a debt collector uses any of the above tactics, I you should file a complaint with the Federal Trade Commission
10 Seek reputable credit
A reputable credit counseling organization can advise you on managing your money and debt and help you develop a budget. Also, many banks, credit unions, and savings and loan institutions offer free educational materials in the areas of consumer credit, money and debt management. You can also find information about consumer credit and your rights from several government agencies, such as the Chicago Department of Business Affairs and Consumer Protection. www.cityofchicago.org/bacp. The Federal Trade Commission offers information on improving your credit and finding legitimate resources for low or no cost help by visiting www.ftc.gov/credit.
Report fraud by calling 311
City of Chicago Department of Business Affairs and Consumer Protection www.cityofchicago.org/bacp 312-742-7777 Consumer Fraud Hotline To file a complaint call 311 To get a Free Credit Report www.annualcreditreport.com 1-877-322-8228 Nationwide Consumer Credit Reporting Companies: Equifax: www.equifax.com Experian: www.experian.com Trans Union: www.transunion.com Illinois Secretary of State Index Department 217-782-7017 Federal Trade Commission www.ftc.gov/credit 1-877-FTC-HELP (1-877-382-4357) TTY:1-866-653-4261 Better Business Bureau www.chicago.bbb.org 1-312-832-0500 Illinois State Attorney General www.ag.state.il.us 1-800-386-5438 TTY: 1-800-964-3013 Money Management International (MMI) Consumer Credit Counseling Service (CCCS) www.moneymanagment.org