Michigan bad credit report repair

ANNE HARRISON KNOWS WHAT IT'S LIKE TO be caught in a credit crunch. "I hated to hear the phone ring," says Harrison, 31, who juggles the roles of wife. mother, salesperson and student in Roswell, Georgia. "I was afraid it was one of my creditors with a demand for money. In the meantime, my bills were sitting in the drawer unpaid. I knew that if I paid the rent, I wouldn't have enough for food."

How did Harrison wind up in this situation? "My husband and I wanted a change," she recalls. "We had been living in New York [in 1994], where everything is so expensive, and we'd heard wonderful things about Atlanta. Unfortunately, after we moved, my husband, a former hospital manager, couldn't get a full-time job for several months, and my own income declined because my commissions from selling computers were down. We had a second child and the next thing I knew, we were $20,000 in debt."

The Harrisons sought help--and found it. From late 1995 to early 1998, they knocked down their debt load from $20,000 to $7,000. Anne's new job allowed her to make more money, which she funneled into larger credit card payments. She also stopped using her credit cards completely. "By the end of the year, we'll be debt-free," Anne says. "In addition, we qualified for a mortgage and are now living in a lovely four-bedroom house in a desirable area."

IT'S SERIOUS BUSINESS

Yes, it is possible to dig your way out of debt if you know how to wield the shovel. Certainly, the Harrisons are far from unique. Millions of people rely on credit to help them buy homes, cars, vacations and more. Inevitably, even the most conscientious can encounter job losses, medical emergencies and other unforeseen circumstances that make repayment difficult. Late payments or defaults will be noted on credit reports that follow you around for years, squeezing your standard of living; so, it's imperative to convince the world that you're a dependable, debt-paying customer.

Moreover, a negative credit report can do more than impair your ability to get a loan or a line of credit--it can cost you your job. Under federal law, with your permission, current and potential employers can see your credit report if they're considering hiring or promoting you. Naturally, an employer who sees that you're not paying your bills is not likely to be favorably impressed.

You don't have to sit back and let your credit report wreak havoc on your life. If you're straining against your credit lines, there are a few points that you as a consumer should understand.

Be patient and don't expect miracles to happen. Once you've accrued debts, there's no simple way to make them disappear, no matter what you hear from companies that "guarantee" you relief from your obligations. The Federal Trade Commission recently announced

Operation Eraser, a crackdown on fraudulent "credit repair" firms that may charge you more than $1,000 for patching up credit problems. At best, these firms don't do anything that you couldn't do yourself for free. At worst, some have been accused of encouraging illegal practices, such as applying for credit using false Social Security numbers.

"Although there are legitimate credit counseling services, the FTC has never seen a legitimate credit repair company," says Jodie Bernstein, director of the FTC's Bureau of Consumer Protection.

"We will continue to fight this fraud." In March, through Operation Eraser, the FTC and state officials brought charges against 31 companies for making deceptive claims and seeking advance payment for credit repair services. Indeed, under the Credit Repair Organization Act, a federal law passed last year, companies are prohibited from taking money from consumers before services are fully performed.

CLEARING YOUR RECORD

Your credit report will show payments made on time as well as the bad news: late payments, repossessions, accounts turned over to a collection agency, amounts written off as uncollectible by creditors, judgments, liens and bankruptcy. Inaccuracies can tarnish a good record and exacerbate your problems if you've fallen behind. Therefore, it's vital to check your credit reports to make sure they contain no damaging errors.

There are three major credit bureaus most lenders rely on for reports: Equifax, Experian and Trans Union (see sidebar, "How to Get Your Credit Report," for addresses and phone numbers). Upon request, each of these companies must tell you everything that's in your report, along with the sources of information that they used. In addition, you must be given a list of everyone who has requested your report within the past year (two years for job-related requests).

"I'd recommend getting reports from all three major credit bureaus," says David Van de Walle, a spokesperson for Trans Union. "In most cases, the information will be virtually the same, so you can ask for subsequent reports from only one credit bureau. However, if you see that one firm seems to have much more information about you, that's the one you should ask for follow-up reports."

You can purchase a credit report from any of these bureaus for no more than $8 apiece, $16 for a married couple's joint report. (Note that some states require lower prices.) Moreover, if you are ever denied credit or turned down for a transaction that requires a credit report, such as an apartment lease or cellular phone service, you'll be notified of your right to see the report that caused the denial, at no charge. The Fair Credit Reporting Act allows you to receive one free report every 12 months if(I) you are unemployed, but plan to get a job within 60 days, (2) you are on welfare or (3) your report is inaccurate due to fraud.

"You should ask to see a credit report after you've been turned down for credit," says Anissa Yates, a spokesperson for Experian. "Even if you haven't been denied credit, you should ask to see your report at least once and preferably twice a year. If you're considering a major purchase, such as a house or car, ask to see a report at least 60 days before ask for credit. Then you can correct any mistakes beforehand."

Each report will include an "investigation request" form and instructions that you can use to question any items you believe to be in error. Once you submit this form, the credit bureau must investigate your claims and report back within 30 days. If an inaccuracy has been found, it will be removed from the record. If the issue can't be resolved, you'll be allowed to prepare a short statement (up to 100 words) giving your side of the story, to be included in future reports.

TALK TO YOUR CREDITORS

Communicate with your creditors once you've fallen behind. The procedures described above should help if your credit report contains mistakes. If you've failed to make required payments on your debt, that information stays.

In such cases, your best tactic may be to call your creditors and explain your situation. "Many creditors will negotiate with you," says Norman Magnuson, vice president of public affairs for Associated Credit Bureaus, a trade group based in Washington, D.C. "Their main goal is to be repaid, and that won't happen if you file for bankruptcy, which is another option. Your creditors have an incentive to be cooperative."

Suppose, for example, your minimum payment on a credit card is $200 per month, which you can't afford. A creditor might agree to take $100 per month, or even $50 per month, with no further interest accruing. "What's more," says Dave Mooney, a spokesperson for Equifax, "if you make those payments regularly, your file will be marked 'paid as agreed,' so your credit record will show positive results."

Auto loan problems may require early warnings to creditors, according to Carol K. Kurth, education coordinator at Credit Counseling Centers Inc. in Farmington Hills, Michigan. "Most automobile financing arrangements permit the creditor to repossess your car any time you are in default on your payments. So don't wait until then. Try to solve the problem with your creditor when you realize you won't be able to meet your payments." If you can't work something out with the creditor, you might prefer to sell the car rather than run the risk of repossession and a stained credit record.

Should you notify your creditors if you get married? That's probably not necessary. You and your spouse will have separate credit reports as long as you maintain separate accounts. For joint accounts, though, both spouses' histories will be included in credit reports. "Joint accounts mean joint liability," says Yates. "Even if you get divorced, a divorce decree has no impact whatsoever on your joint debts." If your spouse runs up large amounts of joint debt while you're still married but contemplating divorce, Yates recommends canceling the accounts, if possible, and informing all creditors in writing that you won't be responsible for these debts after a specific date.

DON'T SUFFER IN SILENCE