Refuting Denied Credit and Scoring
People who have been denied lower interest rate cards want to know what is the next step. Credit card companies, banks, mortgage lenders, credit unions and many others buy information about you through credit bureaus.
They use a procedure called “scoring” applicants when deciding whether to approve or deny credit. Leaving the issues of the scoring process aside, here is what you need to know about what your credit report contains and how to fix incorrect information.
REFUTING DENIED CREDIT
FREE COPY OF CREDIT FILE
You are entitled to get a copy of your credit file free if you have been denied credit from the bureau that reported the information–and I recommend that you check your credit status from time to time anyway, in order to make sure that it is accurate. If you’ve been denied credit, you must apply for your file this within 60 days of the denial. There are other ways to obtain a copy of your credit report free, by taking advantage of offers that come in the mail all the time, for example. I recently received a credit card offer to join a credit club. They offer one month free and then you pay a yearly fee. The terms stated that you could cancel after the first month. I signed up to receive the first month, and then I cancelled. It cost me a stamp and a phone call.
The information that is contained on a credit file is your full name (and any previous names), Social Security number, telephone number, current address, employment history, marriages, divorces, lawsuits, liens, bankruptcy information and most importantly your credit history. It will list the names of your creditors, type of account, when it was opened, your payment history for the previous 24-36 months, your credit limit and current balance. It will also state who is paying the account – whether it is you, a collection agency, or another type of service like the Consumer Credit Counseling Service. If you are disputing a charge, this too will appear in your file. Also it will list the names of people or companies that have requested your file within the last six months (two years if the information was given to an employer or potential employer).
Upon receiving the file, go over all the information to see if everything is accurate. Make a list of everything that is incorrect, out-of-date, or misleading. In particular look for mistakes in your name, address or phone number, Social Security number, missing or outdated employment information. You’ll also want to look for: bankruptcies that are more than ten years old; any negative information about you that is more than seven years old, credit inquiries older than two years, credit accounts that are not yours, lawsuits you were not involved in, incorrect account histories (especially late payments when you’ve paid on time), a missing notation when you’ve disputed a charge on a credit card bill; closed accounts incorrectly listed as open; and any account that is not listed as “closed by consumer” because it looks as if it was closed by the creditor.
REFUTING DENIED CREDIT
REQUEST FOR RE-INVESTIGATION
Once you’ve made the list you can use the “Request for Re-investigation” form that should have come with your credit report. If you did not receive the form, just write a letter and request one. List each incorrect item and explain exactly what is wrong. Be sure to make a copy of the letter before sending it back. The re-investigation is free in every state except New Mexico, where it costs $5.
Once the credit bureau receives your re-investigation request, it must get back to you within a reasonable time. That usually means 30 days although many bureaus will get back to you within 10 days. This is an easy process for them, since they are all linked up by computers. If you have found errors–and don’t be surprised if you do–you might be concerned that the other credit bureaus might also have this misinformation on your credit rating. It might be a good idea to obtain copies of these reports as well, and go through the same process with the other credit bureaus.
If you don’t hear from them within the deadline send a follow-up letter. And to really grab their attention send a copy of your second letter to the Federal Trade Commission (6th & Pennsylvania Ave NW, Washington, DC 20580, main office).
YOU WERE RIGHT
If you are right, or if the creditor who provided the information can no longer verify it, the credit bureau must remove the information from your file. Many times the bureaus will remove items without re-investigating it if the item is more bother than it’s worth.
If you feel something is wrongfully in your file and you want to explain a particular entry you are entitled to add a 100-word statement to your file. Be very careful though because the bureau is required to put down only a summary of what you wrote. So be concise and extremely clear. You can also add positive things to your file, for example, accounts that you’ve paid on time. Just ask in writing that they be added to your report.
Finally, if you feel the bureau is not abiding by the laws or has treated you unfairly, you can send your complaint to the Federal Trade Commission. Be sure to send a copy of this correspondence to the bureau about which you are complaining. If a credit bureau insists on reporting out-of-date or inaccurate information, or if you’ve paid them an unreasonable amount (anything over $50, or the limits set in your state), writing to the FTC can put an end to it.
