Credit Repair Letters

Credit repair letters are generally used to dispute derogatory items on your credit report which cause you to be denied purchases, rentals, or employment. The Fair Credit Reporting Act 15 U.S.C. § 1681, enacted in September, 2012, insures fair and accurate consumer credit reporting. Inaccurate or unfair credit reports hamper commerce, consumers, and banks. The Federal Trade Commission (FTC) enforces consumer protection law in the United States.

Credit Repair for Identity Theft

You need to contact the FTC if you are a victim of identity theft. The Federal Trade Commission created an FTC Identity Theft website with a menu of steps describing which credit repair letters you need to write by type of account to help you. The first credit repair letter you must write is a form letter to the FTC.

You can tell the FTC: (1) “I need to report identity theft,” (2) “Someone filed a tax return using my information,” (3) “Someone used my credit card number or stole my wallet,” or (4) “My information was shared when the store’s website got hacked.” The FTC will create a recovery plan for you, monitor your progress, and guide you. The FTC will draft credit repair forms and dispute letters for you to sign.

Credit Repair

If you are tempted to pay a repair company to write repair letters for you, the Credit Repair Organizations Act prohibits false advertising, like claims to remove bankruptcies, judgments, and tax liens from your credit history. A third party credit repair company cannot quickly repair your bad credit, and they cost money. Good credit requires effort, time, and repayment of debt. If you pay a credit repair company to write your letters, they must give you a written contract with a right to cancel clause. The company may not demand payment in advance for its services.

Letters to Credit Bureau

When you write your first credit repair letter to the credit reporting company, ask them to please clarify each line item on your credit report, which you may want to dispute. You can have a free copy of your credit report every year under the Fact Act amendments to the Fair Credit Reporting Act. You may email annualcreditreport.com, or you may call 1-877-322-8228 to order your free credit reports from the three credit bureaus: TransUnion, Experian, and Equifax.

Where do you start?

Transunion explains credit reports and credit scores on its frequently asked questions webpage to help you manage your money. Your payment history is the most important part of your credit score, 35% of it. The amount of money you owe is 30%. The types of accounts you use is 10% for how long is another 15%. Combining these factors gives you a credit score from 300 at the lowest to 850, the highest possible credit score.

Question each item necessary to improve your credit score. You can write letters to the credit bureaus reporting the date you closed an account or reported your card lost or stolen. Many disputes are resolved through direct communication with a credit reporting company. You save time and resources if you do not ask for all three reports at the same time.

Response to Your Letter

Credit reporting companies must investigate your issue and reply to your letter in writing within 30 days. You are entitled to a free copy of your credit report whenever a creditor makes a changes to your score. You have rights to privacy. TransUnion recommends a password for your TransUnion credit report reserved for family members only to protect you from fraud and theft. Credit card companies which send email notifications of every charge on your credit card increase your financial security. Secure all your devices with passwords and virus protection to safeguard against hackers.

Your Right to Privacy

Only creditors, insurance companies, and employers may access your credit report, but they use it to determine whether to rent you a car, apartment, or house. Banks use it to decide whether to give you a mortgage. Employers can use your credit score to decide whether to hire you. Your adverse action letter lists the reasons why you were denied a rental car, an apartment, or a job. In your credit repair letter to a bureau, you may request that copies of a change and an updated credit report be sent to each recipient who received a copy of your credit report during the last two years.

Your Own Credit Repair Letters

You can write clear and concise credit repair letters yourself to have errors taken off your credit report. Remember to follow your credit report when you list disputes and clearly state exactly what you want to achieve for best results. You can search the FTC website or the FTC Identity Theft website for additional information regarding specific types of accounts. Your name, address, phone number, and account numbers must be clearly stated in your dispute letter or email. All receipts, contracts, and other supporting documentation must be attached to the letter. Anger and sarcasm won’t help here. You may prefer to mail your letter return receipt requested.

Letters to Creditors

Tell the creditor in writing if you dispute a fact and enclose documents which support your position. Many creditors have a department or address for complaints. The creditor must notify the bureaus that you disputed the date, amount, or status of the item. Your credit report must then contain a notice of your dispute, and the originator may not report the information again if it is found inaccurate.

Secure Commercial Transactions

Secure commercial transactions include your car loan or mortgage loan. The terms of your loan agreement are collateralized by your personal property, your vehicle, your land, or your house. Under the fair credit laws, if you default on your loan and your car is repossessed, the remainder owed to the finance company is the unsecured deficit remaining unpaid on the loan. The finance company places the word repossession or foreclosure on you credit report. The deficit is not secured by collateral, and a different statute of limitations applies to it.

Credit Card Debt

If a collection agency is reporting credit card debt, it is their policy to list the date your account was placed in collection on your report. The legal dates of your transactions, which occurred when you actually used the credit card, are the legal reporting dates. You may be able to get a letter stating that the line item was “placed in error” if the account is not yours or your transactions occurred more than seven years ago.

Credit card companies eager to cut their losses may offer you a settlement amount much lower than the actual amount owed. If you accept the settlement offer, the line item on your credit report will state paid in full with a zero balance. You can also use credit repair letters to close accounts and record dates that your credit cards were reported lost or stolen. You can put a note on a credit report to explain negative items on your report, which will be read and considered by lenders.

Statute of Limitations

You should consult the Fair Credit Reporting Act to see how long negative information can remain on your credit report. Most negative items stay on your credit report for seven years. Bankruptcy information is in your file for 10 years. Civil suits, civil judgments, and arrest records remain on your credit report until the statute of limitation expires, and tax liens appear on your report for 7 years from date the debt is paid in full. Criminal convictions may never be removed unless you have them formally expunged. Unpaid judgments remain on your record for your state’s statute of limitations, which could be 11 years.

Sample Letter

[Your Address] [Your City, State, Zip Code] [Date] [Company Name] [Street Address] [City, State, Zip Code]

Dear Sir or Madam:

I am writing to dispute the following information in my consumer credit file. [Identify item(s) disputed by name of the creditor or agency and the type of item disputed by credit card account, judgment, repossession, or foreclosure as incorrect, an error, or inaccurate because the actual transactions occurred on a different date, the payment history is not accurate, or the debt is a result of an accident and was paid in full out of a settlement on a given date, for example.]

I, hereby, request that [the line item be taken off my credit report or corrected to reflect the accurate information, for example.] Enclosed are copies of payment records, court documents, and contracts to prove my facts in this dispute. Please reinvestigate this matter and delete or correct the disputed item[s].

Please send copies of the dispute and an updated credit report to each recipient who received a copy of my credit report during the last two years.

Sincerely,

Your name

Enclosures: (List of items attached.)

Free Advice

Free credit counseling may be available through your college or university, your credit union or bank, or through your small business development center. Nonprofit consumer credit counseling may be free. Nonprofits are a source of information and may offer workshops to help you improve your credit.

A free consultation with a lawyer may give you the information you need to resolve your consumer credit problems. Consumer credit counseling is mandatory if you decide to file bankruptcy. The fact that you attended consumer credit counseling will be recorded on your credit report before you file for bankruptcy.