RECOVER & REBUILD
When a homeowner finds themselves upside down in their mortgage payments, they have no idea of which direction to turn, and It seems that it is almost impossible to get straight answers to their questions about what options they have, and how each option will affect their credit.
Following is information to help you answers those questions. Remember, there are NO quick fixes when it comes to credit, so it is imperative that you don't wait until the last minute to get this information out to your friends, clients and referral partners .
FORECLOSURE
How Does a Foreclosure Affect Credit?
A foreclosure can be reported as a Foreclosure or Repossession and carries a derogatory payment status of 8 or 9 (M1, R1 and I1 being the best and R9, I9, etc. being the most negative) which is just under a Public Record. There is a misconception that foreclosures are considered Public Records to the scoring system, however, they are not. Although there is a Public Notice Record on file once a foreclosure is filed, but this record is completely different than a credit report public record.
A Foreclosure will remain on a credit report for 7 years from completion date. And the score will drop from 50-250 points.
The difference in point loss depends on how many points your client has to lose in the payment history factor of their credit.
So if someone has a 750 credit score, and they opt to foreclose, their score could drop up to 250 points. However, if someone has a 500 credit score, they may lose 50 points for the same derogatory.
If a Deficiency Judgment or Tax Lien is filed in connection with a Foreclosure, the credit score can drop an additional 100 points.
Fannie Mae Waiting Period
WORD OF CAUTION:
Deed in Lieu Of Foreclosure
An alternative to foreclosure is a "deed in lieu of foreclosure." In this scenario, the borrower turns the house over to the lender and walks away without owing anything. A deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The main advantage to the borrower is that it immediately releases him or her from most or all of the personal debt associated with the defaulted loan. The borrower also avoids a foreclosure proceeding and may receive more generous terms than he or she would in a formal foreclosure. Advantages to a lender include a reduction in the time and cost of repossessing the property.
However, the lender usually will not proceed with a deed in lieu of foreclosure if the outstanding debt on the property exceeds the current fair market value of the property. So in this market, this option probably won't be available to most homeowners who are upside down.
How Does a Deed in Lieu Of Foreclosure Affect the Borrower's Credit?
Most lenders report a deed in lieu of foreclosure as a foreclosure, so the credit scores will carry the same serious affect as if it were an actual foreclosure. However, what most borrowers don't know is that they can negotiate with the lender to report it differently in return for turning over the deed and avoiding foreclosure costs.
Many lenders will say that they cannot change the reporting status, but they can. Here are their options in preferred order:
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Fannie Mae Waiting Period
The exception for extenuating circumstances also remains the same at 2 years.
Short Sale (aka Pre-Foreclosure Sale)
In my opinion, the best option is a short sale, which occurs when a bank or mortgage lender agrees to discount a loan balance, due to an economic hardship on the part of the home owner. The home owner sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove a proposed sale.
A short sale is typically executed to prevent a home foreclosure. Lenders often choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. For the home owners, the advantages include avoidance of having foreclosures on their credit histories. Additionally, a short sale is typically faster and less expensive than a foreclosure.
Junior lien holders, such as holders of second mortgages, HELOC lenders, and homeowner associations (special assessment liens), may also need to approve the short sale. Frequent objectors to short sales include those who hold tax liens (income, estate or corporate franchise tax - as opposed to real property taxes, which have priority even unrecorded) and mechanic's lien holders. It is possible for junior lien holders to prevent the short sale.
While it is frequently common for a lender to forgive the balance of the loan in question, it is unlikely that a lien holder that is not a mortgagee will forgive any of their balance. Further, it is common for a lender to omit updating the zero balance and settlement option on the mortgagor's credit report, or even flat-out refuse to do so "due to their financial loss."
The Mortgage Forgiveness Debt Relief Act Of 2007
When the lender decides to forgive all or a portion of the debt and accept less, the forgiven amount is considered as income for the borrower, like with a foreclosure, leaving it open to be taxed. However, The Mortgage Forgiveness Debt Relief Act of 2007 contains amendments to remove such tax liability, allowing the borrower and lender to work together to find a solution beneficial to both parties.
How Does a Short Sale Affect the Borrower's Credit?
The few reported short sales that I have seen have appeared as "Paid Settlements" on a mortgage account. In the wake of the current mortgage crisis, short sales are becoming extremely common, but legislation has not caught up with the tidal wave and there is no law on the books relating to them to date. As a result, there is an opportunity for the borrower to negotiate credit reporting with the lender. I've seen several successful negotiations, so be sure to let your borrower know that it is possible.
My view - a short sale proves that the borrower is exhausting every effort to pay the loan. The borrower has willingly committed to taking on months of emotional and physical stress in a good-faith effort to sell the property to maintain a good relationship with that lender. Most likely, the reason they can't afford their current mortgage is because they were in an adjustable product and their mortgage payment has doubled. That doesn't mean that they can't afford a different loan program with a lower payment. Which leads me to wonder what the incentive is for lenders not to negotiate with the borrower on how the item is reported to the bureaus. All they would be doing is cutting off a pretty substantial future income stream if they put these types of borrowers out of the market for two years. In that light, negotiation for a non-report on short sales is well worth it.
Here are their options in preferred order:
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Fannie Mae Waiting Period
A few weeks ago, Fannie Mae was going to consider a short sale the same as a foreclosure, however, the current
There is no exception for extenuating circumstances.
Bankruptcy Mortgage Relief
Currently, bankruptcy offers very limited protection to a homeowner who is upside down with their payments. The borrower can file a Chapter 7 which, depending on the state bankruptcy law, will most likely require him or her to surrender the property to the bankruptcy court, or file a Chapter 13 debt repayment plan to spread out prior delinquent payments over a number of months or years in the future. However, no bankruptcy proceeding can modify the terms of an existing home loan on a principal residence. Legislation is being proposed to Congress that would allow bankruptcy judges to modify the terms of an existing mortgage loan. I would not hold my breath. It could take years to make further substantial changes to the bankruptcy laws.
How Does a Bankruptcy Affect the Borrower's Credit?
My advice on this is to avoid Bankruptcy at all costs unless, your borrower is upside down on everything. Not only have the new bankruptcy filing requirements become more difficult and more costly, a public record will wreak havoc on credit scores and could stop someone from being hired or renting a place to live.
A Chapter 7 Bankruptcy will remain on the report for 10 years, and a Chapter 13 will remain for 7. The point loss could be from 100-350 points, depending on how many points the borrower has to lose in this factor.
Fannie Mae Waiting Period
The exception for extenuating circumstances is 2 years.
Again, the
Chapter 13 Bankruptcy. The 2 year period can start on either the discharge or dismissal date. In the case of multiple bankruptcies, the current
The exception for extenuating circumstances in the case of multiple bankruptcies is a 3 year waiting period from the most recent discharge or dismissal date.
What's the Good News?
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You can Start Recovering and Rebuilding immediately.
Aging Out : In all instances above where I reference how many points will be lost in each scenario, it is important to make sure your clients understand that over time, all derogatory accounts age out. This means, the older theaccount becomes, the less it will hurt their credit scores. It doesn't state that they "MUST BE.' My experience proves over and over again that there is no need to wait out the 7 years. You don't have to. You can start seeking early removal of the item by disputing to the credit bureaus that are reporting it. In many instances, after 3-4 years, the item will be deleted.7 Year Reporting Period: The law states that derogatory items "can be" reported for 7-10 years as outlined above. selling guideline from Fannie Mae has not changed. It is a 4 year period of how much time must elapse after a Chapter 7 Bankruptcy. The 4 year period can start on either the discharge or dismissal date.selling guideline from Fannie Mae has not changed. It is a 2 year period of how much time must elapse after a selling guidelines that have just been added require a 5 year waiting period from the most recent discharge or dismissal date.selling guideline from Fannie Mae has reduced the amount of time that must elapse after a short sale to 2 years from the date the short sale is completed, not started.If reported, the item will remain on the credit report for 7 years from the completion date or the settlement date.Paid Settlement - Credit score will drop 50-150 points. Unrated - May drop a few points.Paid As Agreed - Won't hurt the score at all as long as the borrower has kept payments current. selling guideline from Fannie Mae has not changed. It is a 4 year period of how much time must elapse after a deed in lieu of foreclosure proceeding is completed.Paid As Agreed - Credit scores will have already dropped over 100 points due to default in payments, however, if reported as Paid As Agreed, the borrower will be able to purchase another home in a shorter time period. The item will remain on the credit report for 7 years from the completion date or the settlement date.Paid Settlement - Credit scores could drop up to 150 points. In General: When it comes to foreclosure and how it affects the ability to obtain credit in the future, there are multiple points of extremely negative impact. Deficiency judgments for the amount not collected by the lender in the foreclosure sale can end up on the borrower's credit report as a derogatory mark. Additionally, there is a high risk that the borrower will be hit with a substantial tax penalty which can result in a tax lien, which also appears on the credit report. As a general rule, other than a bankruptcy, foreclosure is the least desirable of all of the options available when a borrower is upside down in a home mortgage.If you have a borrower going through a foreclosure due to circumstances of losing a job, a medical crisis, sub-prime mortgage crisis fall-out, I suggest that you advise them to fully document their experience now. Not to wait until later, because the details and emotional energy of what they are going through will be more difficult to document and prove down the road if they decide to apply for a loan in 2 years based on an extenuating circumstance claim.The exception for extenuating circumstances has been increased from a 2 year to a 3 year waiting period.selling guideline from Fannie Mae has upped the previous 4 year period of how much time must elapse after a foreclosure to 5 years from the date the foreclosure proceeding is completed, not started.
Foreclosure is the legal process in which a bank or other secured creditor either sells or repossesses a parcel of real property, home or land, after the owner has failed to comply with the mortgage or deed of trust agreement with the lender.
Most frequently, the violation of the mortgage agreement is the default of payment. The completion of the foreclosure process allows the lender to sell the property, and keep the proceeds to pay off the mortgage as well as any legal costs.
The length of the foreclosure process varies from state to state.
If the foreclosed property is sold for less than the remaining primary mortgage balance, and there is no insurance to cover the loss, the court overseeing the foreclosure process may enter a deficiency judgment against the borrower. Deficiency judgments can be used to place a lien on the borrower's other personal property, obligating the borrower to repay the difference or suffer the loss of their property. It gives the lender a legal right to collect the remainder of debt out of borrower's other existing assets.
However, there are exceptions to this rule. If the mortgage is classified as "non-recourse debt," then the borrower has no personal liability in the event of foreclosure. This is often the case with residential mortgages. If so, the lender may not go after borrower's personal assets to recoup additional loss.
The lender's ability to pursue a deficiency judgment can be restricted by state laws. In California and some other states, original mortgages (the ones taken out at the time of purchase) are typically non-recourse loans, however, refinanced loans and home equity lines of credit aren't.
If the lender chooses not to pursue deficiency judgment-or can't because the mortgage is non-recourse-and writes off the loss, the borrower may have to pay income taxes on the un-repaid amount if it can be considered "forgiven debt."
Any other loans taken out against the property being foreclosed (second mortgages, HELOCs) are "wiped out" by foreclosure (in the sense that they are no longer attached to the property), but the borrower is still obligated to pay them off if they are not paid out of the foreclosure auction's proceeds.
FREE - We have a powerful ‘fixing credit report errors’ credit section, which includes tons of information and sample letters designed to help you through the process of improving your credit.The truth about improving your credit score
No one can legally remove accurate and timely negative information from a credit report. But the law does allow you to request a reinvestigation of information in your file that you dispute as inaccurate or incomplete. Everything a credit repair clinic can do for you legally, you can do for yourself with the tools we provide here.
You see the advertisements in newspapers, on TV, the Internet, fliers etc. They all make the same claims: Save your money AND your credit standing - don't listen!
The typical “scripts” in the ads…
"Credit problems? No problem!"
"We can erase your bad credit-100% guaranteed."
"Create a new credit identity-legally."
"We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!"
The Majority of These “Credit Repair Agencies” Are Scams
Everyday, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is they can't deliver. After you pay them hundreds or thousands of dollars in up-front fees, these companies do nothing to improve your credit report; many simply vanish with your money and potentially even lower your score.
Follow everything in this section and you can, in the majority of cases where there are mistakes on your report, improve your credit standing.
The Process of Repairing Your Credit
- Obtain a Copy of Your Credit Report
- Establish Credit
How to establish or re-establish good credit
If you do not have a well-established good credit history, here's some tips on how to begin building or re-building one.
The trick is to start small: try applying for credit with a local business, such as a department store or a local bank or credit union. These local merchants may have lower credit standards than larger lenders. Before you apply for credit, make sure the credit grantor reports credit history information to one of the major U.S. credit bureaus - this will help build your credit history.
Other options, if you are having difficulty opening a credit account, include asking a friend or family member to co-sign your loan or credit card application or obtaining a secured card, which is guaranteed by a deposit you make with the card issuer.
Actively monitor and manage your credit
While the most obvious thing you can do to build a solid credit history is to pay your bills on time, you can also take steps to protect your credit standing and make sure your credit report is accurate when you apply for credit.
Many credit reports contain inaccuracies, usually caused by innocent errors but occasionally by fraud (such as identity fraud, in which a thief uses someone else's name to open credit accounts). The Fair Credit Reporting Act ensures your right to dispute such inaccuracies in your credit report without charge.
The most effective way to verify the accuracy of your credit history is with a 3 Bureau Online Credit Report. This allows you to obtain your credit information from all three major credit bureaus in one easy, side-by-side report in seconds! It's simple to scan your reports and make sure possible inaccuracies aren't impacting your credit history so you can put your best foot forward with lenders. Plus, you'll get a Free Credit Score, complete with personalized analysis and tips that can help you improve your credit rating.
Avoid "credit repair" clinics
Although some consumers pay credit clinics hundreds or even thousands of dollars to "fix" their credit reports, only time can improve bad credit. The Federal Trade Commission has investigated and reported at length on these often fraudulent "clinics." Some credit repair plans actually encourage you to commit fraud yourself by attempting to create a second credit identity. BEWARE!
Crucial Fact regarding "Repair Clinics"
There is nothing a credit repair clinic can legally do to fix a credit report that you can't do yourself for free.
Consumer credit reports contain easy to follow instructions for disputing inaccurate information at no charge. Inaccurate information will be changed or deleted. Accurate information that shows negative payment habits will usually remain on a credit report for seven years, with bankruptcies remaining up to 10 years.
- Dealing With Credit Bureaus
It is essential to understand that Credit Bureaus are really just record keepers.
They keep a record of who has given you credit, when they gave you credit, how much credit you are given and whether or not you paid it back on time. When you want to obtain credit cards, loans, financing for a car or home, etc., the lender or bank will check your credit to review your financial history.
Credit Bureaus have no legal power over consumers. Banks, police or the government does not run them; so you need not be intimidated by them, they are there to help you. As Credit Bureaus, they own large computer systems capable of storing credit information on everyone in the United States. However, because of the tremendous amounts of information on their computers, there is always a chance for errors.
The Major Credit Bureaus are:
Experian
P.O. Box 2002
Allen, TX 75013
(888) 397-3742
www.experian.com
Equifax,Inc.
P.O. Box 740241
Atlanta, GA 30374
(800) 685-1111
www.equifax.com
Trans Union Corporation
P.O. Box 1000
Chester, PA 19022
(800) 888-4213
www.transunion.com
The only thing you legally need to supply the credit bureaus for a copy of your report is your name, your social security number and a legal mailing address (and yes a P.O. Box is a legal address).
The bureaus do have a right to request a copy of your social security card, If they do, give a copy of the front only. They also may request a copy of something showing your address if it is different than what is showing on the report. A billing statement that has your address will suffice. Do not send them a copy of your driver's license. Remember these bureaus are information-gathering companies who can potentially sell your information, not only for credit, but also for promotional reasons.
Before going any further, you should have copies of your current credit reports. We can run a report for you with your authorization. If you wish, you can use the sample letter on the following page as a guideline for requesting your credit reports from the 3 major bureaus.
Removing Credit Reporting Errors and Mistakes -Part 1
- It’s not as hard as you may think!
- Under the updated law, credit bureaus are required to use information supplied by the consumer as well as the credit grantor when reinvestigating inaccurate credit information. This was not a requirement under the old law, and bureaus relied primarily on the credit grantor's version.
- Reinvestigations requested by consumers must be completed within 30 days by the major credit bureaus.
- If the completeness or accuracy of any data reported by a credit grantor to a credit bureau continues to be disputed by a consumer after the information has been reinvestigated by the credit grantor, the credit grantor may not report the information to the credit bureaus without indicating that it is still being disputed by the consumer.
- Bureaus as well as credit grantors (such as banks or retailers) must provide consumers with better notices of their rights. In the past, when a consumer was denied credit, the credit grantor was required to include the name and address of the credit bureau that supplied the report on which the decision was based. Under the new law, the following information must also be included:
- Phone number of the credit bureau (including a toll-free number if it is one of the three major bureaus).
- A statement that the credit bureau did not make the decision to take adverse action.
- Notice of the consumer's right to obtain a free copy of the report from the credit bureau by submitting a written request within 60 days.
- Notice of the consumer's right to dispute the accuracy or completeness of the information in his or her report with the credit bureau.
Be sure the Credit Bureaus explain:
- Every negative entry on your report can be denied or challenged at any time - above all be sure you are being truthful at all times. The bureau must reinvestigate and if that item cannot be verified within a "reasonable amount of time", it must be removed from the file. A reasonable amount of time is 30 days.
- Each item on your credit report must be proven or it cannot remain in the report. If the credit bureau cannot verify the item when investigated, it must be removed from your file.
Steps to Repair Your Credit:
- Obtain your tri-merge report or three individual reports.
- Review the report(s) and locate any negative item(s).
- Dispute any unexplained (untrue) negative items with the credit bureaus.
- State the item you are disputing, it is best not to use dispute forms or file numbers provided by the bureau. Write your own letters, following the examples we provide. This will cause fewer delays by the credit bureau asking for clarification.
- Disputed items are removed or corrected. Items that were not re-verified are removed.
- Negotiate with creditors and collection companies, if any.
- Point out discrepancies on the account if any information about the item is wrong.
Removing Credit Reporting Errors - Part 2
Protecting Your Rights and Your Credit
The Fair Credit Reporting Act:
The Federal Fair Credit Reporting Act is in the consumer’s favor. One part of this law states that when you dispute any information contained on your credit file, the Credit Bureau must verify the accuracy of the information with the creditor who reported the information within 30 days. If they are unable to verify the information within 30 days, it must be removed. Remember, these laws do not work unless you initiate and use them. Here is the internet link to the full text of the act. http://www.ftc.gov/os/statutes/fcra.htm
The Fair Credit Reporting Act sets certain guidelines which credit bureaus and your creditors must follow when reporting your credit file, as well as giving the consumer certain rights.
Your basic rights under The Fair Credit Reporting Act:
- You have the right to challenge the accuracy of your credit report at any time.
- The credit bureaus must reinvestigate anything you challenge without a charge, and if the credit bureau finds an error in the challenged item, they must delete or correct that information in your files immediately.
- The credit bureaus must reinvestigate within a reasonable amount of time. 30 days constitutes a "reasonable amount of time" unless the bureau notifies you otherwise (be sure to keep accurate records). If the credit bureaus cannot or do not confirm the challenged item within 30 days, they must delete that information from your files immediately.
- You have the right to submit a Consumer Statement of your view of the problem. If you dispute the accuracy of certain information in your credit report and it is verified by the creditor as correct, then the credit bureau is required to include your explanation of your dispute in your credit report. Try to limit your explanation to no more than 100 words.
It is best to file a dispute for yourself. If the dispute is sent from anyone other than you, the credit bureau may suspect that you have paid one of those less-than-professional credit repair companies to repair your credit.
Remember: sending your dispute letter by CERTIFIED RETURN RECEIPT MAIL greatly increases your chance of a response. Keep a record of when you sent the dispute letters and what date you should expect a response. If after 30 days you have received no answer, confront the credit bureau with a certified return receipt letter, requesting an updated credit report and demanding the disputed items be deleted. According to the Fair Credit Reporting Act, the items must be immediately deleted.
When you get the updated report review it carefully to see if the negative item(s) still appear, or if anything else has changed. Usually some progress is made each time you challenge, but do not get discouraged if you don't get the desired results each time.
Removing Credit Reporting Errors - Part 3
Steps to remove negative credit items:
Step 1: To dispute an incorrect item on your credit file you need to first identify the items that you want removed.
Remember; DO NOT complete the Dispute Forms that the Credit Bureaus included with copies of your credit file that they sent you. It's much more effective to follow the outlines in our sample letters.
Be sure to include a copy of your credit file and keep the original for your records. Highlight or underline the items you are disputing. Mail the dispute forms to the address listed on each credit file. As always, and most importantly, this advise is offered only to assist with legitimate errors made by the credit bureaus or the reporting creditor(s).
Make a photocopy of your dispute letter for your records and be sure to send it by Certified and Return Receipt Mail from your local Post Office. Mail your dispute form to the address provided with your credit file. Repeat this process for each item that you want removed or changed.
Step 2: After reviewing your updated credit file and finding that most or all the negative items have been removed, you may now focus on building a positive credit profile. Positive information will always outweigh a few negative items that may remain on your file.
This is extremely effective in removing any negative information that was supposedly verified as correct after your dispute.
Important: Always remember that if the dispute is sent in from anyone other than you, the Credit Bureau will suspect that you have paid one of those less than professional credit repair companies to repair your credit. This raises all sorts of Red Flags.
More credit repair techniques:
If the Credit Bureaus were able to verify any disputed information as correct, it would remain on your credit file. So you'll need to contact the creditor who is reporting the information. The creditor who reported the item is listed on the left or bottom of your credit file. If their phone number is not provided, call directory assistance in their city and ask for the creditor's telephone number. Call and ask them to mail you written proof and documentation that this is actually your account, assuming you do not believe the account belongs to you.
Federal Law requires that upon your request, all creditors must show you written proof that the account in question is in fact yours. Written proof is a copy of the contract you signed with the original creditor.
Again, all Federal Laws are in your favor. If you are sure an account is not yours and the creditor obviously cannot produce written proof that the account belongs to you, they must remove the account from your credit file and cease all collection activity.
Removing Credit Reporting Errors- Part 4
Timing is Everything
Important: 10 days should be sufficient time for a creditor to get the proof into your mailbox (5 business days to act on it plus mailing time).
Additional Options:
- Contact the Attorney Generals Office in the city of the creditor who is damaging your credit. Get the phone number through directory assistance. Tell them that you have a creditor who is damaging your credit by reporting an account that is not yours. You have requested proof that the account belongs to you and they do not have it. They will contact the creditor and have the account removed from your credit file. This is a free legal service and almost guarantees they will get the item removed.
- You can also take the creditor to Small Claims Court. To do this, you will need to call your county courthouse and ask about the proper procedure to follow to get a court date. You'll be asked to fill out one or two simple forms stating your complaint. You may want to write that you wish to remove the item from your credit file since it is not yours and the creditor has no proof that it is your account. After you receive a court date, mark it on your calendar and make sure to attend at the proper time, place and date. Bring the receipts from the registered mail you used for your disputes along with your phone bill. Remember, if they do not have proof that this is your account you will win and the account will be removed from your credit file! Also, if the creditor is out of state and does not show in court, you win by their default. Creditors are too busy to spend time on one person when they have thousands of other people to deal with. You may contact an attorney in your area for a free consultation about what your rights are concerning your particular situation.
Removing Credit Reporting Errors - Part 5
Levels of Difficulty
Easier Items To Dispute And Have Removed:
- Items older than 2 years
- Discharged bankruptcies
- Charge-offs
- Inquiries
- Repossessions
- Late payments
- Accounts that were late but are now paid off
More Difficult Items To Dispute And Have Removed:
- Accounts that are currently past due
- Recent Bankruptcies
- Judgements
- IRS or State Tax Liens
- Current collection accounts
These are more difficult to dispute because creditors keep these types of accounts in their current files and they expect you to pay them. It will be much easier for them to verify the information and keep the item in your credit file.
Always remember this: Federal Laws require that the Credit Bureaus verify all disputes. If they are unable to verify your dispute, the law says it must be removed from your file.
Most importantly, this information is to assist you with legitimate claims only – DO not waste anyone’s time attempting to file illegitimate claims.
Sample Credit Repair Letters
General Dispute to Collection Agency
Date
Collection Agent
Address
RE: Acct. # ...
To whom it may concern:
When living in (state, city), I received service through ________________ (Telephone, power, water, etc.) Company. During that time there were numerous billing errors. I kept being mixed up with another family. Though time-consuming and aggravating for me, the __________ company always found and corrected the errors.
Before moving to (state, city), I stopped service and paid the final bill. I never thought I would continue to be plagued with __________________ Company errors.
I am sure if you speak to a human being and not a computer at ________________ Company, there will be a record of the problems we were having with wrong billings. I am also certain you will discover this is not my debt.
I was assured by ______________ Company at the time that I was not the cause of the errors. I don’t know what the actual problem was, but I can assure you this is not my bill.
I would truly appreciate your assistance.
Sincerely,
Your Name
Address
This letter is meant to serve as an example only. The text of your letter should pertain to your personal situation. You should consult an attorney for any legal questions you might have.
Dispute of Collections
Date
Credit Bureau
Address
RE: Acct. #...
Dear (Credit Bureau Name):
I have just received my credit report and have noted that it contains erroneous information regarding the following accounts. I would like them deleted from my record:
Collection Account ______________This is not correct. Please remove.
(Bank, Institution, etc.) - This is not mine.
(company name) (acct. # ______________) When I questioned (company name) about this account, they told me they requested this be removed from my credit report. How were you able to confirm it? Please explain.
(credit card company) ___________________ This is not mine.
(retailer name) _______________ This is not mine.
(company name) ____________ This is not mine.
Please re-investigate and delete these disputed items. I understand that 30 days constitutes a reasonable time to check these out. Please notify me if it takes longer.
Please send names and business addresses of those persons you contacted for any verifications. Or, as per the Fair Credit Reporting Act, please send me notification that the items have been deleted.
Please send an updated copy of my credit report to the following address:
Sincerely,
Name
Address
Social Security Number
Dispute to Collection Agency
Date
Name _______________
Collection Agent
Address
RE: Account number __________________
Dear _______________:
Your company is showing a collection account number _________, on my credit report, and I have no knowledge of this item. The client is listed under the name of___________________.
Please explain this account and tell me who your client is.
Your cooperation in this matter is greatly appreciated.
Yours truly,
Name
Address
Negotiating A Settlement
Date
Creditor
Address
RE: Account # __________________
Dear Creditor:
I am writing to request assistance in correcting erroneous information pertaining to my account #__________________ shown on my credit report.
I was involved in a nasty divorce which necessitated leaving my home. It was my understanding that all outstanding accounts were to have been taken care of in the proceedings.
With changes to my address and marital status, perhaps any billings that were sent, concerning unpaid accounts, never reached me.
While starting a new life, I discovered that your account was never settled. I am trying to correct my credit after going through this set-back by trying to settle these accounts, and doing the best I can.
The outstanding account # ________________ has a balance of ________ which is too large a sum for me at this time. I am writing to inquire if there is any hope for a reduced amount to satisfy the account in full.
I am also concerned about the negative information now on my credit file. I am advised that the negative information you have placed on my files could remain in my credit reports for 7 years after payment is made. However, I have the right to remove any information from this credit report through the suppliers of information.
I am requesting, because of my current situation, your company notify the Credit Bureaus to delete this account from my files when paid in full.
Thank you in advance for your attention to this unfortunate situation.
Sincerely,
Name
Address
Disputing Specific Items or Discrepancies
Date
Credit Bureau
Address
RE: Acct. #...
Dear (Credit Bureau Name):
Going over my credit report I found many errors. I request your investigation of the following:
1. (Retailer name) - I spoke with (retailer name) again to verify my records. They confirmed this was my account and that there were no late payments to this account. They will draft a letter if needed to correct this error. Please contact this creditor.
2. Foreclosure (date) - I did not have a foreclosure on (date) or since then. Please remove this.
3. Collection Account _____________ I have tried to get to the bottom of this with the information your company supplied. How are you able to confirm when I cannot? (See enclosed copy). This is not mine. Please remove this.
Re: Auto
The consumer has no protection against automobile salesmen who are not concerned about a person's credit report or what problems multiple inquiries can cause. I understand your credit bureau has legal responsibility in this matter. There should be more supervision on access to credit files by salesmen with these dealerships.
I did not authorize the following inquiries and demand they be removed from my file:
1. (company name) There are 4 different days in (month) of (year). Why would this be? Please remove 3 of these entries. I only authorized one.
2. ______ Motor Acceptance Corp. I only authorized one. Please remove the other 4 entries.
These listed accounts are neither my debts nor my authorized inquiries. Please correct this by the removal of these items from my credit report. Please send a copy of my corrected credit report as soon as possible to my address listed below.
Sincerely,
Your Signature
Name
Address
Social Security Number
Request Reinvestigation of Items That Are Still Showing
Date
ATTN: CUSTOMER RELATIONS DEPARTMENT
Credit Bureau
Address
Dear (Credit Bureau Name):
I have contacted your company ____ times regarding the errors which continue to remain in my consumer credit report.
I am again noting that problems have been discovered and they continue to remain unresolved. I don't know how to better state my problem nor do I know how to correct the errors.
The following accounts are not mine.
Account Name & Numbers
________________________
________________________
________________________
Since you have not given me names of persons with their business addresses that you contacted for re-verification of the information, I assume that you have been unable to verify the information as well.
If this problem continues I will be forced to seek legal assistance. I understand that 30 days constitutes a "reasonable time" to complete these actions unless you immediately notify me otherwise.
Please send me an updated copy of my credit report with these items deleted.
Thank You,
Signature
Name
Address
Social Security Number
We are in the business of obtaining the best possible loan to meet your needs and goals, we are NOT in the credit repair business. You can remove erroneous information from your credit report by following instructions contained in this section of our website, or seek the help of a true professional, NOT a "Credit repairing agency" - that is the worst thing you can do!
Disclaimer:
This website section has been prepared for general information purposes only. The information in this section is not legal advice. Legal advice is dependent upon the specific circumstances of each individual situation. Laws may vary from state to state. We are not lawyers. We do not offer legal advice. The issues discussed on this site are the expression of the personal experiences of laypersons. Finally, the information contained in this section of the website is not guaranteed to be up to date. Therefore, the information contained in this section cannot replace the advice of competent legal counsel licensed in your state.
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