Credit Repair

January 5, 2015 16:14 by Consumer Ed

Dear Consumer Ed: 

I’ve noticed a number of credit repair signs on the side of the road on my drive home.  Is there a new law that will help me repair my credit?

Consumer Ed says: 

With very few exceptions, Georgia law prohibits people or entities from claiming they can improve your credit history or credit report, or even to offer assistance in doing so.  First, you should understand that these companies cannot remove negative information from your report if it’s accurate. Further, they almost never deliver on the claims they make.  There is nothing they can do that you can’t do for yourself, at far less cost.

Before turning to a person or company that charges for such services, anyone having difficulties with their credit (due to high debt, unpaid debt, etc.) should speak with their creditor(s) directly to work out an arrangement that will allow them to pay back the debt, while easing the burden on their household.  Many creditors will negotiate lower interest rates, or agree to alternative payment plans, to assist you in making the required payments.

If you need more help, there are some organizations in Georgia that can help you gain control over your debt.  Since 2003, Georgia has permitted the practice of debt adjustment under a statute offering significant safeguards to debtors.  Debt adjustment includes budget counseling, debt management, and debt pooling to assist in managing your debt.  Under our current law, these organizations are highly regulated and must comply with strict rules set by the Legislature.  Fees for these services cannot exceed 7.5 percent of the monthly amount to be paid to the creditors, and the service provider must begin to distribute payments to creditors within 30 days.

Once your debt is under control, there are some simple things you can do to improve your credit score on your own.  First, check your credit reports for false entries or other items you may not know of. Occasionally, credit reports will contain reporting errors or even evidence of fraudulent activity.  Each credit reporting agency is required to offer you one free credit report each year.  Residents of Georgia, however, are also entitled to two free credit reports each year.  You can get a free report from each of the three credit reporting agencies by going to www.annualcreditreport.com.  If you discover any errors in the report, contact the agency to dispute the entry and have it removed.

Second, pay your bills on time.  You may have existing delinquencies on your report, but paying future bills on time is crucial to improving your score.

Third, minimize your debt on credit cards and other loans.  When determining your score, credit companies factor in how much credit you currently have in relation to the amount you are approved to borrow.  Keeping your balances low will improve this ratio and, ultimately, your score.

Fourth, don’t open up new lines of credit unless it’s absolutely necessary.  Each time a company checks your credit, or a credit card is opened in your name, it affects your credit score.  While having one or two credit cards with minimal balances could show a responsible use of credit, opening new cards and/or having numerous inquiries will actually lower your score.

The final factor in improving your credit score is simply time.  Delinquencies stay on your credit report for seven years and will lower your score until they’re removed.  It may seem like an impossible task to improve your credit when you’ve had some negative credit history, but those who offer a quick fix are not the solution.  These companies cannot deliver the fast results they promise.  If instead you take the simple steps outlined above, you’ll see your rating increase with time.

If you enjoyed this post, make sure you subscribe to my RSS feed!

Rate This


Will a credit freeze prevent my credit card company from increasing my credit limit?

June 18, 2014 22:42 by Consumer Ed

Dear Consumer Ed:

If I place a credit freeze on my credit report, will it prevent a credit card company from increasing the credit limit on my credit card?

Consumer Ed says: 

A credit freeze will prevent most parties from accessing your credit report or credit score, but it probably wouldn’t prevent your current credit card company from increasing the credit limit on a card that you obtained prior to putting the credit freeze in place.

Credit freezes, also known as security freezes, are regulated on a state-by-state basis.  Georgia law allows consumers to place a security freeze on their credit reports by sending a request in writing to a credit reporting agency.  Generally, a credit freeze prevents credit reporting agencies from releasing your credit report or credit score unless you first remove the freeze by providing your password.  There are, however, exceptions to this general rule. 
   
One of these exceptions is for companies with which the consumer has a pre-existing account, contract, or debtor-creditor relationship for the limited purposes of reviewing the active account, or collecting the financial obligation owing for the account.  Your current credit card company is an example of this.  Therefore, your credit card company and its employees will be able to view your credit report for the purpose of reviewing your active account.  Your credit provider would likely make a determination of whether to increase your credit limit from the information it gathers from this review.  This exception also means that putting a credit freeze into place wouldn’t prevent your credit card company from increasing the credit limit on your card.

If you’d like to put a credit freeze into place, you should send a written request to all three of the major credit bureaus—Experian, Equifax, and TransUnion--because different credit issuers may use different credit bureaus.  Your request should include the following information:

  • Full name (and former name if applicable)
  • Current address and former address if it changed in the last 5 years
  • Social Security number
  • Date of birth
  • Photocopy of a driver’s license, state ID card or other government-issued identification
  • Proof of current residence, such as a copy of a phone or utility bill
  • If you are a victim of identity theft, include a copy of either the police report; investigative report, or complaint to a law enforcement agency concerning identity theft;
  • Georgia residents who are not victims of identity theft and are under age 65 should include payment by check, money order or credit card in the amount of $3.00.  Do not send cash in the mail.


You can contact the credit bureaus at the addresses below:


Experian Security Freeze
P.O. Box 9554
Allen, TX  75013
1-888-397-3742
https://www.experian.com/freeze/center.html

Equifax Security Freeze
P.O. Box 105788         
Atlanta, GA  30348  
1-800-685-1111
https://www.freeze.equifax.com

TransUnion LLC
P.O. Box 2000
Chester, PA 19022-2000
1-888-909-8872
www.transunion.com/personal-credit/credit-disputes/credit-freezes.page

If you enjoyed this post, make sure you subscribe to my RSS feed!

Rate This


Can a company pull credit report when you reload a gift card?

April 22, 2014 21:49 by Consumer Ed

Dear Consumer Ed:

I attempted to reload a restaurant gift card. After providing my credit card number, expiration date and 3-digit code, I was then prompted with three questions: The street number of my residence on a street that I lived on several years ago, the type of residence I live in on my street, which was given by name, and what street I have lived on in the past out of 4 choices. The processor must have accessed my credit report. Is this legal? 

Consumer Ed Says:

Yes, this is likely legal under the Fair Credit Reporting Act, as well as the terms and conditions of the gift card that you used.

The Fair Credit Reporting Act (FCRA) limits the manner (and the reasons) in which a consumer's credit report may be accessed. The Act is designed to protect the privacy of consumers' information, and to guarantee that the information supplied by credit reporting agencies is as accurate as possible. Under the FCRA, there must be a permissible and legitimate purpose for a business to check your credit report. For example, a business may access your report if you are applying for credit and it needs to check your creditworthiness, or if you already hold an account with a business and it needs to determine if you continue to meet the terms of the account.

A business can also access your report if it has a legitimate need for the information in relation to a business transaction that you initiate. In your case, by using and then reloading the restaurant gift card, you can be said to have initiated a transaction with this business. The business may have obtained this information about you in order to verify your identity before completing the transaction. As long as the information is not misused or mishandled, identity verification of a consumer helps to stop fraud and identity theft, and may be deemed to be for a legitimate purpose. 

Additionally, the terms and conditions of the gift card you purchased may give the business the right to check your information. Often in those terms and conditions, a business will expressly retain the right to access information about you for identity verification and for fraud prevention. If your gift card is subject to such a provision, then when you began to use the gift card you may have given the business permission to check your personal information, and to verify your identity.

If you still have questions about how or why the business accessed your information, you could try the following:

 

  • Check the terms and conditions of the gift card you purchased to see whether you have authorized the business to check your information; or   
  • Ask the company directly how they obtained your information and what steps they take to ensure your private information is protected.

 

If you aren't satisfied with the business' response to your questions, or feel they are misusing your personal information, then you can always simply take your business elsewhere. 

If you enjoyed this post, make sure you subscribe to my RSS feed!

Rate This


Credit/Debt
nav_cap