John, I filed bankruptcy 7 years ago. I heard that bankruptcies have to be deleted after 7 years but it’s not. Are the credit bureaus breaking the law?
Answer, No the credit bureaus are not breaking the law. Chapter 7 bankruptcies can remain on your credit files for 10 years from the date filed. Chapter 13 bankruptcies can remain on your credit files for 7 years from the date discharged, but no longer than 10 years. Chapter 13s take a few years to discharge so most of them stay on file for 10 years. Sorry, I know that’s not the answer you wanted.
John, I’ve got really bad credit. Some of it is my fault and some of it is my ex-husband’s fault. A friend of mine said I should pay for a credit repair company to get stuff off my credit files. Is that legal? Do they work?
Answer, If you listened to the credit reporting agencies and the Federal Trade Commission then you’d conclude that credit repair is a scam. In fact, I used share their opinion because I came from the industry and you get a little brainwashed. However, now that I’ve had a chance to see first hand just how poor of a job the credit bureaus do of maintaining fully correct data, my opinion has softened a bit. I still think some of them are dirt bags but to say the entire industry is a scam is an exaggeration.
Credit repair, despite some rumors, is not illegal. There are Federal and state laws that govern how credit repair organizations must operate in order to NOT be acting illegally. CROA (Credit Repair Organizations Act) is the big one. If the company is complying with CROA (you can look it up and review it, it’s not complicated) then that’s the first step to choosing a credit repair company. Also, if they guarantee they can have items removed or try to take money up front for their services, RUN! That’s illegal under CROA.
We know at least one of the credit bureaus sells credit reports to credit repair organizations so they’re being a little hypocritical calling the entire industry a scam. And I know that many of them are successful getting items removed from credit reports. If you believe what you see on the Internet then some of them have gotten millions of items removed over the years. And, even the FTC’s own annual compiling of complaints shows that credit repair generates a very small number as compared to ID theft, debt collectors, and yes, the credit bureaus.
I hope this has helped. As with any service provider, there are good ones and there are bad ones. Do your due diligence before signing up with anyone. Ask for complaints, ask for success metrics, ask for costs, and maybe even ask for references. Don’t worry about BBB ratings. Those have proven to be less about reality and more about coercing payment from companies who want a higher rating.
John, Thanks for your informative website. My question relates to your post about how IRS will remove a tax lien from your credit report if you pay off your debt to them in full. My question: I have a “State Tax Lien” that is filed on my credit report. Does this still fall within the IRS new law. ie. if I pay off my state tax lien will the State of California remove the lien from all 3 credit agencies.
Answer – Unfortunately the IRS’ new tax lien policy applies only to Federal Tax Liens and not to state tax liens. Having said that, if you have paid the CA lien in full it doesn’t cost you a dime to ask them for a withdrawal. If you are successful then you will be able to have the lien removed from your credit reports because the credit reporting agencies don’t maintain withdrawn liens, state or Federal.
Also, I need to point something out from your question. The State of CA didn’t put the lien on your credit reports. The liens are public records and the credit bureaus proactively pull them from courthouse records and then place them on credit files. So, if you are successful getting the state to withdraw the lien they won’t be the one to have them removed from your credit reports. You’ll simply need to file a dispute with all three of the credit bureaus, include a copy of the withdrawal paperwork, and then they’ll remove them.
John , I have a 670 FICO score. Is that good? What’s a good score to have? Beverly
Answer – Beverly, a 670 FICO score used to get you anything you wanted, about 5 years ago. Today it doesn’t get you much. 750 is the new “black” so you’ve got some work to do. Anything below 650 is currently considered subprime. There is no blanket answer to what’s a good score. But, a good score is any score that gets you approved at the best deal the lender or insurance company is offering. For some lenders that’s 700, for others it’s much higher. I’d work on getting your scores to at least 750 and then you won’t need to worry about good scores and bad scores. Good luck!! John
John, Should I try to get old inquiries off my credit reports?
Answer, Inquiries only count in your scores for the first 12 months they’re on your credit reports. So, if your inquiries are older than 12 months you’ll be wasting your time. There won’t be any sort of score benefit if you’re able to get them removed
Hi John, ok, what’s the real deal about credit reports? How many do I have? Beverly
The Answer, Bev you’ve just identified one of most prevalent myths about credit reporting. The general consensus is that you have 3 credit reports, one each from Experian, TransUnion and Equifax. That’s incorrect. You actually have 4. Add Innovis Data Solutions to the list. You can get a copy of that report here.
John, My date of birth is on my credit reports. It’s not hard to determine my age. Do creditors look at that and do credit scores look at that?
Answer You’d be surprised to learn that considering your age is NOT illegal or prohibited. Think about your insurance premiums…they are certainly determined by your age, and a variety of other things. In fact, the Equal Credit Opportunity Act outlines how age CAN be used by lenders as long as they compensate its negative influence on protected classes (the elderly). So, the short answer to your question is no, it does not count. But, it doesn’t count not because of its legality.
I closed a Platinum AmEx because the unlimited credit limit actually shows up on my credit report as $0 credit. I opened an AmEx Blue account instead. Was that a good move?
If your goal is to get an account on your credit report that actually helps your revolving utilization percentage then yes, good move. If you’re referring to the Amex Platinum charge card then it’s not being considered for that percentage in the newer scoring models. You now have a new inquiry on one of your credit reports that could be hurting your score a bit and you will have a new account on all three of your reports that will also probably hurt the scores a little bit. But, in the grand scheme of things having lower utilization is much more important and actually having a card that shows a high credit limit is a good move. By the way, your old Amex card really does have a limit. It’s called a “shadow limit.” Do you really think you can go out and charge an unlimited amount of goods or services on that card?
Last yr Cap One sent me statements on two accounts saying I owe money. I thought I settled these accounts and even made electronic payments but without a settlement letter. I had not heard from Cap One for almost 4 yrs and now they have added interest to the amount they say I owe. How can I resolve this matter. The last time I had contact with them was in 2006. I live in NY and the debt was incurred while I lived in NY.
First off, if you really settled it then you don’t owe anything on it any longer. That’s what a settlement buys you…a zero balance. If someone is trying to collect a debt that you don’t owe any longer that’s illegal. If the debt was incurred in NY and it wasn’t really settled then they can sue to collect the debt for six years so it would still be an issue. You say you paid it electronically. See if you have any record of the transaction in the archive statements. I can see my statements online for the past seven years so hopefully you can do the same and find a record of the transaction. I wouldn’t pay a debt that you don’t owe unless you just don’t care and don’t want to deal with it. If you absolutely know you settled it then contact a NACA attorney and talk to them about your rights under the FDCPA.