Cleaning up Your credit

Here's how to wipe your credit report's slate clean

you couldn’t do yourself for free. At worst, some have been accused of encouraging illegal practices, such as applying for credit using false Social Security numbers.
“Although there are legitimate credit counseling services, the FTC has never seen a legitimate credit repair company,” says Jodie Bernstein, director of the FTC’s Bureau of Consumer Protection.

“We will continue to fight this fraud.” In March, through Operation Eraser, the FTC and state officials brought charges against 31 companies for making deceptive claims and seeking advance payment for credit repair services. Indeed, under the Credit Repair Organization Act, a federal law passed last year, companies are prohibited from taking money from consumers before services are fully performed.

CLEARING YOUR RECORD
Your credit report will show payments made on time as well as the bad news: late payments, repossessions, accounts turned over to a collection agency, amounts written off as uncollectible by creditors, judgments, liens and bankruptcy. Inaccuracies can tarnish a good record and exacerbate your problems if you’ve fallen behind. Therefore, it’s vital to check credit reports to make sure they contain no damaging errors. There are three major credit bureaus most lenders rely on for reports: Equifax, Experian and Trans Union (see sidebar, “How to Get Your Credit Report,” for addresses and phone numbers). Upon request, each of these companies must tell you everything that’s in your report, along with the sources of information that they used. In addition, you must be given a list of everyone who has requested your report within the past year (two years for job-related requests).

“I’d recommend getting reports from all three major credit bureaus,” says David Van de Walle, a spokesperson for Trans Union. “In most cases, the information will be virtually the same, so you can ask for subsequent reports from only one credit bureau. However, if you see that one firm seems to have much more information about you, that’s the one you should ask for follow-up reports.”

You can purchase a credit report from any of these bureaus for no more than $8 apiece, $16 for a married couple’s joint report. (Note that some states require lower prices.) Moreover, if you are ever denied credit or turned down for a transaction that requires a credit report, such as an apartment lease or cellular phone service, you’ll be notified of your right to see the report that caused the denial, at no charge. The Fair Credit Reporting Act allows you to receive one free report every 12 months if(1) you are unemployed, but plan to get a job within 60 days, (2) you are on welfare or (3) your report is inaccurate due to fraud.

“You should ask to see a credit report after you’ve been turned down for credit,” says Anissa Yates, a spokesperson for Experian. “Even if you haven’t been denied credit, you should ask to see your report at least once and preferably twice a year. If you’re considering a major purchase, such as a house or car, ask to see a report at least 60

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