July 2003 - Making Cents Repair Your Credit It's a gut-wrenching feeling. Out of nowhere, you are rejected for a credit card or department store charge account or turned down for a car loan or mortgage. This couldn't happen, you think. You pay your bills on time. Well, think again. Your credit can be ruined for a number of reasons, including job loss, illness, or just bad spending and credit habits. If you have paid your bills late, abandoned a loan, had a car repossessed, or declared bankruptcy - for whatever reason - these events impact your ability to obtain new credit and may cause problems with existing credit. Credit cards and lines of credit can be cancelled or borrowing limits lowered. Then there are horror stories of credit ruined because records got mixed up with someone else's or because of a former spouse's spending spree. Sometimes it's a result of identity theft, or sometimes nothing more than a simple clerical error. As the sharing and transferability of personal financial information has proliferated, some privacy and consumer advocates think that the industry's financial information database has ridden the wave of technology way beyond regulators and legislators. A refined and complex system among financial providers has made an unbelievable amount of your personal financial information available to whomever has access. According to the major credit reporting agencies, the system saves consumers billions of dollars by lowering default risks and thus costs for worthy borrowers. There is a darker side, though. Many see a system gone wild, in which the practices of a greedy, error-ridden and unresponsive industry with inaccurate and hard-to-correct reporting, ends up costing consumers extra on everything from mortgages, credit cards and auto loans to property and liability insurance. Are credit reports that fragile? How accurate are they? It depends on whose numbers you accept. Industry sources point to studies showing that less than two percent of credit reports have errors serious enough to warrant denial of credit. Other consumeroriented studies have found serious errors in 29 percent of the reports analyzed and minor errors in nearly half. If you are turned down for credit and you think there's been an error, contact the three major credit bureaus and get an informed look at your credit files: Equifax (888) 997-2493; Experian (888) 397-3742; and Trans Union (800) 888-4213. These bureaus will also provide instructions on how to read their reports and how to dispute inaccuracies. Be prepared to contact your creditors, write letters and document any errors. If there are legitimate black marks on your credit, you can pay off overdue accounts, work out arrangements with creditors, and even add good credit items to your report. In some circumstances, you can add a letter of explanation to a negative entry. By law, if you notify the credit bureau of an error, they must respond to you within 30 days or remove the item. If you really have credit problems and need help, there are services that advertise to help repair your ratings. While many are legitimate, some are little more that scams designed to separate troubled borrowers from what's left of their money, according to Sonny Colley, president of Consumer Credit Counseling Service. Consumer Credit Counseling is a non-profit organization that helps individuals with credit repair. They offer workshops and seminars open to the public on topics such as managing credit, budgeting and much more, and can be reached at (843) 689-2227. Since anyone can be the victim of credit card fraud, identity theft, or simple clerical error, caution is the best preventative. Respond quickly to any error or discrepancy. And for the most credit-challenged individuals, the best advice might be - just pay cash.