The Proper Use Of Credit Cards

How will I know if there is negative information in my report?

The best way to determine if you have negative information in your credit report is to order a copy and check it carefully. For a thorough review, you should check with all three CRAs since there may be some variations in the file each CRA maintains on you. This should be done at least once a year. Because the crime of identity theft is on the rise, we recommend that you check at least one of your credit reports each six months. After the effective date for free credit reports under FACTA, you will be able to contact a centralized source that will include information from all three CRAs.

Tips for managing your credit cards

You should also check your credit report when you know it is going to be used to make important decisions, such as applying for an automobile or home loan, renting an apartment, or applying for a job. Reports should be ordered at least one to two months before you apply for credit or intend to rent. At these crucial times, you do not want to be surprised to find that your report contains negative information, especially if that information is inaccurate.

A creditor has the duty to report only accurate, complete, and updated information to a CRA. For example, if you close an account voluntarily, your creditor must report this fact in order to distinguish it from an account that is closed for nonpayment. If you disagree with a creditor's report of negative information, the creditor must put a notice of that dispute in your file before reporting to the CRA.

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What can I do if there are errors in my report?

There is no denying that errors can and do appear in credit reports. The July 2000 issue of Consumer Reports cited a study where more than 50% of the credit reports checked contained errors. A more recent survey conducted by the US Public Interest Research Group found that one in four credit reports contain serious errors.
http://uspirg.org/uspirgnewsroom.asp.
There are two main reasons errors may appear on your credit report. One is when you have been mistaken for another person with a similar name and their information ends up in your file. The other more serious cause of error is fraud. Someone may have intentionally gained access to your personal information and obtained credit in your name. Instances of identity theft are increasing.

See PRC Fact Sheet 17, "Coping with Identity Theft" www.privacyrights.org/FS/fs17-it.htm and Fact Sheet 17a, "Identity Theft: What to Do if It Happens to You" www.privacyrights.org/FS/fs17a.htm .

A survey conducted by the Federal Trade Commission in September 2003 found that nearly 10 million people were victims of identity theft in 2002 alone. For more on the FTC's and other recent surveys, see www.privacyrights.org/ar/idtheftsurveys.htm .

How to Reduce Your Exposure to Credit Card Theft

Both state and federal laws provide you with the right to have errors corrected. Credit bureaus are regulated under the California Consumer Credit Reporting Agencies Act (California Civil Code section 1785 et seq.), the laws of other states, and the federal Fair Credit Reporting Act (15 USC 1681 et seq.). For information on the law in your state, contact your state's consumer protection bureau or office of the Attorney General. National credit bureaus must have a toll-free number so you can contact them with your questions. Also, credit reports must provide an address to request an investigation of inaccurate information.

Once you have notified a CRA of your dispute, both federal and California law allow 30 business days for an investigation. The bureau must consider all the relevant evidence you give it, and errors must be corrected. If the CRA cannot verify negative information, it must be deleted from your file. You are entitled to receive a free copy of your corrected report. You may ask the credit bureau to send a corrected report to anyone who has requested your file in the past six months, as well as to anyone who has requested it in the last two years in relation to employment. Remember, when corresponding with the CRAs, be sure to make copies of all letters, and mail them certified return receipt requested.

Major Problems Using Credit Cards

If you disagree with the result of the CRA's investigation, you have the right to submit a 100-word explanation. The credit bureau must include the explanation in your file although the negative information will not be removed.

Some consumers who have had errors corrected find the incorrect information reappears in their files at a later date. Both federal and California laws require credit bureaus to notify the consumer within five days of reinserting information. Negative information cannot be reinserted into your file unless the credit bureau takes the added step of having the source of the information certify that it is complete and accurate. Credit bureaus must provide the subject of the report with a toll-free number to dispute the reinsertion and the opportunity to include a dispute statement. However, even if you have had errors in your report corrected, it is wise to periodically check your credit report to make sure the errors do not reappear.

The recent FACTA amendments to the FCRA also place new obligations to investigate errors on companies that furnish information to a CRA.

Is there more I should know if I'm a victim of identity theft?

As we explained above, if you are a victim of identity theft or suspect your SSN may be compromised, you can get a free copy of your credit report from each of the major credit bureaus. The free copies are mailed to you when you call the credit bureaus to establish a fraud alert. When creditors encounter the fraud alert, they are supposed to contact you to determine if it is truly you or if it is an imposter making the application for credit.

Credit Cards: Profits and Losses

Victims of identity theft in California, Louisiana, and Texas can also “freeze” their credit report so it can only be accessed in very limited situations. With some exceptions, this option is offered free to victims of identity theft who provide a police report to the credit bureaus. Those who are not victims of identity theft may have the option of freezing their credit reports for a fee in those states that offer the freeze.

For more information about fraud alerts and credit freezes, see www.idtheftcenter.org/vg124.shtml and www.privacy.ca.gov/financial/cfreezeon.htm .

Can I have negative information deleted if the entry is not an error?

After seven years, negative information in your report should automatically be deleted. Under federal as well as California law, the seven years begins 180 days from the date of the original delinquency. A Chapter 7 bankruptcy should be deleted after 10 years from the filing date. A Chapter 13 bankruptcy, which includes some debt repayment terms, remains on your credit report for seven years. Otherwise, negative information will remain in your file for the period allowed by law. However, you may include in your 100-word explanation any extraordinary circumstances tha t led to the negative information, such the loss of a job or illness.

Types of Credit Cards

Companies or individuals promising quick fixes are almost always fraudulent. The important thing to remember is that no one can have accurate information removed from the credit file. The law offers some small protection to consumers who deal with so-called "credit doctors" or "credit repair clinics." Such companies are prohibited from charging a fee before completing a promised service.

A better alternative for help with re-establishing good credit is to contact a member agency of the National Foundation for Consumer Credit, such as the Consumer Credit Counseling Service. These nonprofit groups have offices in most cities. To find the office nearest you, call or write:

Beware of other credit repair services. Generally they promise a lot, charge a lot and, deliver little. For more information about credit repair services see www.ftc.gov/bcp/menu-credit.htm

Credit card counseling