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Credit Report - Frequently Asked Questions
What is a credit report?
A credit report is a report issued by an independent agency that contains certain information concerning an individual’s credit history and current credit standing. Under federal law, you are entitled to an accurate history. However, that history can properly include delinquencies or bankruptcy.
Your credit report is not necessarily a reliable reflection of all of your creditors. Not all creditors report to credit reporting agencies; your credit report lists only those that do report and the contents of the public record.
Fixing your credit report
It is not necessary to hire an attorney to see whether errors in your credit report are corrected or positive information is reported. In fact, many credit repair offers are scams that, at best, waste your money and, at worst, involve you in a crime.
Under the Fair Credit Reporting Act, you can challenge information that you believe is inaccurate. If the reporting agency can't verify the accuracy of the information, they must remove it. However, negative credit history cannot be removed if it is indeed accurate and verified by the reporting agency.
Consumers are entitled to a free credit report annually from each of the major reporting agencies. To access that free credit report, click here. https://www.annualcreditreport.com/cra/index.jsp
Credit reports after bankruptcy
Your bankruptcy can be reported on your credit report for 10 years from the filing of the case. If you file a bankruptcy and voluntarily dismiss it before the discharge, the credit reporting agency must report the dismissal as well as the bankruptcy filing.
A bankruptcy discharge will not erase discharged creditors or your pre bankruptcy payment history. However, if you have received a discharge in bankruptcy, it is in your interest to have the discharge noted on your report, since it is proof that the old debt is no longer legally enforceable.
According to Commentary to the Fair Credit Reporting Act, a debt discharged in bankruptcy must be listed as having a 0 balance. FTC OSC section 607, item 6 states: "A consumer report may include an account that was discharged in bankruptcy (as well as the bankruptcy itself), as long as it reports a zero balance due to reflect the fact that the consumer is no longer liable for the discharged debt."
Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) is a federal law that regulates the collection, dissemination, and use of consumer credit information. Along with the Fair Debt Collection Practices Act (FDCPA), it forms the basis of consumer credit rights in the United States. It was originally passed in 1970, and is enforced by the United States Federal Trade Commission.
The following sites can help you understand and exercise your rights under the FCRA.
Bankruptcy & Credit
While most bankruptcy clients promise themselves that they will never again have or use a credit card, some consider keeping at least one of their cards for convenience or emergencies after their bankruptcy is over. In fact, there is usually no reason for you to retain any of your old credit cards through your bankruptcy. Most people receive unsolicited credit cards soon after they file bankruptcy. Bankruptcy debtors receive new credit cards because they are often considered a better credit risk after wiping out their debts in bankruptcy than they were when they owed money to many creditors. Also, bankruptcy clients cannot file against newly issued credit cards for eight years. For most people, bankruptcy makes it easier, not harder, to get new credit cards.
As soon as you receive your bankruptcy discharge, you will be able to qualify for some basic consumer loans, although at a higher interest rate. The good news is most lenders state that it takes no more than two years to reestablish a normal credit rating provided you pay debts currently and make sufficient income. Within two years after receiving a Chapter 7 discharge, most people are able to purchase cars and homes with normal interest rates and terms.
At one time bankruptcy destroyed peoples' credit. Banks used to believe personal bankruptcy was a stigma on credit that a debtor could not overcome. Today, so many people file bankruptcy every year that banks cannot ignore this large market of potential customers. As a result, banks are much more lenient toward people forced into bankruptcy. While no one plans to file bankruptcy, the effect of filing today is not nearly as bad as your creditors would like you to believe.