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Color of Money

Color of Money Book Club

Free-for-All Discussion

Michelle Singletary and Evan Hendricks
Washington Post Business Columnist and Author
Wednesday, July 21, 2004; 1:00 PM

Your credit determines the rate on your mortgage, car and credit cards. So how much do you know about the credit-reporting system? Can you name the three main credit bureaus?

Author Evan Hendricks joins Post columnist Michelle SingletaryWednesday, July 21 at 1 p.m. ET to discuss this month's book club selection, "Credit Scores & Credit Reports: How The System Really Works, What You Can Do."

_____Michelle's Column_____
The Color of Money

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

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Michelle Singletary: Welcome. I really must be weird because I love talking about credit scores and credit reports. It's almost better than a big bowl of coffee ice cream (which I can't have these days because I'm trying to slim down). Oh, sorry, off track. Anyway, I'm so pleased to have Evan Hendricks join me for this discussion. Don't worry if you haven't read the book but I do suggest you get it if you use credit. So let's get started.

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Urbana: I haven't read the book, sorry if this is covered...

How do scores combine after marriage? One of us makes $80k and has a score of 740. The other makes $35k and has spent like Carrie Bradshaw... a history of late and minimum payments to several department scores and bank cards.

Would it be better, worse, or no different if the higher-earning spouse paid the other's debts before or after the wedding?

Evan Hendricks: I would proceed with caution and patience; keeping your accounts separate until time goes by and your future spouse can pay off her debts and raise her credit score. The older the delinquency, the less it hurts your credit score. Better to keep you credit history clean until she can catch up. One way to improve a partner's score is to make them an authorized user on an account which is always up to date. (This is another story.)

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Sterling, Va.: I have a debt that is six years old. Currently, I have the option to pay it off or remove it from my credit reports next year. I'm leaning towards removing it off my credit reports next year because if I pay it off it will still show up on my report as a bad credit for another seven years. My question is: after I remove it the bank will not legally be able to report the debt again?

Evan Hendricks: This is a complex, confusing and mysterious area, because research showed that sometimes paying off an old debt can worsen your credit score, because the creditor or debt collector can report it to a credit bureau in a way that makes it look more recent. Remember, delinquencies in the last 11 month have the biggest hit on your credit score (Chapter 2).
So if you do have to or want to pay off 6-year old debt then negotiate w/ creditor to ensure it is not "refreshened" for reporting purposes.

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Washington, D.C.: Hello, Mr. Hendricks,

Where are the laws currently on ordering
free credit reports? They seem to change a
lot, and I can't keep up!;

Evan Hendricks: A word on the new federal law in a minute, but since it hasn't taken effect, here's the current state:

States in which all residents are entitled to free report: Maryland, Maine, New Jersey, Georgia (2), Coloradao, Vermont

Then, anyone denied credit cuz of credit report, or suspect victim of ID theft, or unemployed, also entitled to free report (THese are Chapter 4, or also listed in Michelle's book)

Under new federal law, phased in roll out of free reports

12/04 Western States
3/05 MidWestern States
6/05 SOuthern States
9/05 East Coast

Michelle did column on this about a month ago

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First time home buyer: Hi, had a bankruptcy in Dec. 98, have had 100% perfect credit since then. How badly will the bankruptcy affect my credit report when I go to buy my first home, which I'm about to start looking into? Will it help that I have significant savings set aside for the down payment?

Evan Hendricks: Actually, you should have a pretty good shot. If you've stayed clean for 6 years, that tells them a lot. Specialists tell me that if consumers stick to a program, they can reenter the credit mainstream after 15 months. Again, no quick fixes, but discipline, like dieting

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Washington DC: How often does your FICO or credit score get updated?

Evan Hendricks: The FICO score theoretically could change daily, those these usually are minor changes. With info technology, creditors are reporting to credit bureaus on all days of months. Once new data comes in, that can affect your credit score (Chapters 1 and 2)

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Washington, DC: Hi Michelle,
I have a credit card with a good interest rate (11.9%) that I rarely use but keep for those times when I need a credit card, like for online purchases or reserving a rental car. When I do use it, the balance is paid in full that month. I've had the card for five years, and every few months the available credit line increases, but I recently saw the credit line jump from around $13,000 to $22,700! Though I feel a bit flattered, could such a large amount of unused credit negatively effect my credit rating? Should I call the company and ask them to lower the credit line?
Thanks a lot.

Michelle Singletary: I believe you can decline the credit interest, can't you Evan?

Evan Hendricks: Yes, you can decline it, but research shows that it generally raises your credit score to have more credit available. If you use less than 1/3rd or 50% of balance, then that is good for your credit score. Though your balance isn't reported as Zero just cuz you pay if off each month

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Washington, D.C.: When I bought my first new car at age 20, I was told that my credit wasn't good enough for the better interest rates. I replied that I'd had a credit card for two years and paid off the entire balance every month. The salesperson replied that that does not denote good credit, that you have to carry a balance for a long time THEN pay it off. What say you? Doesn't this seem really backward?

Michelle Singletary: It is backward. That salesperson was an idiot! You don't have to carry a balance to establish good credit. You can charge and pay it off every month but you must pay it on TIME every month. You might have had a low credit score because you were new to the credit game. What do you think Evan?

Evan Hendricks: Car Salesmen! What's important is if your credit card co. reports your balance at end of the month (when you'r maxed out) and you pay off the whole thing in middle of month, your credit score still gets hit cuz you were maxed out when reported. I wont buy a car from that guy.

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NJ: My girlfriend and I are probably going to buy some property together in a year or so. I have very good credit; I was told when I refinanced my current mortgage that my report was the cleanest they had seen. However my girlfriend's record is not so good, so she tells me. She has no debt at this time, however around 8-10 years ago she co-owned a house with some friends and the arrangement went sour, the loan either went into default or nearly did. She said she was denied an AMEX card she applied for, based on this history.

My question is, looking ahead, what can she do to fix this problem, if anything? What inquiries should she make to get started? We will likely need both incomes to afford a house.

Evan Hendricks: A bit mysterious. Your girlfriend shouldn't get rejected for an Amex simply cuz of something that happened 8-10 years ago.
Clearly, she must obtain all three credit reports and make sure there's not something else. Do that first before your next move

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Maryland: Hi. I'm not sure if this is a question you can answer, but I hope so. Because I'm a Maryland resident and can get a free copy of my credit report, I just set about requesting one from each of the three agencies. One apparently doesn't have my current address on file and it's automated system wouldn't allow me to order the report. Is there an easy way for me to make sure they have my correct address? A phone message told me I would have to send a copy of my SS card, bank statements and numerous other materials so they could verify my address. I feel a little wary of doing that. I haven't gotten through to someone who can help me there.
Thanks for your help!;

Evan Hendricks: Go ahead and send your ID documents, certified mail, note the date. I too was not authenticated on one of the 800 Numbers when I researched their systems for book. Marylanders are in a great position. Get your free reports now. You go get 'em again in 12 months, and then in Sept 2005, you're entitled to another free set under Federal law. Whatta deal! But you gotta move now!

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Arlington, VA: Mr. Hendricks, thanks for being here today. Kudos to Congress for mandating a free credit report yearly (even if I won't be able to see it until 2006). But as useful as a credit report is, it doesn't tell me my FICO score. What's an easy and cheap way to get that score?

Evan Hendricks: Trans Union makes you pay an extra $4. myFico.com has a menu of options to choose from. Under the new law, they can only charge a "fair and reasonable" fee for credit scores. BTW, the credit bureaus sometimes charge its creditor customers less than 50 cents per score. So we're pushing to lower the price.

Also, www.experian.com has 30 day free trial, so remember to cancel on day 29. PRoblem, the score you get is a "knock-off" , not the real FICO score.

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Herndon, VA: Hi Michelle, my question is about credit cards. Does the interest rate affect you if you do not keep a balance? I pay off my credit cards every month, so I have not bothered to call and negotiate lower interest rates. Should I be doing so? Does this affect credit rating or other interest rates?

Michelle Singletary: Sounds like you are in good shape to me. What's to negotiate, if you pay it off every month? And Evan can answer the last question.

Evan Hendricks: If your balance is high on the day your credit card co reports you to the credit bureau, it can still lower your score.

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To carry or not to carry: When going for things like mortgages or car loans, do creditors prefer to see you carrying some debt like a credit card or car payment, or do they prefer you have as little debt as possible?

Evan Hendricks: Not one easy answer. In general, if you have little or no credit, it's a thin file and you might not have credit score.

The system wants to see you have top quality, "Mainstream" debt, mortgages, major bank Visa, MC and Amex, and that you handle your credit "responsibly," meaning you have it available, but don't need to use those CCs all the time.

Mortgage payments are major. Dept store cards dont help you as much. Some finaance co stuff can hurt.

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My FICO: Is the FairIsaac FICO scoring system THE ruler for which lending companies and banks go by or are there more (like the three different reporting companies)?

Evan Hendricks: Yes, FICO rules; some 70-75% of the majors use one version or another, but there is some competitive pressure building, so stay tuned.

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Rockville: I was an authorized user on my dad's credit card account for a while, in order to improve my credit score. Then I realized that it might not be a good idea to be associated with some $5k of credit card debt, since it appears on the credit report as if it were my account. What do you think? Is it better to have the debt on an account in good standing or not be attached to an account with $5k of debt. Help or hurt?

Evan Hendricks: The authorized user route is a great, but risky way, for parents to help young adult offspring.

For you, it depends. If your Dad's credit limit is 15K, you win. If it's only 7K, you lose. Still the ontime payment history will help

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Virginia: You said above that the credit card vendor can report the max balance every month, instead of after you pay it off, affecting your score.

Seems this is what happens to me...even though we pay off the VISA in full, they still report the whole balance for the month. Is there any way to change this?

Thanks~!;

Evan Hendricks: 1) See if you can get a straight answer out of your card co. on day they report to credit bureaus (Customer service folk dont always know, ask for supervisor.

2) But better, use diff credit cards, making sure to keep balance 50% below limit at all times

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Falls Church: How do balance transfers affect a FICO score? My score is currently 723. Due to a rough patch last year, I've charged up about $16k on credit cards. I'm working diligently on paying it off. The highest interest I'm paying is 9.9%. I called the cc company and asked the interest rate to be lowered but they won't budge. I'm interested in spreading the balance out on 2 cards with 0%, but I'm worried that having more credit cards and the inquiries will affect my credit. Your opinion? Thanks!;

Evan Hendricks: Good question and tough one. If you just got one new credit card, transferred all balance so it was approaching maxed out, your score would get hit for the inquiry, for the bad balance to credit limit ratio.

But I think over 6-12 month period, spreading it out and lowering balances on a couple of cards, even new ones, would help your score, or at least not hurt it

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Burke, VA: I also LOVE talking about credit reports and scoring. Ever since approaching near bankruptcy a few years ago, I became obsessed with my report and doing everything I can to fix it (gradually of course).

Why is it that, when a negative item came off my report (after 7 years), did my FICO score actually drop some 30 POINTS!;

It was a credit card, and the limit was quite high. I can only imagine it was b/c w/o it, my debt ratio was off.

Why would a charged off neg. item still count towards factoring your credit-debt ratio?

Evan Hendricks: Your theories are good. It sounds like a glitch, where the high credit limit outdid the charge off.

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burke, VA: Hi,

My car insurance company (Allstate) changed
the "tier" that I'm in based on credit
scoring, thus raising my rates.

I checked my credit reports at the three main
bureaus, and there's no negative info on my
reports (my FICO score is 810).

Allstate refuses to discuss on what basis
they made the tier change; essentially
saying "yeah, your credit report is flawless,
but we're raising your rates anyway, on the
basis of your credit score".

Do you know if there are laws requiring
insurance companies to justify this type
of action?

This is particularly frustrating because
there's no action I can take such as addressing negative information in my credit
report; there isn't any!;

Evan Hendricks: What an outrage! Did Allstate send you an adverse action notice telling you which credit bureau report they used??
ALso, important is that the insurers calculate their own scores, so the score you buy from FICO isn't the same (Chapter 13)

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Shreveport, Louisiana: Evan's expertise is well documented. What a great book. Everyone should read it. Keep up the good work Evan. Michelle Singletary: Okay, I'll allow one shout out!

Evan Hendricks: Brings me fond memories of LSU!

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Baltimore: You mentioned "mainstream" debt.

Is your credit score in some way hurt if the debt on it is of the kind more often taken on by lower-income persons (like "payday loans")?

Evan Hendricks: It's not entirely clear. But it certainly used to be that finance co's and low end credit cards didnt' help as much, and could hurt you mo' than living up to the system's definition of what's best. It reminds me of the ole Greek mythology of cutting the person to fit the bed.

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atlanta, GA: Why do you immediately suspect that the higher wage
earner is a man and the lower wage earner/spendthrift is
a woman? There is no indication about that in the letter
(the first one you answered).

Michelle Singletary: Come on folks, be easy on my guest. I'm sure he didn't mean anything by that :).

Evan Hendricks: I'm typing as fast as I can. But hey, fire away.

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Ethical Dilemma: hi Michelle,

First, an experience I had with paying off old debt. 7 or 8 years ago, I went into a depression and let everything lapse. By the time I got out, my three credit card companies had sent my account to collections agencies which had then written them off. I didn't do anything about it but got much more disciplined about credit. Two years ago, I came into a small inheritance and decided to use part of it to pay off those debts (I had always felt guilty about not paying money I owed). Those debts now show up on my credit report as having gone into collections but that the consumer (me) paid in full. My mortgage guy said that reflected positively on me.

Second: while perusing my credit reports (all three agencies) I found two errors that were consistent across all three. My problem is that the errors are in my favor. Someone took out a student loan and a home equity line both of which were paid on time throughout the life of the loan. This raises my credit score. Do i say anything, or can I leave them on there?

Evan Hendricks: Remember, those old collections will hurt your score less and less as time goes by. I cant really tell you what to do about the tradelines you didn't recognize, except keep an eye on your entire report to ensure there are no inaccuracies hurting your score. If there are, the law gives you the right to have them removed.

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Arlington, VA: Your credit report and credit score is also used by DOD to determine if your eligible for a security clearance or to occupy a sesntivie position. Bad credit can also effect your ability to enlist in the armed services.

A DOD adjudicator

Michelle Singletary: Good points to make!

Evan Hendricks: And also, look for increasing use of credit reports in judging job applicants, even for jobs that got nuthin' to do w/ money

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Bethesda, MD: When you declare Ch.7, should all of the accounts that were included be shown as tradelines? I've heard that only the public record of the Ch.7 should be listed -- that is, all the accounts included should not be seen on the credit report. Is this true?

Evan Hendricks: This is a bit of a new area, and I'm researching it lately for some cases I'm working. In general, bankruptcy is supposed to give you a fresh start.

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Woodbridge VA: The credit reporting system is so incredibly biased against the consumer. Anyone who can demonstrate that they are a business can make a claim of debt against anyone, and it's a very difficult burden on the consumer to correct bad claims.

This goes beyond credit reporting, to collection agencies. Some collection agencies are downright unethical, easing their way to summary court judgements against innocent people for sometimes dubious claims of debt. And then that information is stuck in the credit reports for years to come.

There ought to be a way for people to defend their credit reports as easily as businesses - legitimate and otherwise - can tear them down. An individual ought to be able to compel the credit reporting agencies to drop, let's say, one negative item in any five-year period or something like that.

Michelle Singletary: You said it!

Evan Hendricks: The first and most major bias in the system is that people generally dont understand it. This is a clear case where knowledge = both money and personal power. Or, as Michelle wrote, Ignorance isn't bliss.

The very powerful financial services industry invested millions of dollars in lobbying expenditures to preserve the system. They did that for a reason

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San Bruno, CA: I read that a FICO score of 720 would get an individual most favorable rates on mortgages, car loans, etc.

What percentage of consumers have a FICO score of 720 or more?

Why don't consumers who have a higher score get even lower rates, since they are, in theory, lower risks?

Evan Hendricks: According to Fair Isaac, approx 45% have rates better than 720 (pg 41); I've heard some lenders can do a 740 or 760 cut off, so it depends, lender-by-lender.

Your question points to the need for greater public awareness and transparency.

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riva maryland: My husband works on commission-- never more than 50k in a good year. This has not been a good year and he has earned nothing since January. We have depleted all of our savings. I have a reasonably good salary of $1,800 biweekly. We have incurred some significant debt over the past few years and have reached a point where we now owe two months mortgage, are being sued by a credit card creditor ($8,000 which we are trying to settle) and are trying to work out payments to the IRS (have been regularly working with reps. re payment plans). We are going to let our parttime in home childcare provider go next week and we also owe close $5- 7,000 on another credit card. We are able to make payments for gas, electric, phone, etc. We do not owe on any other credit cards and only use our debit card for expenses. We do not otherwise live extravagently. I have stopped buying coffees, lunches out, etc. My husband will handle childcare and maintain his business as he can from home and on weekends.

What are some other strategies we can use to tackle this situation? We have discussed bankruptcy but are not entirely in favor of this option? Thanks.

Michelle Singletary: First, I'm so sorry about your situation. My prayers go out to you. I'm sure Evan can help you as it concerns managing your past due debt as it concerns your credit report and rating. But I suggest right now that you only focus on the debts you HAVE to pay (your mortgage, gas or electic, water, food etc.). Since you have such little coming in don't worry about trying to pay down your credit card debt. I know. I know. Don't think I've lost my mind. Normally, I wouldn't recommend this but your main priority right now is to come current on your mortgage. The last thing you want is to lose your house. From your note you have about $15,000 in credit card debt. That's high but not outrageous so bankruptcy might not help you out all that much. If I may be bold. I would suggest your husband pick up some extra work (after you get home so you don't have the child care issue. He needs to be bringing something in even if it's a little paycheck from a fast food joint. I know that may be hard to accept but you are in crisis mode right now and you have to act fast and smart so that you don't dig yourself into a deeper hole. Your credit standing is important but unless you are going to need credit anything soon that shouldn't be your main concern right now.

Evan Hendricks: What's great about Michelle is she puts life, and being a human being, ahead of numbers. Why I like Jean Chatzky's book too.

What I would add is think of your rebuilding process as a long-term process, like running a marathon, requiring discipline and patience. Thus, you'll be able to reenter the credit mainstream.

BUT, it's more important to remember to appreciate your home and the people around you that you love.

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Spendthrift woman v. man: I'd guess the 'spent like Carrie Bradshaw' probably brought to mind a woman. I mean, duh, some people are so bleeding sensitive.

Michelle Singletary: You said it. But I do understand. We women have been unfairly characterized as spendthrifts.

Evan Hendricks: No, it was my fault. I thought Carrie was a man

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Clinton, Md.: Hi, I had been out of work for two and a half years and because we had very little debt we were able to make it along with working odd jobs. The sad part is I now have no saving and 401K. I'm back at work and trying to rebuild. I'm not sure where to start. (Yes, I did run up some credit cards and working to pay them off.) I make 75,000. per year and 8,000 in credit card debt. Because of where I work there is NO pubic transportation, to take the job I purchased a car an yr ago w/3 yrs left on the note. This week I will set-up my 401K at work; have refinanced my home to 5% fixed (which has help a lot). I'm going to buy your book and have a son that will start college in September. Just need help getting back on track. Thanks!

Evan Hendricks: Hey, you're thinking clearly, and that's a great start. Maximize your advantage w/ the refinancing, to keep credit card balances low, rebuild credit; now w/ job, keep in mind Michelle's penny-pinching delights and save, save. Set 6-month, 12-month 18-month goals, so you can check your progress.

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Falls Church, VA: In responce to the earlier question about bankruptcy reporting. I'm a credit manager for a bank in VA. all debts owed at the time of BK get reported to the bureaus, not just the public record items.

Evan Hendricks: Thanks for that update. I've also seen some creditors continue to report as "active" debts that were included in bankruptcy as a way trying to pressure consumers into paying debts they didn't legally owe.

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DC: How long does it takes to correct error informations by the credits bureaus?

Evan Hendricks: Under law, they have 30 days from your dispute to either verify or remove it from your credit report. They system doesn't always work the way it should. (Chpater 6)

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DC: Does credit counseling negatively affect credit scores?

Evan Hendricks: Need a chapter on this one. FICO says that they do not score any references to credit counseling, so on that level, no.

BUT, my research showed that some credit counselors and debt consolidators themselves dont understand that what they recommend can lower credit scores. What's needed, and are not widespread yet, are cred counselors and debt consolidators who are sophisticated in the ways of credit scoring so they can truly help their clients (Chapter 11)

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Arlington, Virginia: I was overseas and unknowingly had an overdraft ($400) in my account for about 40 days. At the end of 30 days my bank wrote it off and reported it, now it shows as a bad debt even though I paid it in full as soon as I got back. Can I do anything ?

Evan Hendricks: Engage in "Accountability Combat." Negotiate w/ bank, explain situation, try and use leverage as customer to get them to stop reporting so you can happily continue your relationship with them. They would need to send a Universal Data Form (UDF) to 3 bureaus to ensure that it is removed

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Arlington, Va.: Hi Michelle,

Five years ago, a credit card en route to me was stolen. The thieves charged $15,000 in two days, rented a New York apartment in my name, and set up utilities. I found out when my credit card PIN arrived without any card. I put fraud alerts on all three credit reports and wrote dozens of letters to restore my good credit.

All was well for three years, but some of the old utility accounts set up by the thieves keep reappearing on my credit report. They were turned over to collection agencies. I get the bogus reports off, then they reappear. How can I get them off permanently? I've sent police reports and letters, but these companies keep resubmitting bad reports. Please help. What can I do?

Evan Hendricks: Im very sorry. You've fallen on the wrong side of the system. I've seen situations such as yours that were not fixed until a lawyer was involved. The good news, is that the Fair Credit REporting Act allows for attorneys fees, so, attorneys who specialize in FCRA can often help consumers with tough/good cases such as yours with little or no up front payment.

Chapters 6 and 8 also see www.naca.net

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Falls Church, Virginia: My credit score is between 620 and 650 all depending on the credit bureau. I filed for bankruptcy in 2001, which I know will remain on my credit file for up to ten years. For those of us with 'less than perfect credit' is there any advise that you can give with rebuilding credit? I would like to purchase a home within the next 6 years.

HELP.

Evan Hendricks: SPecialists tell me that you don't have to wait that long. But it requires a solid plan. Contact me later, as we're running outta time soon.

evan@privacytimes.com

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Michelle Singletary: I know we are past 2 but Evan is going to answer a few more questions. Still keep them coming however because he's agree to answer more either in my column (Thurs. and Suns.) or in my NEW e-newsletter, which I hope all of you have sign up for. You can sign up for it at www.washingtonpost.com/newsletters (scroll down to where it says personal finance).

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Arington Va: Seems to me like this credit reporting system is a scandal - you can't get accurate or timely info from your cc company (eg when they report) they penalize you if you pay your bills (eg. if you pay off an old debt they may "refresh" it) and the rules are so complicated onn ly an expert can follow them - why doesn't Congress do something ? Its inconscionable.

Evan Hendricks: Congress spent the whole year on this last year, and strenghtened the law for consumers, as they did in 1996, the first time they amended since the law's enactment in 1970.

In the book we ask, "If people pay more for having lower credit scores, will the system have a bias toward lowering scores?" I'd like to see a study on precisely how many billions of $$s are at stake here. (see chapters 21-22).

Ultimately, this is a political issue about consumer rights and individual rights over their own personal data? Progress for humanoid won't come without struggle.

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Washington, D.C.: Thanks for the answer on the free reports--
to be more specific, why are credit bureaus
so unresponsive in sending free reports
as a result of someone being turned down
for credit? In my job I work with low-income
people who frequently don't have money to
order the reports.

Evan Hendricks: First, the law says they have to provide free reports when the consumer tells that particular credit bureau your report caused my denial. 2nd, I've seen non-responsiveness as well, which sadly, is why some folks have to sue to get their credit reports cleaned up (Chpater 9). Thirdly, and sadly again, if credit bureaus (like other mammoth orgs) think you're just a "peon," (As opposed to their priority categories, i.e., celebirty or govt. enforcement official or well known lawyer specializing in FCRA) they sometimes dont treat you with the respect you deserve.

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Financing USA: Hi all --
As an executive in the real estate financing and credit card industry, I wanted to make sure you clear up some confusion around revolving credit debt. Not all credit cards are equal! Please please please don't get sucked into the hype of opening up credit at every store in the mall or gas station. If the credit card is not affiliated with a national carrier, like Visa, MasterCard or AMEX, carrying a balance can cause your credit score to DROP LIKE A STONE.

Thanks for giving me a forum on this!

Michelle Singletary: I agreed with totally (and I've written about this. Evan writes about it in his book.)

Evan Hendricks: Oh agreed; in Chapter 2-3 we explain how appying for instant credit at the dept store can make your score drop in 3 diff ways, and if you do this while your mortgage app is pending, it can blow the whole thing.

In the course of writing the book, we were refinancing and my wife called from Sears to confirm her SSN so she could get a 10% discount w/ instant credit card; I promptly and cinematically screamed into the phone: NOOOooooooooaaaa!!

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Washington, DC: I bought one of those three-in-one credit reports from MyFico. But the report didn't have individual report numbers for the three bureaus, and TransUnion and Experian won't let me dispute or correct an item without an individual report number. Do I have any recourse? If I know they have the information, how can I get them to correct it? When I submit an online query it rejects it, saying that because I didn't purchase it THROUGH THEM they won't address it.

Michelle Singletary: Now this is the first time I've heard about this glitch. If you can, please e-mail me (singletarym@washpost.com) with your information (not for publication) and I'll see what I can find out.

Evan Hendricks: That is a new one, and patently unfair. I'm not sure about the propriety of refusing to correct errors just cuz you don't have a report numbers. Seems that if you provide you identifying data and describe the error, they have to fix it.
HHHmmmmm, Like Michelle, I took would like to hear more.

There could be some interesting competition developing between the 3 bureaus and Fair ISaac.

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Laurel: Will it (negatively) affect my score that creditors don't make money off me.

A year ago I took out a no-cost home equity line of credit to buy a car. Six months later I re-financed my house, paying off and closing the HELOC. That bank must have lost money processing my loan and then collecting only 4% for six months.

Do things like that make you worse in the eyes of potential creditors?

Evan Hendricks: No, it should actually help your credit score, which is what most lenders depend on. It's an example of understanding the system and making it work to your advantage. Congrats

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Bowie: Michelle has written about the unfairness of not including timely rent payments in credit reporting. Reading between the lines, it appears that this is a way of biasing credit reporting in favor of higher-income individuals -- i.e. rent is a kind of debt paid more often by lower-income individuals, so counting it would tend to raise the scores of the "wrong" (from a lender's perspective) people.

Are there kinds of debt (ignoring payment history) that lenders look on more favorably than others? Like they'd rather see a HELOC to finance a child's college education than a bunch of purchases at Nordstroms?

Evan Hendricks: The rent payment thing part of the divide between homeowners and renters. The irony is that the major banks, in order to grow, need to provide mortgage and other services to folks they used to ignore. Problem: No credit history, thin files (Chapters 16-17) Documenting positive rent payment is seen as one solution; A local company is a pioneer here (see Michelle's column) But it's an uphill thing for this to really work; we'll see.

And yes, the system generally prefers you having mainstream credit vs. dept. store or specialty credit.

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Michelle Singletary: Well, you guys really worked my guest today. That's good. Thanks so much for joining me today. And don't forget to watch for answers to some questions we didn't get to either in my column in my new electronic newsletter, which you can sign up for TODAY (www.washingtonpost.com/newsletters). Meet me back here in two week for another money talk.

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