Each negative on your credit report is a derogatory that creates a derogatory account in your credit file. Derogatory accounts hurt your credit score and pull your credit score down.

One solution, is to let the negative fall off the account after 7 years, at which point the credit bureaus are supposed to change the derogatory status of the account back to “pays as agreed”. However, there is a good chance that this can be neglected by the credit bureaus and you will have to dispute the negative to get it removed.

The other solution is to dispute the negative to get it removed as soon as you find out you have a negative on any of your accounts. This is a right under the law of the Fair Credit Reporting Act. The credit bureaus are required to verify the data that gets put into a public record but the simple problem is that they don’t. The fallout for this neglect is that 79% of all credit reports have negative information in them that is not theirs.  Makes it really fair for the consumer, no?

NO! It’s really a scam and, in reality, credit bureaus make their money by keeping negatives on your credit report.

You certainly have the right to challenge these negatives or dispute them, but the simple truth is that it is a difficult thing to get them off because of the way the credit bureaus interpret the law.

Unless you use an attorney, credit bureaus can thumb their nose at consumers; some items may be removed but the majority will remain for years until they are required by law to fall off at 7 or 10 years.

There is a solution, but we will get to that later.

Lawrence,
Russ and I had a question that we were wondering if you could answer.  We have $8500.00 in credit card debt.  I think our interest rate is around 8%.  We have two trucks that we could sell and pay off the card.  We are wondering though if it would be smarter to do that and buy another vehicle that we’d have to get a loan for or keep one of the trucks and just pay down the card when we have extra money?

Thanks!
Mindy

Hi Mindy,

Thanks for the question!

It sounds like you only need one vehicle and not two. If this is the case, then selling one and paying off your credit cards looks to be the best scenario for paying off debt, and increasing  your credit scores at the same time.

Points to consider:

1. If you sell both vehicles but then have to get a loan on a new truck, your scores will drop because of the new account. Your scores are hit 7 different ways with a new account.
2. Yes, debt to credit limit rations will definitely be helped by paying down credit cards. I would make sure to pay all cards that are over 45% debt to credit limit ratio; then pay them down further as you have more money to put toward them; this will also help increase your credit scores.
3. The best recommendation is to sell the most expensive vehicle and put that money toward bills. As you pay off your bills, save for a new truck, and then purchase it with the available cash that you have saved. You have eliminated debt and increased your credit scores at the same time.

Hope this helps.
Lawrence M law

The whole purpose of credit bureaus is to report accurate information.

This is so that your public record is accurate in order for lenders to see if you qualify for the loans or credit cards that you are asking for. Stand by for a revelation:

They don’t.

The credit bureaus, I mean. They do not attempt to verify information to see if it is accurate or not.

Here’s what happens.

The credit bureaus will take any information from anyone who has an account with them (lenders pay to have an account with credit bureaus) and will accept any and all information that is somehow linked to you i.e., your name, your address, your social security number, or parts of it, and dump it all into your account.

Remember, we previously stated that 79% of all people, who have a credit report, have negative items on their credit report that are not theirs.

Hello….? Is this for real?

Why is the American consumer held guilty until proven innocent? This is happening in a business that is costing the same American consumer(s) billions in extra dollars because of higher interest rates, fees, and other costs, all based on the almighty credit score.

If only 21% of all credit reports have accurate information in them, why do we trust the credit bureaus? This is an outright fraud on the American consumer while Big Business is buying into it like never before!

The only way to really fight this is to have great credit and sidestep the problem to begin with.

How to do this?

Get the negatives off, and manage your credit the way I have previously described and you will see not only mid 700’s but higher into the 800’s, eventually!

Oh, and by the way… it would be an extremely good idea to check all your accounts in your credit report to see if they are accurate and have accurate information. Without accurate information, your credit report is really worthless. You will not be able to get the loan you need or an interest rate that is reasonable. So, check your credit report for accuracy and get the information corrected.

Now.

In the World of Free Credit Reports,

There is Good News and Bad News.

The Good News is:

Yes, there is something for “free”! The Bad News? You will have to pay with time and frustration to get it.

This, unfortunately, is the game that credit bureaus will make you play to get those “free” credit reports.

Let me explain.

If you go to www.AnnualCreditReport.com you can get a free credit report once a year from all three credit bureaus. (This is a law mandated from Congress; otherwise, trust me, it would not be “free”. The credit bureaus are not magnanimous, as you will learn from trying to get your “free” credit report, although they do have this wonderful website.)

The Bad News is: it is extremely difficult to navigate.

The Good News? It does work.

Now, some warnings.

If you are asked for a credit card for your free report, you have navigated to a wrong page and you must back track to get to the right page. Usually it is at the bottom of the page to the left and says: “No Thanks, I just want my free credit report.” Click there and it will take you to the correct place without having to pay.

Now, for some fun.

You will have to identify yourself and prove that you are who you say you are. This is Good News.

The Bad News is that it can be difficult to remember the answers to security questions they ask.

For example they may ask for:
•    Former addresses
•    Account numbers of revolving or installment accounts
•    Past Mortgages info
•    Past Auto Loans info
It’s not too hard, but you will need to be prepared before you log on with account information, etc.

Also, once you have gotten into the website you will have to search for a way to print the file. It is small and kind of hidden but it will say something like: print this file, or printer friendly version. At this point, click the button and print out your report but be aware that you will need lots of paper and be sure your ink is up in the printer.

The credit bureaus make it as difficult to get this free credit report as possible so that you will not try to fight their policy of keeping incredible amounts of negative information on your credit file. After all, this is what makes them their billions of dollars each year.

So-

The Good News is: you will have a credit report that will have all your credit information on it, both personal and accounts. It will also have the inquiries you have done over the past two years.

The Bad News? It will also have a whole bunch of other stuff on it that is not yours.

Now to get to work and fix this mess….=o)

BTW:
There are other ways you can get a free credit report if you have already gotten one from this site. If you are applying for a job or been denied credit in the last 30 days, the credit bureaus are required to give you another credit report for free.