I host Question & Answer sessions for students who need help rebuilding their credit score. Removing a bankruptcy from a credit report and rebuilding credit after a bankruptcy are both frequently asked questions on these calls.
Below is one of the many questions I received and my response.
Question: Can you give me the specifics on how to remove a bankruptcy from my credit report?
Answer: Forget all you’ve heard about how to remove a bankruptcy from your credit report because I have a very different approach to this topic.
First of all, I assume your bankruptcy is legitimate. You, not someone else, are responsible for it. This simply means you are not a victim of identity theft and the bankruptcy on your credit report is legitimately yours.
With that assumption, here is my answer: You cannot get it removed and you should not worry about getting it removed. Wait! Before getting discouraged and losing hope, let me explain my approach to handling bankruptcies.
It isn’t necessary to remove a bankruptcy from your credit report. Yes, that’s right. Even though a bankruptcy is on your credit report, it will not prevent you from reestablishing your credit after bankruptcy. Don’t believe the statement that your credit is ruined for seven years. You can have a 720 Credit Score in just two years after the bankruptcy.
Don’t search for someone to help you remove a bankruptcy from your credit report. Many people and/or organizations will say they can help you remove a bankruptcy for a fee. Don’t believe them! They will tell you they can remove a bankruptcy from your credit report and may offer a “100% money back guarantee.” The truth is that you won’t be able to get your money back. There are no legal ways to remove a legitimate bankruptcy from your credit report. Save your money and avoid these scams.
Removing a legitimate bankruptcy from your credit report is illegal! According to the FTC, it is illegal to get an item off your credit report that is correct.
Here is the one simple solution that works every time: Reestablish your credit after a bankruptcy the same way you established credit the first time. Start now, don’t delay.
Learning to rebuild credit is simple, just keep in mind that it’s going to take you between 12-24 months to get a credit score over 720, assuming you do it the right way. The biggest mistake people make is wiping their hands of all credit. Never do that because no credit is just as bad as bad credit.
Please check out my free ebook: “Rebuilding Your Life After Bankruptcy… It’s Easier Than You Think” You will learn a lot of very valuable information.
Category: Credit Report
Correct Errors To Rebuild Your Credit Score
The first step to rebuilding your credit is getting a copy of your credit report. Yes, I know that’s an extremely simple first step, but it is an essential one. When rebuilding your credit, it is wise to review your credit report at least once every six months. If your credit score is low, you may want to pull your credit report quarterly. This won’t negatively affect your credit score. After getting your credit report, look for errors. If there aren’t any, good! You can now focus on rebuilding your credit score. If there are errors address them immediately if they are severe. In Step Five of my program, I explain that almost 80 percent of people have errors on their credit report, and 25 percent of these errors are severe enough to cause a person to lose a loan or a job opportunity. This is one reason it is essential to know what’s on your credit report. When finding an error on your credit report, what should you do? First and foremost, if you think you are a victim of identity theft, call the three credit bureaus right away to put a freeze on your credit account. This way, no one else can open credit in your name. If the mistake doesn’t seem to indicate you are a victim of identity theft, you can start by filing an online dispute at each of the three credit bureaus. Following are the three credit bureau links:
If a bank or credit card company is responsible for incorrect information on your credit report, contact them. Ask them to investigate the mistake they reported to the credit bureaus. Make sure you have documentation to support your statements. One of the most common (and dangerous) errors you will find is an inaccurate credit limit. So why does an inaccurate credit limit hurt your credit score? The credit-scoring agencies give higher credit scores to people with lower utilization rates (your credit card balance as a percentage of your limit.) If your limit is, for instance, $2,000, and your balance is $600, you have a utilization rate of 30 percent. Maintaining a 30 percent utilization rate is good. It should improve your credit score. If your credit card company is reporting your limit as $1,000 instead of $2,000, this is an error. Your utilization rate will appear to be 60 percent (a $600 balance on a $1,000 limit). This is a bad utilization rate because it may seem that you rely on credit. This will cause your credit score to drop. Notify the credit bureaus of the error on your credit limit by filing a dispute with all three credit bureaus. At the same time, place a call or send a letter to your credit card company demanding they report your correct limit. Correcting errors help rebuild your credit score. After all major errors are corrected, get another copy of your credit report to verify it is error-free. If it is, focus on rebuilding your credit to increase your credit score. FYI: Your credit score will not decrease if you get a copy of your credit report. Inquiries into your credit score by lenders will cause a dent in your score, but you are not penalized for getting your own credit report. This is considered responsible financial behavior. Therefore, get your credit report as often as you desire to check for errors and/or to rebuild your credit score.
How to Remove a Bankruptcy From Your Credit Report
One of my readers recently asked me if there was a way to get her bankruptcy removed from her credit report.
The answer is that no, there isn’t. At least not legally. But beyond that, there’s a deeper issue at play here. A lot of people worry about their credit scores and their credit reports. They worry about past delinquencies. They worry about their public records. They spend countless hours trying to get information removed from their credit reports.
My advice: You are worrying about the wrong thing.
You see, items that are older than two years—even major items like a bankruptcy—don’t matter nearly as much as the behavior you have taken in the past two years. A lot of credit “repair” companies have their clients spend hours and hours of their lives trying to suppress every single derogatory item on a credit report.
I don’t agree with that strategy. First off, it’s illegal. The Federal Trade Commission itself says, “No one can remove accurate negative information from your credit file. It’s illegal.”
Second of all, even if you do somehow manage to skirt the system and get negative information suppressed, it will rear its ugly head later on down the line. And in the future, the credit bureaus will be unlikely to spend their time helping you remove any true errors from your credit report.
My third point is that it’s just not where you should be spending your time. I know how attractive it is to think that you can erase your past, but you can’t. And if you spend your time trying to cover up the past, you will waste invaluable time living in the present and creating a better future.
There’s only one solution: Learn how to build credit. Educate yourself so that you have the tools to have a great score for life. Learn from your past, but don’t focus on what happened yesterday.
The Faces of Identity Theft
About 80 percent of people have errors on their credit reports, and many of these are a result of identity theft. Identity theft can be a devastating event that gets in the way of learning how to build credit. Once a thief acquires your personal information s/he can quickly suck your account dry or steal your identity, resulting in not only a tremendous financial loss but a considerable outlay of time to put your affairs back in order.
Now, more than ever, you have to be careful about leaving any scrap of personal information available to scheming identity thieves. Take safeguards to avoid leaving yourself open to identity theft, and be aware of the many ways identity theft might occur.
Dumpster diving. One of the more common forms of identity theft is when thieves find pieces of personal information is to rummage through a victim’s rubbish. For example, the credit card offers that you discard without a thought might be used by a dumpster diver to set up credit accounts in your name. Bank account statements that have your credit card number or bank account might even be used to purchase items online or over the phone. To prevent this, purchase a shredder and use it on anything with your personal information.
Open-access mailboxes. If you have a mailbox that is not secured or is a community mailbox, beware of identity thieves snatching your mail and setting up bogus accounts in your name. If you’re going to be away on vacation, protect yourself from identity theft by asking the post office to put your mail on hold so no one can grab it.
Pickpockets and purse-snatchers. Make sure you never leave your purse or bag unattended. Having access to your credit card and driver’s license is an identity thief’s dream. For that reason, never, ever carry your Social Security card in your wallet.
Phishers and Phreakers. Be especially wary of phishers and phreakers, the newest form of identity theft. Phreakers are people who search for personal information by eavesdropping on telephone calls. Phishers send cleverly disguised emails that ask you to provide personal account information. Using anti-virus software and a firewall is a good way to cut down on malignant attempts by criminals to access your information. Do not share your password with anybody and change it often to decrease the possibility someone may hack into your computer. Also watch out for spyware, which is often installed on your computer without your consent. It can monitor your computer for personal information, such as credit card numbers.
Keep a close lid on your Social Security number. This is your most sensitive personal information, and when an identity thief gets your Social Security number, s/he can easily steal your identity. Do not give out your number unless you started the call and can confirm the identity of the person/company you are calling.
Always keep track of your credit report. Regularly checking your credit report is the best weapon you have against identity theft. Request copies of your credit report at least four times a year. You can get a free annual credit report once a year, but remember, never buy your credit score from www.annualcreditreport.com. If you believe you are a victim of identity theft, you can start by placing a freeze on your credit report. Contact the three credit-scoring bureaus (here, here, and here) to request this credit freeze. Then make a police report, and submit this, along with all other evidence, to the credit-scoring bureaus.
If the credit-bureaus refuse to correct the errors on your credit report, fight back by hiring an attorney.
Now, more than ever, you have to be careful about leaving any scrap of personal information available to scheming identity thieves. Take safeguards to avoid leaving yourself open to identity theft, and be aware of the many ways identity theft might occur.
Dumpster diving. One of the more common forms of identity theft is when thieves find pieces of personal information is to rummage through a victim’s rubbish. For example, the credit card offers that you discard without a thought might be used by a dumpster diver to set up credit accounts in your name. Bank account statements that have your credit card number or bank account might even be used to purchase items online or over the phone. To prevent this, purchase a shredder and use it on anything with your personal information.
Open-access mailboxes. If you have a mailbox that is not secured or is a community mailbox, beware of identity thieves snatching your mail and setting up bogus accounts in your name. If you’re going to be away on vacation, protect yourself from identity theft by asking the post office to put your mail on hold so no one can grab it.
Pickpockets and purse-snatchers. Make sure you never leave your purse or bag unattended. Having access to your credit card and driver’s license is an identity thief’s dream. For that reason, never, ever carry your Social Security card in your wallet.
Phishers and Phreakers. Be especially wary of phishers and phreakers, the newest form of identity theft. Phreakers are people who search for personal information by eavesdropping on telephone calls. Phishers send cleverly disguised emails that ask you to provide personal account information. Using anti-virus software and a firewall is a good way to cut down on malignant attempts by criminals to access your information. Do not share your password with anybody and change it often to decrease the possibility someone may hack into your computer. Also watch out for spyware, which is often installed on your computer without your consent. It can monitor your computer for personal information, such as credit card numbers.
Keep a close lid on your Social Security number. This is your most sensitive personal information, and when an identity thief gets your Social Security number, s/he can easily steal your identity. Do not give out your number unless you started the call and can confirm the identity of the person/company you are calling.
Always keep track of your credit report. Regularly checking your credit report is the best weapon you have against identity theft. Request copies of your credit report at least four times a year. You can get a free annual credit report once a year, but remember, never buy your credit score from www.annualcreditreport.com. If you believe you are a victim of identity theft, you can start by placing a freeze on your credit report. Contact the three credit-scoring bureaus (here, here, and here) to request this credit freeze. Then make a police report, and submit this, along with all other evidence, to the credit-scoring bureaus.
If the credit-bureaus refuse to correct the errors on your credit report, fight back by hiring an attorney.
How to Fight a Collection Report
This letter asking for information about how to fight a collection account just came into my inbox:
“I am currently fighting a collection agency who suspiciously has me owing over $1,000 to a hospital that I have never heard about, and that is no longer in existence. The collection agency’s report states that I had a dog bite and visited the emergency room.”
My student went on to say that the collection company could not link his Social Security number or current address to the bill, and so the collection agency asked my student to send a letter to dispute the matter.
You know, to clear things up …
So my student sent a letter letting the collection agency know his SSN, his address, and his current employer. Guess what collection company did? It took the information from the letter and entered it into the database, linking my student’s Social Security number, address, and current employer to the bill.
That’s right: My student was trying to correct an error, and the collection agency used this information to make the error even worse! Boy does this have me steamed!
If a creditor or collection agency ever mistreats you, fight back! The Fair Credit Reporting Act is a set of laws that protects consumers from creditors and credit bureaus that is incorrectly reporting information.Under this act, you have the right to dispute any item on your credit report that you believe is wrong. And credit agencies must respond to your dispute.
Here are the steps you can follow to fight a collection report.
1) Upon identifying an error, send a “dispute letter” detailing the items listed incorrectly in your credit report. Since my student is dealing with a dishonest collection company, I suggest that he approach the credit bureaus directly.
The first letter should state, very simply, “I am writing to request that you remove information from my credit report. The information does not belong to me.
“Following are the details: [Insert the details of the mistaken account, and include a copy of your credit report with the incorrect account highlighted].
“Please investigate this claim and remove the inaccurate information from my credit report.”
2) Upon receiving the dispute letter, the bureau will contact the creditor and ask it to verify that the item in question is correct.
3) Expect a written response from the bureau within 30 days. The response will either provide the results of the investigation, or it will request more information from you, in which case it will have another 15 days to complete the investigation.
4) If you do not hear back within 30 days, fill out this form, which will help you fight back and protect your rights under the Fair Credit Reporting Act.
5) If the agency determines that the dispute is valid, or if it cannot verify the disputed item’s accuracy, it is required by law to remove (permanently or temporarily) the item you are disputing. Unless the agency receive information validating the account’s accuracy, the information should not reappear on your credit report.
6) Be sure to keep great records. Send letters via certified mail, return receipt requested. And pull your credit report a few months after the dispute has been resolved to make sure that the inaccurate information doesn’t make its way back onto your credit report.
Hope this helps. If you have more questions about how to fight a collection account, be sure to leave a comment below.
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