The business of collecting data for the purpose of establishing your credit report is a very complicated business. What I’m about to tell you is a collection of recent events in my life, and the remedial processes I utilized with the help of a mortgage banker I solicited for professional advice. I’m willing to share these somewhat humiliating experiences with you because they reveal the backdoor activities and murkiness of the credit world which will accept information, sometimes slanderous and inaccurate, from its customers without even questioning its validity and will then place it on your credit report.
All without your knowledge.
I’m hoping to open your minds to what you might not know, about who’s looking at you, where it shows, why it’s done, what it costs and how to fix what’s been done
“Salvaging” My Credit
I was totally flabbergasted and humiliated the day that my local Dodge dealer questioned my ability to lease a new Dodge Dakota for my salesman because of my credit report. I thought my credit was perfect.
Let the games begin.
One bad mark was from GMAC. I had leased a new 1500 Chevrolet 4WD truck for my clean-up guy because he was on limited citizenship in this country. I paid the down payment, and he paid all of the lease payments. And he paid every single payment on time. (If I had it to do over, I would have had him pay me, and I would have taken control of making the lease payments just to be safe.) Right before the leased expired, he had to leave the country unexpectedly, but he did me the courtesy of properly delivering the vehicle back to the dealer.
I knew the vehicle was straight but had gone over a bit on miles, so I was expecting a bill from the dealer. I received a bill for $2,000 or so, and I paid it as requested and on time.
On my credit report, however, I had received a negative mark because the car was labeled salvage and was sold in Denver.
What?! I couldn’t believe this!
Ever try to call GMAC? It’s not fun.
I got lucky though. The first person I reached at GMAC just happened to be a customer of mine. After I told him the story, he said that he had no idea why GMAC would have chosen to slander my credit with such a negative remark, and he offered to call Denver for me. I accepted, and the mark got cleaned off my report after GMAC recanted their position on this issue.
My point? All GMAC or anyone else has to do is make statements about your transaction history with them, and the credit repositories Experian, TransUnion and Equifax will publish them on your credit report. You won’t know, you won’t see and you won’t be asked for an explanation of the reported events.
My So-Called Bankrupcty
I leased another 1500 4WD Chevrolet for an estimator of mine from GMAC. When we were signing the lease, my estimator told me he’d be buying the truck after the lease expired and wanted to co-sign the lease, which was fine with me since I didn’t give it a lot of thought one way or another.
I put the money down, and I paid every single payment on time from Pearson Auto Body, right down to the final day. When the estimator quit, I gave the truck to his replacement to use till the lease expired.
BANG! A bankruptcy notation on MY credit report.
The estimator who quit had subsequently filed Chapter 7 bankruptcy, which I had no way of knowing. Regardless, I had made every single payment on time, which you wouldn’t know by my credit report; Trans Union described my payment performance on this truck as “unrated,” right next to the bankruptcy notice. Not “paid as agreed” like the rest of my GMAC accounts.
Are you starting to see how these credit repositories work? Someone gives them the information, they put it in your credit report and you’ll never know.
This guy’s bankruptcy didn’t cost GMAC a nickel or cause a late payment, yet they don’t hesitate to put anything they feel like on your credit report. They don’t care at all, which is why you have to care!
But wait ... there’s more.
No Default of Mine
I had a 60-month loan on some home improvements we did. Fifty-nine payments were paid on the due date. But because this loan was going to be re-written with a new agreed principle, my loan officer told me not to make the last payment because it would be rolled into the new loan.
Guess what? Yep, another bad mark on my credit report.
Now keep in mind, there was no late notice or anything like that because of how my loan officer handled the paperwork, leaving the opportunity for someone else in the bank to misinterpret this transaction, which triggered the black mark.
I was advised by my loan officer to ask Marquette bank to write to Experian and explain, on my behalf, that the mistake was on their side. The credit repositories have to respond to the inquests within 30 days or the bad mark has to be removed, no matter what.
I should have been completely exonerated from this issue because it was totally the bank’s fault.
This particular credit repository didn’t choose to respond to the bank’s letter, so I kind of got rid of the black mark. Thing is, because they didn’t choose to respond within the 30 days, they marked my report as “cleared by default.”
The word “default” has no business being there.
At this point, I could see that they just really want to get ya.
If I wrote all I’d like to on this subject, you’d be reading this magazine on the floor because you couldn’t lift it.
But my story isn’t done yet ...
My wife Marsha and I have nine
children in a blended family, and all those kids aren’t perfect yet. One got creative with my mail upon discovering a credit application for recreational toys, filled it out, sent it in, got the toy and never paid any of the payments.
Unfortunately, he signed my name on the application.
I did manage to get this off my record, but it was a heart-wrenching process. The only way this company would release me from this major credit problem was if I signed the issue over to their fraud unit.
Because of the age of this child, it was fraud, so I agonized over this for a while. But I knew in my heart that I had to fix this so it could come off my report.
I paid the balance of the account so I didn’t owe them anything for starters, and I held my son accountable for the money, which he has paid to me. I also told him that I was going to sign this over so they could proceed against him if they so desired and that he would have to answer for his deeds.
We didn’t owe them any money, so I had doubts about their willingness to prosecute without a monetary reward, but I didn’t tell him that. I was right. They never proceeded, and I think my son learned a valuable lesson.
Co-Sign of Trouble
I’ve got another kid story.
In this instance, I got bad marks on my credit report but managed to get them completely remedied with the advice of my mortgage banker. And it’s fair to say that, in this instance, I deserved the bad credit marks I received.
I co-signed for a loan with one of my daughters for her house payment. I wasn’t the co-maker. I was the co-signer. And there’s a difference.
As a co-maker of a loan, you have joint liability from beginning to end of the loan, including payment performance.
As a co-signer, you have responsibil-ity only if the creditor notifies you of payment problems, and you then make the late payments as they have requested you to do. And this lender did call me all the time on the payment performance on this loan.
But I always referred the call to my daughter, since I wanted him to be bugging her, not me. I really wanted her to feel the pain of all the calls so that her behavior and that of her boyfriends would improve.
It still hasn’t worked, and it’s been years of hell.
I finally took over the payment responsibilities myself and collect later, the best I can. At least the payment is always on time because it’s electronically authorized.
So how did I get the negative marks off my credit report? I called the loan officer and asked her if I had fulfilled my obligations as the co-signer on this loan, because every time she called, I did call back and I did try to help in every way. They agreed to make a statement on my behalf to submit to the credit repositories for the remedy, and I got those marks totally removed. “Paid as agreed” are the key words.
Quite a few different elements
contribute to your credit score. Your score is the fluid representation of how you use your money and how you pay your bills.
You might think that just because you have earned the right to carry many high-limit credit cards that your credit is better, but that’s not always true. If those cards lay dormant with these high limits relatively unused, it becomes a negative on your credit. Why? Because you could hurt yourself financially by going on a spending spree and using up these limits in a short period of time.
Boy, did that surprise me!
I now subscribe to a credit watch program through Wells Fargo bank, where I get an instant e-mail if anyone messes with my credit in any way. Also, for the $13 dollars per month, I get a merged credit report every quarter with an in-depth analysis of how I look. This is a fabulous deal!
Here’s what they wrote for me in the first complete credit report I just received: “You have five credit card accounts listed in your credit report. This is making your score higher. Having accounts listed in your credit report shows lenders how you pay your bills. However, having too many accounts may be considered a negative factor because lenders worry that you’re spending, or preparing to spend, beyond your means,” and so on and on. I think you could make the case that they’re saying that five open accounts is synonymous with large available credit lines, which can actually end up hurting your credit if those cards lay dormant.
Also, if you continuously apply for credit in a relatively short time span, this is seen as a negative and will lower your credit score.
Earlier I mentioned how poor credit costs you and you don’t even know it. For example, poor credit can affect your cost of insurance if the company you’re applying to or currently using uses
credit scores to assess your risk profile. I’ve read some of the studies as to how credit history can tell a very revealing story about someone’s tendencies under pressure and how it can predict a likely loss pattern.
Lucky for us, there are different levels of security that come into play so not just anyone can gather a merged credit report on you unless it’s a
pretty important purchase. (A merged report is a compilation of all three credit repositories.)
Different contributing businesses, banks, department stores and such report to each one of these credit companies, so your report will look different on each one. That’s why the merged report needs extra clearance to acquire because it contains all of the information that has been reported to all three credit repositories.
I found that if you have a great payment history and nobody knows about it at the credit bureaus, you can ask them to put it into your record, and they usually do. And a couple of these bureaus have online access programs for around $10 a month, if you find yourself needing to do some credit repair work.
Tax liens are a different matter. They’re going to be there for the full 10 years no matter what you do, maybe 20 if the government re-files. Everything else (everything other than government liens) is 10 years unless you do the corrections on the inappropriate entries.
If you’ve had a tough time or had a bankruptcy, it’s most likely going to take two to 21/2 years of clean behavior before you’re determined credit-worthy again, which isn’t too bad when you think about the 10 years that this stuff shows on your report. By law, these credit companies owe you one free report per year upon request, but if you want the scored report, it won’t be free.
It’s also worth noting that these credit repositories sell the information that they acquire to the credit card people. So all the solicitations we receive about opening new credit card accounts are the result of our information being sold. Then the credit card people cherry-pick certain profiles to target for these mailings. And it’s all totally legal.
Credit Where Credit Is Due
My hopes for this article? That I’ve inspired some of you to get active with your credit history, even if you think it’s perfect (because it probably isn’t).
And, by the way, I did finally get that Dakota for my salesman.
Writer Bob Pearson started his business in an outside parking lot with an extension cord coming out of an apartment building; a crank-start, diesel, two-wheel air compressor; and a single-car garage with no heat or light. Today, he operates two body shops totaling $3.5 million in annual sales. Pearson is the past Collision Division Director of AASP Minnesota and the current Board Secretary and serves as a trustee of AMI. He also has his AAM degree. Pearson and wife Marsha have nine children between them. In his spare time, Pearson enjoys billiards, 500, volleyball, softball, ping pong, horseshoes and drag racing. He can be reached at [email protected].
Special thanks to mortgage banker Dick Bourg for his advice and assistance with my credit and this article.