FTC letter on credit repair.

Re: FTC Ref. No. xxxxxxxxxxx

Dear xxxxxxxxxxxxxx:

This is in response to your complaint concerning your credit report. While the FTC does not collect or keep credit records on individual consumers, it is responsible for making sure that credit bureaus report accurate and up-to-date information. We have enclosed a brochure that addresses your concerns. Between the brochure and this letter we hope to be able to answer all of your questions.

Credit bureaus are private information distributors which report credit information supplied by retailers who use their services. Most credit bureaus operate locally and you should look in the yellow pages of your telephone book under "credit bureaus" or "credit reporting agencies" to find the credit bureau or bureaus most likely to have your file. It is possible that you may have a file in more than one local agency. In addition to the local credit bureaus, there are three national credit bureaus that may have you on file:

- Equifax, P.O. Box 740241, Atlanta, GA 30374-0241

(800) 685-1111

- Experian, P.O. Box 949, Allen, TX 75013

(800) 682-7654

- Trans Union, 760 West Sproul Road, P.O. Box 390, Springfield, PA 19064-0390

(800) 916-8800

The Fair Credit Reporting Act ("FCRA") became effective in 1971 and was significantly amended in 1997. It was designed to protect consumers against the circulation of inaccurate or obsolete information reported about them in consumer reports (a credit report is one type of consumer report). Negative information, if accurate, generally may be reported for 7 years with the exception of a bankruptcy, which may be reported for 10 years.

The Fair Credit Reporting Act allows a consumer reporting agency to issue a consumer report to a person ("user") which it has reason to believe has a legitimate business need for the information in connection with a business transaction involving the consumer. When permissible purposes exist, parties may obtain, and consumer reporting agencies may furnish, consumer reports without the consumer's permission with the exception of employment and medical purposes. Credit reports containing medical information or reports issued to present or perspective employers always require the consent of the consumer.

The FCRA provides that any person who knowingly and willfully obtains information on a consumer from a consumer reporting agency under false pretenses shall be fined, imprisoned for not more than 2 years, or both. Authority to bring criminal action for violation resides solely in the U.S. Department of Justice, not the Federal Trade Commission.

While it is permissible under the FCRA for credit reporting agencies to furnish lists of names and addresses to credit card and insurance companies, Section 604(e) allows consumers to "opt out" of these lists. Proper notification of the credit reporting agency will exclude the consumer's name and address from any list that the credit reporting agencies routinely provide to credit card and insurance companies. To properly notify the credit bureau, you should call the toll free number that shall be included in the unsolicited offers, or contact the credit bureau directly and fill out an "opt out" form. The phone call will remove your name for two years. Filling out the credit bureau's "opt out" form will permanently keep your name off the lists.

If you are denied credit because of a credit report, the FCRA requires the creditor to tell you the name and address of the credit bureau which provided the information. You should then contact that credit bureau to obtain your credit report. You have the right to learn the nature, substance, and sources of information in your file at the credit bureau at the time of your request. Most consumers request disclosures in written form, however, at your request, disclosures may be obtained in person, upon reasonable notice, during normal business hours, or by telephone if the consumer makes a written request for telephone disclosure and pays the cost of the telephone call. For either type of disclosure, section 610 of the FCRA requires that you must provide proper identification before you receive this information. If you request the credit report within 60 days of the denial notice, the report is free. At other times, the credit bureau may charge a fee of $9.00.

Section 611 of the FCRA provides the procedure to be followed if the consumer disputes the accuracy of the information in the consumer's file. If information in your file is inaccurate, you should write both the consumer reporting agency and the creditor or other party who furnished the inaccurate information to the consumer reporting agency. Tell both of them that a dispute exists. You should provide both of them with any information that you have that will assist them in investigating your dispute. You should clearly state the facts concerning the disputed item and include copies of any letters or other documents that support your position. We suggest that you send your letters via certified mail, and that you retain a copy for your records. Remember, the right to dispute information applies only to items that are incomplete or inaccurate. The FCRA does not give you the right to dispute information just because it is unfavorable.

Consumer reporting agencies are required to investigate your dispute usually within 30 days, unless the bureau has reasonable grounds for determining that the dispute is frivolous or irrelevant. The creditor or other entity must also conduct a reinvestigation and notify the consumer reporting agency of the results within that 30-day period. If the item is wrong or can no longer be verified, it must be corrected or dropped from your file. If the item is verified by the creditor (or other information furnisher) and accepted by the consumer reporting agency, the information will remain in your file at the consumer reporting agency. After the investigation, the consumer reporting agency will send you an updated copy of your credit report if it has changed as a result of the investigation. If, after the credit bureau has concluded its reinvestigation, you still don't agree that your report is accurate, you should write a short statement of 100 words or less giving your side of the situation and ask the consumer reporting agency to include it in your file. This statement or a summary of it then becomes a part of your credit report. If your report has changed based on your dispute, you have the right to ask the credit bureau to send your updated report to anyone who has received a copy of your credit report within the last six months (two years if sent to an employer or potential employer). You may be charged a small fee for having these updated reports sent.

If information is inaccurate or has not been verified by the furnisher within the 30-day period, it must be removed from your file. It can only be reinserted in the file if the creditor or other furnisher of information certifies its accuracy to the credit bureau. In turn the credit bureau must notify you in writing that the information is being reinserted. If the furnisher finds the information to be accurate and you still dispute the information, the furnisher cannot continue to report that information unless the information is accompanied by a statement that it is disputed.

Applying for credit, insurance, or financing for large purchases creates credit record inquiries. A creditor may ask your local credit bureau for the number of inquiries it has received about you. Excessive inquiries may indicate to a creditor that you may become overextended with too many active credit accounts and may cause a creditor to deny your application for credit because of excessive inquiries.

The FCRA does not specifically state how long inquiries may remain on the credit report. However, the FCRA does require that credit bureaus disclose to consumers any recipient of a consumer report for a two year period regarding employment purposes and a six month period for any other purpose. The law does not require that inquiries stay on the credit report for any specified period of time, but only that the credit bureau must be able to provide consumers with this information upon request. Because the FCRA does not specifically state how long inquiries may remain on the credit report, credit bureaus have the right to set their own policy or procedure regarding how long inquiries will remain on the credit report.

If you feel that your credit report does not accurately portray your creditworthiness, Regulation B, which implements the Equal Credit Opportunity Act, provides that you have the right to present information to a prospective creditor to show that your credit report does not reflect your ability or willingness to repay. It is possible that the consumer reporting agency used by the firm to which you applied for credit does not include in their files those organizations with which you have already established credit (an occurrence which is not in violation of the FCRA). To overcome this you may wish to provide the creditor with copies of bill statements and other information about your credit history from other creditors with which you have done business. The creditor must consider this information at your request. Also, if you know there is adverse information on your credit report, it is often best to explain the circumstances surrounding that item and provide other positive information to the creditor at the time you complete an application.

We cannot act as your lawyer or intervene in a dispute between a consumer and a credit bureau or between a consumer and a creditor or furnisher of information. The private enforcement provisions of the FCRA permit the consumer to bring a civil suit for willful noncompliance with the Act. You may receive actual damages or punitive damages up to $1,000 for willful noncompliance (Section 616). You may also sue for negligent noncompliance and recover actual damages sustained by you (Section 617). Attorney's fees, as determined by the court, will be allowed for both forms of action. If you believe that the FCRA has been violated, we suggest that you consult a private attorney or a local legal services organization.

Sincerely yours,

Consumer Response Center