It’s bad enough having credit problems. But it’s even more frustrating if your credit report reflects credit problems that aren’t yours.

Credit problems, no matter how enormous, can be resolved, and you can get back on the road to good credit, says Michael Miller, a staff attorney with the Federal Trade Commission. The FTC regulates credit bureaus and credit reporting agencies and their interactions with consumers.

But you have to take the initiative. Miller’s expertise has been to chase down “credit repair” or “credit fixing” agencies who fraudulently claim to have the ability to wipe your credit history clean – for the low, low price of $500 to $1,000. He has also assisted in pursuing companies that promise to get you a loan, no matter how bad your credit problems, for a fee of $100 to $500.

“These advance fee loans are advertised in the newspaper. And typically consumers send in their cash and never hear from the company again. Or, they get sent a list of available sources of loans. But these companies lead the consumer to believe that they can get these loans if they just pay the fee,” Miller explained.

Miller said the FTC recently changed the telemarketing sales rule which requires the credit repair company or advance fee loan company to perform the service first before they can collect their money.

“That means, the advance fee loan company must get you the loan before you pay them. Or the credit repair company must fix your credit before you pay them. It’s been an effective way to (get rid of these companies),” he said.

“Credit repair companies often say that they can get rid of bankruptcies, judgments, bad loans, and late payments from your credit file. However, that’s not true. Unless the information is inaccurate, it will stay on your credit history for 7 years, 10 years for a bankruptcy. Consumers shouldn’t believe what credit repair companies say. Only time, a conscious effort and a debt repayment plan can improve your credit,” he added.

Even if a credit repair companies gets rid of a mistake from your credit report, if your report reflects an additional 8 pieces of negative information, removing that one mistake doesn’t really improve your chances of getting a loan.

The FTC goes to bat in cases that are pretty outrageous. Miller said the FTC recently took a Cincinnati company to court. A Cleveland woman gave the company $1,600 to fix her credit so she could buy a house. All the company did was request her credit report.

Miller said consumers should also be aware of credit repair companies who try to offer “credit counseling” on an hourly fee. Unless the consumer really was getting counseled, the FTC would regard that as a deceptive practice.

Still, Miller says consumers often have misconceptions about what credit reporting bureaus do, and what they can do for consumers. The law requires credit reporting agencies to verify problems or check out a disputed piece of negative information within a reasonable amount of time.

“You have the right to dispute any errors that appear on your credit report. But you can’t dispute it over the telephone because of confidentiality rules. You have to put it in writing. Once you get a hold of your credit report, it should give you instructions on how to proceed with dispute resolution,” he said.

Miller suggests that consumers who are trying to resolve credit errors should keep a paper trail. Make sure the creditor gives you a copy of the notice it sent to the credit reporting agency. Keep copies of all correspondence and send everything by registered mail. Work with the credit reporting bureau, providing copies of letters sent, and proof of payment. Finally, consumers can write a 100-word statement and have it attached to their credit report explaining the negative information.

The FTC has a complaint line. Leave a message and you will be called back, Miller said. If a consumer has unsuccessfully tried to resolve a dispute, the FTC may ask the credit bureau to take another look at the case. To find out the telephone number of the FTC regional office nearest you, call (202) 326-2222. (STEVE: CHICAGO NUMBER 312-353-4423).

Oct. 17, 2003