A Credit Score Drop & Your Reporting Date

There is nothing more irritating than increasing your credit score and then seeing it drop significantly months later.  When this happens, you review your report thoroughly to see if there are any new negative items reporting, only to find that a rather old item has all of a sudden started to report again!

Yes, this is legal, as long as it is within the federal reporting time frame they can report whenever they like; reporting activity to the credit bureaus, is after all, a form of collection activity.  

Your reporting date is simply the date that the creditor reported information to the credit bureaus about your credit-relationship with them.  If they are updating every month your credit score will not be adversely affected as much as indicated above. 

FICO/Vantage and any other scoring model will factor the negative item based on the type and the age.  So, the scoring system will recognize the item; if its old it won't affect your score much, if it's new it will, but as it ages it will have a lower and lower affect on your score. By a creditor reporting the debt on a monthly basis, FICO will continue to view the item as a new account and it will prevent your score from climbing as much as it could. You can still achieve a decent credit score; but it will not increase as much with the negative account updating on a regular/monthly basis.  

The good thing is that whether they continue to update it or not; the bureaus will still delete it based on the Date of First Delinquency (the date you became late on the account and never brought it current again) no matter how regularly the creditor reports it on your credit; similarly, your state's statute of limitations will remain unaffected as well.

But, what happens when an older item; say 5yrs old, all of  a sudden starts reporting again?  Exactly what the picture depicts above.  The scoring system will recognize it as a brand new negative item and your score will drop immediately.  After a while, the system will get over it's initial shock, recognize the age of the negative item and your score will adjust.  If the creditor continues to report on a monthly basis, the adjusting can take much longer as again, the scoring system will recognize it as a newer debt and it will negatively affect your score as much as it did when it was originally furnished to your report.  

In this client's case, the debt will be deleted in June of 2015; so we're going to let them sit tight. The state's statute of limitations on this debt has passed so they are banking on this drop prompting my client to call them up and make payment arrangements on a debt that is time-barred; slick right? But, it works all the time to those possessing little credit and collection knowledge. But now you know!

If your debt still has a few years left of reporting time; both federal and state; you have a few options:

1. Dispute it
2. Pay them (if collection agency, Validate First!)
3. Settle
4. Wait it out; they usually stop reporting anyway as the debt gets older
5. Keep your other/newer credit items squeaky clean - paying on time, keeping all balances super low. Although negative items factor into 35% of your score (Payment History); 65% of your score (Payment History/Amount Owed) is based on how well you manage the credit you currently have.

Hope this helps!

Let me know if you have any questions!!!


~ Netiva

How To Remove Inquiries From Your Credit Report

When reviewing our credit reports, we often go to 2 areas first - the Adverse (negative) area and the Inquiry area.

In the Inquiry section you'll find 2 types of inquires:

1. Hard Inquires - The type of inquiry that negatively affects your credit score.

When you complete an application online, over the phone or in person granting a lender permission to pull your credit report in hopes of obtaining a loan of some sort, this is a hard inquiry. This type of inquiry applies to credit cards, lines of credit, car loans, home loans, etc.

For credit cards, each inquiry will result in a Hard Inquiry. For student loans, car loans, and mortgage loans, and apartment hunting FICO allows you to shop around for the best rate. As long as you do your rate hunting within 45 days you'll only be 'dinged' once for the inquiry. So.. to avoid lowering your score, make your decision relatively quickly.

2. Soft Inquiries - The type of inquiry that does not affect your credit score.

On your credit report Soft Inquires are listed as Account Review and Promotional Inquires.

Account reviews are when you pull your own credit report and when creditors that you already have a relationship with pull your credit report. 

Promotional inquiries occur when a business checks your credit report in hopes of offering you their product/service; this is completely legal as long as their inquiry is marked as 'Promotional' on your credit report. You can prevent this access, however, by visiting www.optoutprescreen.com and opting out.

So, how do you get the Hard ones off?

Well, keep in mind inquiries affect very little of your credit score and by the time you have gone through the dispute process, the effects of that inquiry has more than likely faded. And as far as credit repair goes, they are the bottom of the credit disputing train.

When a client comes to me with late payments, collections, public records and over-utilized credit accounts; I'm focusing on those first. Payment history is 35% of your credit score; Utilization is 30% of your score, those inquires account for less than 10% of your score. Obviously, tackling the 'big' items makes more sense.

I personally only focus on removing inquires if my client has been a victim of identity theft or if a company has truly pulled their report without permission; meaning that the inquiry might lead to future identity theft.

However, I will say that a hard inquiry can drop your score as much as 10pts, and if you're looking to make a credit-based purchase, disputing an inquiry for those few points can make a difference. Keep in mind that disputing an inquiry will result in a Fraud Alert being placed on your credit.  A fraud alert will tell a business that they must verify your identity first prior to issuing any form of credit.  It lasts for 90 days, so if you're in the process of rebuilding you may experience a delay in getting approved for any form of credit; this doesn't mean you'll get denied, but you may get something in the mail or a phone call asking for hard copies of your personal info (ssn card/ID,etc).

To remove an inquiry you can either dispute with the creditor that has it listed or directly with the credit bureaus. With the original creditor you'd have to approach it as a 'Remove As A Good Will' or 'Remove Because I Never Authorized This Transaction' (often referred to as a Good Lie Letter if you really did give them access to your report).  If you choose the latter, it will only work if the lender does not have documentation with your 'wet' signature or recorded telephone conversation where you clearly gave them permission to access your accounts.

To dispute with the bureaus you'd have to take the 'Remove Because I Never Authorized This Transaction and Therefore They Did Not Have Permissible Purpose' approach.' Credit bureaus cannot give just any company access to our credit information. The business must have 'permissible purpose'.

Permissible purpose is defined in detail by the Fair Credit Reporting Act, Section 604. Basically if we did not give written permission, if credit access was not court ordered, or requested by a State/Local government agency in relation to child support, the company shouldn't have access to our credit information. Prior to placing any inquiry on our credit report; the bureaus should have proof that one of these events took place.

I'll post popular templates of Inquiry Removal Letters below; please Google other examples when forming your own inquiry dispute letters. You guys should know my motto by now, the best dispute letter is a personal, customized one in your own words :) For more info on goodwill letters click here.

If you need assistance pinpointing the items that are negatively affecting your credit; please feel free to reach out to me; I'd love to help!

~ Netiva

Original Credit Inquiry Removal Template:

[Your Full Name]
[Current Address]

[Creditor's Name]
[Creditor's Address]

RE: Unauthorized Credit Inquiry

To Whom It May Concern,

This letter is a notice to cease unauthorized inquires into my credit report and a formal demand that you immediately contact the credit reporting agencies and bureaus to have your illegal inquiries removed. While checking my personal credit report from {insert Credit bureau name}, I noticed an inquiry made by your organization.

The details of the inquiry are as follows:

Line number: [Line Number]
Inquiry made on: [Inquiry Date]
Inquiry made by: [Creditor]

To the best of my knowledge I have not approved your organization, any person associated with your organization, to make such an inquiry. This violates the Fair Credit Reporting Act, Section 1681b(c): Transactions Not Initiated by Consumer. I also demand that you remove my personal information from your records. Please send written confirmation that you have complied.

If you believe that you posses sufficient document that supports your authorization to make the inquiry, please forward a copy so that I may verify its validity.

I am using certified mail to ensure that you receive this letter and expect a prompt response.

Regards,

[Full Name]


Credit Bureau Inquiry Removal Template:

Date

Your Name
Your Address

Credit Bureau
Credit Bureau Address

To Whom it May Concern:

I recently pulled a copy of my credit report and noticed the following information are in error:

RE: Inquires

The FCRA states that the only permissible purpose for pulling someone's credit report is a) firm offer of credit b) insurance c) employment or d) a court order.

The following inquiries are related to none of the aforementioned permissible purposes.
1. ABC Banking
2. Midwest Credit Card
3. FindYourLuck Shopping

Please remove these inquiries from my credit report. I have enclosed a copy of my driver's license as proof of identity.

Sincerely,

Your Name