How to Stop Creditors from Reporting Your Credit, or Not

In the previous three articles, How to Get Credit, and How to Stop Creditors From Collecting Your Money, Or Not, and How to Stop Collection Calls, Or Not, I discussed how your ability to receive credit is governed by understanding the credit laws that apply to the credit application approval process, and I discussed the laws that govern your creditors ability to collect money on the debt owed. This last article in the series, How to Stop Creditors From Reporting Your Credit, Or Not will discuss the laws that apply to your creditors' ability to report your credit behavior. I'm sorry to disappoint you, but there is not legal way to stop creditors from reporting your credit behavior. The only way to control your credit report in a positive manner is to give creditors good behavior to report.

Federal laws that govern the ability of your creditors to report your credit behavior include the following:

1.) The Right to Financial Privacy Act of 1978 limits government access to your credit information.

2.) The Fair Credit Reporting Act of 1971, an amendment to The Consumer Credit Protection Act, governs credit bureaus and creditors' use of consumer credit information. Credit bureaus are not government agencies. They are private businesses, which exist to support the credit industry.

The Fair Credit Reporting Act of 1971 includes the following restrictions:

A.) A creditor when acting as a credit reference can only report his experience with a debtor. He cannot report what another creditor, or a debtor's relative told him about the customer to any third party, who is asking for a credit reference. This restriction also applies when skip tracing. Skip tracing is locating a customer who has "skipped." A "skipped" customer has disconnected his phone, quit his work, and moved out of town to avoid collection calls. Skip tracing is the process of locating a customer by calling the debtors other creditors, and potential creditors. Potential creditors are creditors, who have obtained the debtor's new credit applications. Creditor information needed to locate a customer is usually located on the debtor's credit bureau report.

B.) Under The Fair Credit Reporting Act, credit reports can only be used for specific purposes. When a debtor signs the retail charge agreement, also known as the credit application or contract, there is a clause in the contract which gives a creditor the right to conduct a credit check. A creditor conducts a credit check by contacting the debtor's credit references, which are the credit cards the debtor listed on the application. A creditor also conducts a credit check by running a credit bureau report, verifying the debtor's employment, and verifying the debtor's home number listed on the application. If after granting the debtor credit, the debtor falls into a state of delinquency by missing a payment or sending in late payments, the creditor may also conduct another credit check on the debtor. If the debtor requests additional credit, or "skips", the creditor may also conduct another credit check on the debtor. Also, the creditor may also conduct a credit check on a current debtor for any other legitimate business purpose.

C.) Under The Fair Credit Reporting Act, credit reports can also be used for employment purposes, underwriting insurance, or any other legitimate business transaction. If you don't want your name to be sold to another creditor so they can run a credit bureau on you, then write the company, and ask the company to remove you from its marketing list. Also, you can opt out of unsolicited credit offers by calling 1-888-567-8688.

D.) Good and poor credit on your credit bureau report is reflected as current payment history, also known as status of delinquency. Current payment history is the number of payments missed or number of late payments, bankruptcy history, Wage Earner Plan status, charge offs, repossessions, and judgments. Although not mandated by law, traditionally credit history usually remains on your credit bureau report for 7 to 10 years.¹ This comes from the Biblical tradition handed down from the Jewish tradition, where debts are relaxed every 7 years.1 At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the LORD's release. NKJVDeuteronomy 15:1-2 ² Even if the creditor no longer reports to your credit bureau after 7 years, the creditor can still try to collect after 7 years. It is unlikely that a creditor would pursue a debtor that long, unless it was to collect on alimony, child support, or past due taxes. However, under the new Bankruptcy Reform Act of 2005, the aditional "7 year rule" has been elongated, or lengthened, to 8 to 8 years. ³

E.) Under the Federal Credit Reporting Act of 1971, denial of credit based on credit reports or denial of credit based on based on credit references must be disclosed to the applicant in writing. This gives the applicant an opportunity to dispute a decision based on false information.

F.) Also, under the Federal Credit Reporting Act of 1971, denial of employment based on a credit report must also be disclosed in writing to the applicant. Advance warning of a credit bureau check does not need to be disclosed to an employee being considered for a promotion. Usually an employee signs a statement on the application blank that discloses a credit check will be conducted in a pre-employment background check, in the event of a promotional opportunity, or in a random post-employment background check. Read your employment application, especially the small print, carefully.

G.) In addition, penalties for fraudulently obtaining a credit report for any other reason than the above are severe. You may request a credit bureau report on yourself to check for erroneous or fraudulent information. This may be advisable since forgery, fraud, and identity theft is on the increase. It would be a good idea to request your report from several different credit bureau companies, as not all creditors report to all credit bureaus. The 3 major credit bureaus are Equifax, at 1-800-685-1111, TransUnion LLC at 1-800-888-4213, and Experían, at 1-888-397-3742. Look in your yellow pages under credit reports for more information, and a complete list of credit bureaus in your area.

The enforcement of federal credit laws falls under The Federal Trade Commission, the FTC, which governs finance charge disputes, Truth-In-Lending disputes, and misleading sales statement disputes.

More information on federal laws can be obtained by contacting The Federal Information Center at 1-800-688-9889. More information on state laws can be obtained by contacting your local state government information center.¹

For the introduction, to this series, see my article entitled, How to Understand Credit Laws.

ENDNOTES:

¹ Credit Operations Manual, Jewelers Financial Services, Inc. Zale Corporation.

² Scripture taken from the New King James Version Bible. Copyright © 1982 by Thomas Nelson, Inc. Used by permission. All rights reserved.

³ "Bankruptcy Reform Act-Brief Summary of Important Changes", © 2005 by Compact Library Publishers, website http://www.ws5.com/bankruptcy/