No matter what your story, today over 80 percent of all entrepreneurs have information on their credit report that is holding them back—even those business owners who always pay every bill on time. Of all the credit reporting from the three bureaus each year, half is inaccurate and those inaccuracies can hurt you.

There are endless scenarios of how negative information is accumulated on credit reports. Some of the most common issues faced are inaccuracies, information reported incorrectly or the reporting of a debt that never occurred.

Other common negative issues pertain to identity. Reporting errors are very common for people who have common names like Smith and Jones, or juniors and seniors in the same family. Also, if a bureau representative transposes a Social Security number, something as simple as an unpaid bill—from someone in a state where you never lived—is now on your report. If you are a victim of identity theft, laws went into effect in 2004 to protect consumers which now makes the credit restoration process for theft victims much easier.

Other common issues are erroneous or outdated information, as well as multiple inquiries. If information is on your credit report from more than seven years ago (ten years in some bankruptcy filings), it should be removed. Additionally, if you purchase a vehicle, a dealer may reach out to multiple lending institutions to get the best interest rate for the auto loan. One client of ours has 17 inquiries on his credit report from a car he had purchased four years ago. Those inquiries should have automatically dropped off just a few months after the purchase of the car. They didn’t, and his credit score suffered by 34 points.

The law states that information must be accurate in order to be placed on a credit report. The law also states that you have the right to dispute an inaccuracy and have it removed. There are a few options available to you on how to go about doing this.

Can individuals handle the dispute(s) themselves? By phoning, going online or writing letters directly to the three credit reporting agencies, people can show proof of an error with a copy of a credit report identifying the inaccuracy, along with documentation supporting the dispute. The bureau has 30 days to respond with either a request for additional information or with the correction. If they do not respond in 30 days, they must remove the negative information without question.

Doing the corrections on your own saves money; however, you just enrolled yourself in a new hobby. In most cases, business owners should be prepared for intensive follow-up as this process never goes quickly. An individual should plan to spend up to a year or more working with the three bureaus.

Remember: One issue will be dealt with as many as three times, one for each bureau (Equifax, Trans Union and Experian). One to three issues to address could take more than six months to correct; four or more could take a year or longer to resolve. With this option, self-service credit restoration may be the most cost effective; however, accuracy is reduced and completion time can be significantly delayed.

Another option is to use a law firm. They are efficient and accurate and will probably deliver timely results—but are they cost effective?

Today, there are new laws and rules to protect entrepreneurs, and a third option is to use a credit consulting agency. Reputable credit restoration companies are quite common and take 90 percent of the workload off while expediting the process in half the time. These experts will review a credit report, and after a consultation can determine what can be changed or removed.

Credit consulting agencies provide accurate and timely results with the best cost of service available.

Here are a couple helpful tips:

- Seek the advice of your credit counselor, lender or lawyer.

- Never use more than 50 percent of the available balance on your credit card. It is better to have two credit cards with a $2,500 balance on each with a $5,000 limit per card than to have one credit card with a $5,000 limit that is maxed out.

- Paying more than the minimum amount on a credit card on time every month will still affect a credit score and interest rate negatively.

- Stay out of collection. Be in regular contact with the creditor and pay something, even if you cannot make payments on time.

- Don’t let fear or pride get in the way. If you need help, ask.

The laws protect everyone, but if your credit score is holding you back, take action and get curious about the issues to learn more. Next, determine your options versus the cost. Then get moving right away because this might take a little longer than you think.

		Tim Gray is a local expert in the credit and collections industry, and is a division vice president and credit coach at IMT Credit Services. Gray is also a provider of consultative services for credit restoration and credit score advisement. For more information, go to www.imtcredit.com.

 

 

 

 

 

 

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