Whether you realize it or not, there is a tremendous battle going on aimed at shaping your opinion. On one side you have the credit bureaus with a massive public relations campaign to discourage consumers from attempting to restore their credit by telling them it is impossible. They do this by limiting their acknowledgment to those methods strictly outlined in the Fair Credit Reporting Act, such as the dispute method and the consumer statement.

On the other side you have consumer rights groups pushing for more reform. And sometimes in the middle, but most often leaning toward the side of the bureaus, you have the Federal Trade Commission. If that weren't enough, you still have outside voices (attorneys and credit repair services) whose motives are purely financial and at time such motives and ignorance add more fog to an already cloudy landscape.

The result is a lot of conflicting and confusing information.  It is very easy to get bogged down in this information glut.  But you don't have to muddle in the mire. This resource strives to shine a bright beam of truth to dissipate this fog of misinformation--so that you can begin pursuing a clear path, able to discern the good and the bad offered you from both sides.

As evidence of this ongoing credit war, consider these great myths about the credit reporting industry. Each of these statements below is false. Nonetheless, almost every consumer still believes that one or more may be true.

Myth: The information on a credit report cannot be changed.

Fact: Exactly the opposite is true. The Fair Credit Reporting Act requires that items be removed if they are not fully 100% accurate OR can not be verified within 30 days. Also, anything a creditor is responsible for reporting and confirming, a creditor can change.

Myth: Requests (inquiries) for credit reports can't hurt them.

Fact: At the end of each report will be a log of inquiries. An inquiry notation is made each time someone requests a copy of your credit file from that credit bureau. Any company that receives a copy of your credit profile will be listed under this inquiry section of your report.

Lenders don't like to see a lot of inquiries on a credit report. Excessive inquiries can result in a credit denial as easily as bad credit. But, not all inquires are viewed negatively. (Full details at The Subject of Inquiries)

Myth: When I pay off a delinquent account such as a charge-off or collection account, it will stop hurting my credit, because it will then be shown as "paid."

Fact: As hard as it might be to believe, sometimes paying off a debt can actually hurt you. This is one of those occasions. These type of collection accounts are allowed to stay on your credit for a "maximum" of seven years. See Old Delinquent Accounts for warning and explanation of how you can unwittingly restart this clock.

However, this does not mean that you never pay these debts. While discussing negotiating with creditors covered in Chapter 4, you will read how to include in your negotiated settlement a provision for how it is to be reported. To not do so can severely hurt your chances of restoring your good credit.

Myth: Credit reporting agencies are empowered with governmental authority.

Fact: Absolutely Not! Rather, they must adhere to the government authorities and laws overseeing their operations. Credit bureaus are like any other business. They buy and sell products and services to turn a profit. No special authority exists.

Myth: Bankruptcy is a "Fresh Start."

Fact: Unfortunately, many attorneys don't clearly explain the devastating effects to one's credit when filing bankruptcy. This goes for all types of bankruptcy including Chapter 13, wage earner.

Bankruptcy is not a clean slate. Every account included in the bankruptcy will be so noted in your credit file. Additionally, there will be a court record generated that will also be added. Avoid bankruptcy if at all possible. The time table and the odds of completing credit restoration are greatly extended due to the number of negative entries that are associated with such filings.

Myth: Some types of credit information (such as bankruptcies, judgments and foreclosures) are impossible to remove.

Fact: Although it is true that some types of information can be more difficult than others to remove, each of these negative entries have been removed thousands of times, using a multitude of creative methods.

Myth: Credit repair is too complicated to do myself. I would have to hire an attorney.

Fact: In some cases involving a stubborn situation, an attorney can be of great assistance. An attorney can also help with clarifying the finer points of your state's laws. However, you can accomplish most if not all of the legal and negotiation-based methods in this report yourself by becoming familiar with your federally given rights and how to enforce them, as well as other creative methods employed by consumers.

Myth: It is illegal to have truthful information removed from your credit report.

Fact: Congress has already set the precedent by making special provisions for the removal of correct information from individuals' credit files by fulfilling certain criteria. Congress realizes that dangling that carrot in front of college students encourages repayment of defaulted student loans. It should come as no surprise that creditors in other financial markets are hip to this. Let's face it; congress had to get the idea from somewhere. Right?

If you need more proof, read section 609(c)(2)(E) of the NEW Fair Credit Reporting Act that President Clinton signed in September of '96.

"...a consumer reporting agency is not required to remove accurate derogatory information from a consumer's file, unless the information is outdated under section 605 or cannot be verified."

Notice the wording above, "is not required to remove." It is very interesting that the law does not say that accurate information "can not" be removed, but only that the credit bureau is not required to. Now, there is law that says a creditor can not knowingly add wrong information to someone's file, but the subject of removing accurate information is mysteriously avoided. The truth is the FTC and the bureaus themselves spend a lot of money trying to convince consumers otherwise. Why? Lobbyists and money of course! It makes more work for the credit bureaus, thus increasing their labor costs. Bureaus save millions of dollars a year by convincing consumers that the consumer is virtually powerless. But congress worded things to leave the door open, and in at least one case drafted law allowing for it, specifically.

Fortunately, creditors make their profits by collecting from their customers, not reporting negative credit information. Many creditors, though, have an agreement with the credit bureaus that they will not allow a negative listing to be deleted upon settlement. Larger creditors, such as huge credit card companies or banks will require more pressure before they will agree to delete a negative listing, but virtually every creditor will give in with the right amount of convincing. Every creditor who reports to the credit bureaus can also change the information they report. In most credit organizations, there are several managers with the authority to make changes on the credit report.

Bottom Line: Anything a creditor is responsible for reporting and confirming, a creditor can change.

[Excerpted from Fresh Start: The Authoritative Guide To Consumer Credit Repair. Three more sections conclude Chapter One by thoroughly covering all the changes as a result of the most recent laws going into effect.]