Contents

Introduction . . . . . . . . . . . . . . .......... . . . . . . . . . . . . .1

1. Credit Score Basics . . . . . . . . . . . . . . .. . . . . . . . .15

2. Credit Scores – Advanced . . . . . ... . . . . . . . . . . . 26

3. Re-Scoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

4. Obtaining Your Credit Report . . . . . . . . . . . . . . . . 65

5. Reading Your Credit Report . . . . . . . . . . . . . . . . . 87

6. Disputing Errors . . . . . . . . . . . . . . . . . . . . . . . . . . 97

7. Identity Theft Basics . . . . . . . . . . . . . . . . . . . . . . 115

8. Making & Mixing Credit Reports . . . . . . . . . . . . . 141

9. Reinvestigations (or not) . . . . . . . . . . . . . . . . . . 159

10. History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

11. Credit Repair . . . . . . . . . . . . . . . . . . . . . . . . . . 207

12. Debt Collection . . . . . . . . . . . . . . . . . . . . . . . . .223

13. Auto Insurance . . . . . . . . . . . . . . . . . . . . . . . . .229

14. Homeowners Insurance . . . . . . . . . . . . . . . . . . 251

15. Mortgage Insurance . . . . . . . . . . . . . . . . . . . . .261

16. The Color of Credit Scores . . . . . . . . . . . . . . . 265

17. Special Challenges . . . . . . . . . . . . . . . . . . . . . 277

18. Opting Out . . . . . . . . . . . . . . . . . . . . . . . . . . . .293

19. Impermissible Access . . . . . . . . . . . . . . . . . . . 303

20. Damage & Damages . . . . . . . . . . . . . . . . . . . .311

21. The 2003 FACTA Battle . . . . . . . . . . . . . . . . .337

22. Missing Credit Limits . . . . . . . . . . . . . . . . . . . .366

23. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . .383

Reviews & Endorsements

Unlocking the Mysteries Of Your Credit Score

Page F01 I find it amazing that the credit reporting and scoring system -- something so important to how we do business -- is a mystery to many. Credit agencies hold the financial histories of millions of people. The information is used to create a score (from a low of 300 to a high of 850) that determines how much you pay in interest for a mortgage, car loan or credit card. Credit scores can result in your losing your job or in the cancellation of your auto or homeowner's insurance policy. And yet, according to one study by Consumer Federation of America, only 3 percent of Americans could, unprompted, name the three main credit bureaus. What about you? Can you name them? They sure know who you are, and they've got your credit number. So what should you do to become more informed? To start, I suggest you read Evan Hendricks's book "Credit Scores & Credit Reports: How the System Really Works, What You Can Do" (Privacy Times, $19.95). In his book, Hendricks tells a scary tale of how vulnerable we all are when it comes to our credit lives. This cautionary story is why his book is the July selection for the Color of Money Book Club. "The credit scoring and credit reporting system is a work in progress," Hendricks writes. "It would be inaccurate to characterize the system as totally or always unfair. But it clearly cannot be depicted as totally or always fair either." To be honest, I didn't think this book was appropriate for the average consumer. At more than 300 pages, "Credit Scores & Credit Reports" is an extensive manual that includes just about everything you will ever want to know about the system and then some. But you know what? Ignorance is not bliss. Ignorance can cost you money. In an interview, Hendricks said he wanted his book to inspire more consumers to "educate themselves about this big, complex system and the money and power involved." This book clearly has a bias, and that's fine with me. For years, Hendricks, as editor, publisher and founder of the newsletter Privacy Times, has been testifying before Congress, trying to protect the credit rights of consumers. As Hendricks points out, when the credit-reporting system breaks down, the impact on people and their families can range from inconvenience to financial devastation. The latter is no exaggeration. Hendricks recounts how one consumer spent two years trying to convince credit bureaus and creditors that he was alive and was not his deceased mother. He writes about a young consumer whose new credit file was mixed up with an older man's with the same name. Nobody seemed to care that it was impossible for this young man to have had delinquent credit accounts when he was just 14. Folks, these are not isolated cases. An increasing number of consumers have had to file lawsuits to get their credit files corrected. In fact, one in four credit reports contains errors serious enough to cause consumers to be denied credit, an apartment lease or a home loan, according to a new survey released recently by U.S. PIRG, the national lobbying office for state Public Interest Research Groups. U.S. PIRG collected 200 surveys from adults in 30 states who reviewed their credit reports for accuracy.

Here's what the survey found:

In "Credit Scores & Credit Reports," you get information based on advice from top consumer attorneys on how to dispute errors, and you learn what happens when credit bureaus investigate consumer claims of inaccuracies (actual court testimony from officials in the credit industry will make you shudder). Key to the book is the front section, which explains how credit scoring works. For example, did you know the credit-scoring models place a great deal of weight on how recently you had a credit problem? So a 30-day late payment from last month could reduce your score more than a delinquency from years ago. And the amount of money past due is not always as significant as how recently you were delinquent. "In other words, a $40 balance on an account that is currently 60 days late in some cases can do more damage to your credit score than a $3,000 collection account that appeared on your credit report four years ago," Hendricks writes. "Credit Scores & Credit Reports" isn't light reading, but it sure will enlighten you.

—Michelle Singletary, WashingtonPost.com, Sunday, July 11, 2004

“There are few books I think all consumers should read. This is one of them. It is a well-informed, informative, and a well-written guide to a subject of great and growing importance to consumers.”

—Stephen Brobeck, Executive Director, Consumer Federation of America

"It is tough to overstate the value of this incredible book; its one everyone in America should read, because credit scoring is affecting us all now. It’s almost 350 pages long and I think I learned something new from each page, and that is after more than a decade of teaching about, writing about, and learning about credit scoring. The first three chapters alone - which concentrate on credit scoring - are worth much more than the cost of the book. If you only have time to read those chapters, you will have gotten a great deal out of this book."

—Christopher Cruise www.TrainingPro.com

 "It is not only a very useful handbook for consumers, it's a very good description of the legislative process."

—Congressman Barney Frank, Chairman, House Financial Services Committee