Bankruptcy Creditors are not the problem! What’s killing your credit scores, even more than bankruptcy, comes from the Credit Reporting Agencies. Those damn rats!
Get this (if you haven’t heard me say this a thousand times before), the BIG 3 make money off (your) bad credit reporting.
…and I’m talking about a helluva lot more money when compared to good credit reporting.
You see, it’s reported a person with bad credit applies for credit 5x more often than a person with good credit.
…5x more often!
That means each time you apply for credit, the potential creditor pays the BIG 1, 2, or 3 for your score. Cha-ching! Each month, the BIG 3 charge creditors to report bad credit. Cha-ching!
Yep, the BIG 3 profit off bad-credit reporting, and the bureaus do not want to lose their “sugar.” (And you, my friend are the sugar!)
Now you know the “why” but you are about to discover why you should never, ever…ever…send copies of your bankruptcy paperwork to the BIG 3, thinking you’re doing them a favor. This is just part of the truth about credit reporting agencies. Click “read more” below to get the rest of the story.
THE REAL PROBLEM WITH THE BIG 3
The other day, a friend named Sara asked me about a listing on her credit reports. A while back she had filed Chapter 13 bankruptcy and did not include her car in the BK (bankruptcy).
She “reaffirmed” it and paid it off…on time each month until paid off.
So what’s the PROBLEM?
Yet, there it was…on two of her reports showing up as “Included In BK.”
It was NOT included in the bankruptcy.
Innocently, Sara made copies of her BK paperwork and fired all this paperwork off to the BIG 3, asking each bureau to report this account accurately. Innocent enough, don’t you think?
- Experian immediately processed the dispute and updated Sara’s report. Cool.
- Unfortunately, Transunion and Equifax still will not report accurately…yet.
Apparently the CRA employees just looked at the BK papers Sara sent them and simply marked accounts by the same creditor as “included in the BK,” without ever giving thought (any thought) to the account getting paid prior to the filing or paid after completion of the plan.
So what’s the SOLUTION?
- Do not just send your BK papers to the BIG 3. This is a BIG “no-no”.
- Dispute (with both bureaus) this single auto account they’re reporting inaccurately…get it reported as “paid as agreed.” It was NOT included in the bankruptcy as reported. It’s inaccurately reported and these two bureaus must report accurately…that’s the law.
- Dispute any other accounts NOT included in bankruptcy and try for a “paid as agreed” for the accounts that were paid 100% and not charged off prior to the filing.
- File a complaint with the Federal Trade Commission (FTC), forcing these two bureaus choose not to report your car loan as “paid as agreed” instead of “included in BK”.
Bankruptcy creditors typically are not the problem when your reports get screwed up. Your “beef” is with the credit reporting bureaus, in most cases. Do NOT send your bankruptcy documentation to the CRAs. This is one mistake you do NOT want to make.
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