Adding a 100 Word Statement is Not a Helpful Credit Repair Tactic

Negative items on credit reports make some of the largest hits to your credit rating. A few delinquent payments can make the difference between getting a favorable interest rate on a mortgage or other type of loan and having to make a large down payment in order to even qualify for financing. Major derogatory items like charge-offs, repossessions, and bankruptcies have the potential to drop your credit score so much that you will have difficulty getting approved for credit, regardless of the terms.

So what are the options if there are damaging items on a credit file that shouldn't be there? Errors do happen and damaging listings are incorrectly added to consumers' credit reports very frequently. And what about negative listings that do describe actual events but there was a perfectly good reason behind them? Is it fair to require that you deal with a low credit rating for up to a decade when the damaging listings on your credit reports were completely outside your control?

The Fair Credit Reporting Act (FCRA) gives consumers a few options when dealing with bad credit, and enforcing their right to a fair and accurate credit score. This includes the right to order free copies of your credit reports so you can see what information they contain as well as the right to dispute items on your credit reports that you feel may be inaccurate, untimely, misleading, incomplete, ambiguous, unverifiable, biased or unclear.

Another antiquated option you have as a result of this act is the ability to add a one hundred word statement to your credit reports explaining to creditors the circumstances behind negative items on your credit reports. The idea is that when looking at your credit reports, lenders will be able to take into account the justification behind these negative listings when considering a loan application.

What makes this statement antiquated is that these days, lenders rarely look at the individual listings in your credit reports. In fact, they may never see your reports at all so your carefully crafted 100-one hundred word statements would never be read.

On top of that, lenders are primarily interested in your credit score, which does not take the 100 word statement into account. No matter how reasonable your justification is for having a negative item on your credit reports, your credit score will remain unchanged.

The only way to prevent negative items from lowering your credit score is to have them removed from your credit report. One option people have for attempting to do this is the credit bureau dispute described in the Fair Credit Reporting Act. Additional credit repair options are made available through a number of other consumer protection acts targeted towards creditors and collections agencies.