Myles M. Mattenson
ATTORNEY AT LAW
5550 Topanga Canyon Blvd.
Woodland Hills, California 91367
Telephone (818) 313-9060
Facsimile (818) 313-9260
|Have You Read Your "paper" Lately?|
Have You Read Your "paper" Lately?
Lenders frequently refer to your credit report as your "paper". Most people don't look over their "paper" until they're in the midst of a credit transaction. Sound familiar? Just when you think your loan application is moving along like Carl Lewis in the Olympics, you suddenly get a form letter from the lender indicating that your loan application has been placed in the dead-letter file pending receipt of your explanation as to why a $350,000 judgment was rendered against you in a Los Angeles Superior Court action in 1987. You remember the case. You remember that there were four defendants, that you shouldn't have been named as a defendant in the first place, that the court, in fact, dismissed you from the action, and that judgment was rendered against the remaining defendants. The credit reporting agency apparently picked up all four names from the pleading caption, and looked no further in the file. You assume that it should not be too difficult to drive downtown and obtain a certified copy of the Order dismissing you from the action, and that with that document in hand, the lender will proceed with loan approval. So after waiting in line for half-an-hour in the records section of the Los Angeles Superior Court, you reach the head of the line and inform the clerk of your need for the file. The clerk advises you that since your case is of ancient vintage, the file is to be found in the basement of another building. Three basements later, you finally stagger up to the correct counter and request your file. The clerk takes your order for the file and, since it takes extra time to retrieve old files, the clerk advises you to return in four days. You explain that you need the file immediately since you have a desperate need for a loan in two days and need the file to clear up a discrepancy in your credit report. The clerk, with the sympathy a tuna exhibits to a sardine, exclaims "Return in four days! Who's next in line?" The time to clean up your "paper" is before you have a need to do so, not afterward! The principal credit reporting agencies are TRW (800) 682-7654, Equifax (800) 263-9584, and Trans Union (800) 296-0112. TRW, the nation's largest credit- reporting agency will provide you with one free credit report on yourself each year. Most other credit-reporting agencies will charge between $8.00 and $15.00 for one's own credit report. Negative credit history can remain on your credit report for many years. For example, TRW will only remove a Chapter 13 Bankruptcy from your credit report after seven years have lapsed from the date the Bankruptcy was filed. Equifax advises that courthouse records remain for seven years from the date filed, except Chapter 7 and 11 Bankruptcies which remain for ten years from the date filed. Accounts closed and paid in good standing will also be reported for seven years. Mortgage Bankers and major loan companies often review consumers' credit reports from all three major agencies before lending money. It is thus wise to obtain copies from each of the major credit reporting agencies to be sure no inaccuracies are being reported. Although the economy, in some respects, appears to be improving, it has been reported by the American Banker's Association that the credit card delinquency ratio during the second quarter of 1996 reached its highest level since 1974 when the Association began collecting such data. During September, the Federal Deposit Insurance Corporation reported that bank credit card losses rose to their highest level since 1992. Such losses were felt attributable to a rise in personal bankruptcy filings and corporate downsizing. Personal bankruptcies have been projected to hit a record one million this year. The total number of bankruptcies in California alone rose 20% during the first seven months of the year to 87,000, with Southern California accounting for nearly two-thirds of that number, according to a Santa Ana public data research firm. Credit cards, if not used responsibly, can produce uncontrollable debt. If, for example, you make minimum monthly payments on a credit card balance of $3,000 at 19.8% interest, and make no new purchases, it will take you approximately 39 years to pay off the debt. The interest alone will cost you over $10,000! Because of increased credit card debt, the rise in personal bankruptcy filings, and other challenges to the economy, financial institutions and individual lenders are increasingly aware of the need to carefully review every bit of credit information that can be obtained upon a prospective borrower. How does your "paper" read?
[This column is intended to provide general information only and is not intended to provide specific legal advice; if you have a specific question regarding the law, you should contact an attorney of your choice. Suggestions for topics to be discussed in this column are welcome.] Reprinted from New Era Magazine Myles M. Mattenson © 1996-2002