Are you still steaming because an inaccurate credit report has sent your FICO score spiraling downward, causing major problems with your efforts to refinance your home?

Join the club.

A few months ago, we became victims of credit-card fraud. Some clown got access to our account and charged thousands of dollars of computer equipment on our card, via telephone, at a popular outlet in the San Francisco Bay area. We discovered the bogus charges after we had returned from a short vacation and quickly informed the bank that issued our card. We also stipulated that we would not pay the charges that we did not make.

By the time the mess was sorted out, we were judged to have been late on our credit-card payment for the month that we refused to pay the phony charges. That blemish, coupled with another late charge when my bill-paying bride was out of town in 2003, sent our FICO score lower.

FICO scores (generated by Fair Isaac Corp.) typically range from a high of 850 to a low of 300. These numbers are compiled by the three national credit agencies. Most of the time, consumers who grade out above 760 get the best mortgage rates, those between 760 and 700 are in the middle, and those under 630 usually pay the highest rates, if they can get financing.

To compound the problem, I chose to apply for a new credit card late last summer when my preferred airline carrier had a bad stretch of service. I wanted to shift my frequent-flier miles to another carrier, so I received another card supporting a different airline.

Really bad timing. When you apply for credit, or have lenders/creditors/companies inquire about your credit, your FICO score tends to go down. The lender for our proposed line of credit basically said, “what have you guys been doing?” after our application had been filed and the new FICO score had arrived.

The good news is that many states, including Washington, have specific timelines in which creditors and reporting agencies must act on credit challenges. For example, a credit agency has 30 business days to reinvestigate any contested blemish on your credit report and then contact you with the findings. If the credit bureau cannot verify the delinquency in question, the delinquency must be removed.

The Washington law passed in 1994 in an attempt to get creditors and reporting agencies to clean up their files and speed up processing. It also requires that the credit-reporting agency contact the creditor within five days to verify the debt.

We had been down this road before, prior to 1994, and spent months getting the challenge squared away. Several years ago, we had applied for a mortgage. We quickly received a credit report showing two delinquent payments to department stores. The “30-day lates” had occurred nearly seven years before then–about the time we were moving into a new home. I wrote the stores, explained what happened, and both companies removed the delinquent notices.

However, the letter from one store did not get to the credit bureau. The same delinquent notice showed up on my report the next time I considered a refinance. I dug out the original letter, called the credit agency, and demanded an explanation. Needless to say, I also called the department store chain and spoke to a credit agent. I read her my letter over the phone and explained someone had dropped the ball. What added fuel to my fire were the long-distance call (no “800 number”) and the time it took away from work.

Credit reports are powerful vehicles. Jobs, homes, reputations and future credit often depend on them. If an incorrect item appears on a credit report, it’s up to the consumer to see that it is corrected. For example, I once had two mortgages with the same lender. Both payments were once credited to one account, and I got a delinquency notice on the other. It took two letters and numerous phone calls to get the 30-day delinquency removed from my credit report.

Merely telling the agency is not enough. You should submit the explanation or proof in writing. People often don’t understand that a credit agency cannot remove something from a credit report without the authorization of the company filing the delinquency. Delinquencies include tax liens, judgments and repossessions.

For a copy of your own credit report, contact the reporting agencies: Experian, (888) 397-3742, experian.com; Equifax, (800) 685-1111, equifax.com; and TransUnion, (312) 408-1077 transunion.com. The Fair Credit Reporting Act (FCRA) requires each of the companies to provide you with a free copy of your credit report, at your request, once every 12 months.

Tom Kelly’s new book “The New Reverse Mortgage Formula” (John Wiley & Sons) is now available in local libraries and bookstores. Tom can be reached at news@tomkelly.com

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