WHEN I MADE THE DECISION TO RETURN TO THE ROLE OF RETAIL ORIGINATOR IN 2012, my purpose and mission was to help people who had been injured during the Great Recession. This is why I write this column and this is why I spend a tremendous part of my day problem solving for folks who are trying to rebuild, in some cases after losing everything.

I find that one of the biggest issues of difficulty that people face is cleaning up the credit reporting wreckage of the past. The issue of inaccurate reporting of consumers’ credit histories is big — so big that the Consumer Financial Protection Bureau has made it one of their core points of focus.

While I certainly am not a credit repair specialist and this is definitely not my favorite thing about my job, it is something I get involved with when trying to help people achieve the goal of successful homeownership.

The unfortunate truth is that millions of consumers have inaccurate information contained in their credit histories. The most common problem that I see is creditors failing to accurately report the status of accounts that have been settled or paid after being charged off.

The situation usually unfolds like this: a consumer falls behind in their payments, the creditor charges off the debt as a loss and reports the account as an unpaid charge-off. Then, after some time, the consumer decides to settle with the creditor and either pays the unpaid balance in full or reaches a settlement to pay the creditor an amount less than the full balance.

The creditor promises to update the account to reflect that the bad debt has now been paid or settled — but years later the consumer discovers that the creditor has never updated the account, and as a result the improvement they expected to their credit score never materialized.

Understandably, this can quickly become a highly charged situation. Something from a dark point in the past has now come back to haunt the individual, and worse yet, they have to go back through the agony of dealing with the creditor to resolve the problem — the same creditor that was impossible to deal with years ago when they were going through a particularly tough time. The resulting emotions run the gamut from despair to outrage.

How should a consumer deal with this situation?

The first thing is being aware that there is a problem. In almost all cases that I encounter, consumers were completely unaware that their credit files contained inaccurate information. Since your credit score affects so many different aspects of your life, from the costs of your insurance to the likelihood you will get that next job, it is imperative that you monitor your credit report. This is especially true if you happen to have some gremlins in your past.

The easiest and most cost-effective way to monitor your credit is to take advantage of the free site the government has set up for this purpose: annualcreditreport.com is the only source for free credit reports authorized by federal law. On this site you can access reports from all three of the major bureaus once per year. Review one bureau every four months and you get a free look three times a year.

If you discover a problem, you can dispute the issue right from this site. This is where keeping your paperwork from when you settled that account will come in handy. If you have to dispute an inaccurate item, having your documentation will be invaluable.

Sometimes the only way to resolve an issue is to go directly to the creditor and ask them to update the records they are sending to the bureaus. This can be especially frustrating but doesn’t have to be. The number-one rule is, keep your calm. Most of the time the folks you talk with initially are reading from a script and are truly powerless. They will frequently tell you that fixing your problem is impossible or try to put you off by telling you that they need to send your request to another department. The truth of the matter is that they actually believe what they are telling you because they simply don’t have the power or knowledge to help. But there is someone above that person who can resolve your issue. You just have to climb the ladder and ask to speak to the next person up until you find the manager who can and will help you. Typically it takes talking to two or three people before finding the right person, and typically, if your complaint is valid, this individual will help you resolve the problem.

There is a light at the end of the credit repair tunnel. It may be difficult, but with patience and perseverance even the most difficult credit challenges can be overcome.

Guy Benjamin (CAL BRE License #01014834, NMLS 887909) writes a weekly column for The Herald, offering general information on real estate matters. As it is impossible to address all possibilities and variations, he will try to answer individual questions by readers who contact him at 707-246-0949 or guyb@fairwaymc.com.height=”150″ />

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