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