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New Mexico State University

New Mexico State University

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Millions of People Have Credit File Problems

LAS CRUCES--People who have high debts may have a hard time paying them off, especially when credit is used too often. As many as 50 million people have credit file problems, said a consumer education specialist with New Mexico State University.


According to a National Council of Financial Education survey, the number one problem is late or missed payments, said Susan Wright with NMSU's Cooperative Extension Service. In the case of delinquent payments, records don't have to be removed- just note that they were paid. Negative information remains in credit files for seven years. Reports of bankruptcies remain for 10 years.

"Up to one-third of credit file problems are caused by a spouse after divorce or when there is a separation agreement that is not honored," Wright said. "People may fail to live up to agreements. They may agree to take over payments on a debt but never follow through."

When people get divorced or separated, all mutual debts should be paid in full or separately refinanced, Wright said. All joint credit cards should be canceled and returned to the issuers. Do not just throw them away.

"Bankruptcy will be a very important part of a credit file," she said. "A letter explaining the circumstances of the problem can be placed in the file, but the information will remain on your record for 10 years."

A report of any collections or charge-offs will appear in the person's credit file, Wright said. Items repossessed or claimed as losses by a company also will be noted.

People need to check credit files often when other family members have the same or a similar name, she advised. Reports can sometimes be misfiled.

"Review credit cards listed in your file," Wright said. "Also, check for any credit cards, leases or loans that may not have been listed. When a company does a credit check and sees that a person had not been truthful, they will mistrust them and deny credit."

If incorrect information appears in a file, consumers can ask the credit bureau to investigate and notify them of the findings, she said. If there is a disagreement about the entry, they can write a letter of protest and have it included in their files.

Sometimes people may become victims of fraud, Wright said. When credit cards are stolen, report it to the credit bureau and to the local authorities.