Q. Help! I have been unlawfully reported by Early Warning Systems and my bank to credit bureaus for bank fraud, and I have done nothing wrong. As a small business owner, I was 45 days late paying a small business credit card.
As a result of a false report to credit bureaus, I cannot open a bank account in person or online anywhere. And I now work for a Fortune 20 company now making an over six-figure salary.
What is the best and fastest way to fix this problem?
– Kristin, Chicago
A. Small business credit cards typically require a personal guarantee – if you don’t pay, your personal assets and credit score can be affected, explains Ted Rossman, senior industry analyst at Bankrate.com. And banks have a lot of latitude to close accounts or adjust credit limits.
“Basically, it seems like the bank got spooked by the 45-day late status on the small business card and pulled her credit lines,” Rossman says. “I’m a bit surprised this happened after 45 days – normally with a credit card, I’d think someone would have to be 90 or even 180 days late to have something like this happen. But I’m not seeing anything unlawful.”
Unfortunately, the damage of the late payment was compounded by losing the other available credit lines, Rossman explains. The best bet for Kristin at this point is to focus on rebuilding her credit score.
“This is one of the tough things about credit scoring,” Rossman says. There’s an element of ‘the bigger they are, the harder they fall’ – an excellent score can be tanked by just one late payment.”
It’s important to note that late payments stay on credit reports for up to seven years, although the impact is most pronounced in the first two years. Kristin works for a prestigious company and makes good money, but those details are irrelevant in credit scoring, Rossman says.
To rebuild her credit, Kristin might want to sign up for a secured credit card. She should also consider an alternative credit scoring system such as Experian Boost or eCredable Lift, Rossman says. If possible, she could become an authorized user on someone else’s credit card – perhaps a spouse, parent or adult child.
“It’s going to take some time, unfortunately, for her score to bounce back,” Rossman says. “I believe the best approach is to fill her reports with good information to, over time, recover from these blemishes.”
