DEFINITION of 'Jamming'

A scam perpetrated by bogus credit repair firms that involves the mail out of dispute letters en masse to credit bureaus on behalf of consumers with spotty credit histories. Jamming is so called because it clogs up the dispute process. Since credit bureaus only have 30 days to verify disputes, an inordinately large number of dispute letters would result in their temporary removal from consumers' credit records. These dispute letters request removal of information that reflects negatively on a consumer's credit record - such as non-payment or chronic late payments of bills - but that is perfectly accurate and legitimate.

BREAKING DOWN 'Jamming'

Fraudulent credit repair firms make a bad situation even worse for a consumer with a poor credit record. These firms typically charge a substantial amount payable upfront to repair one's credit. The hapless consumer who believes that his or her credit record has been successfully repaired soon finds that the disputed information is back on the credit report, because it was correct to begin with. But now the consumer is also out of pocket to the extent of the fees paid to the credit repair firm, which often run into thousands of dollars.

Jamming also affects consumers who are legitimately disputing items on their credit records, since the fake disputes filed by fraudulent credit repair firms will clog up the system and delay the resolution of real disputes.

The Federal Trade Commission (FTC) in its "Consumer Information" section, includes "jamming" as one of the five signs of a credit repair scam:

  • the credit repair company demands upfront payment before doing any work on your behalf;
  • tells you not to contact the credit bureaus directly;
  • tells you to dispute information in your credit report even if it's accurate (i.e. jamming);
  • encourages you to falsify information on credit or loan applications;
  • does not explain your legal rights.
RELATED TERMS
  1. Credit Repair Organizations Act ...

    A federal law passed in 1996 that requires companies offering ...
  2. Credit Report

    A detailed report of an individual's credit history prepared ...
  3. Thin File

    A limited credit history which can make it difficult to get credit ...
  4. Mixed File

    A credit bureau record that contains more than one consumer’s ...
  5. Credit Limit

    The amount of credit that a financial institution extends to ...
  6. Consumer Credit

    A debt that someone incurs for the purpose of purchasing a good ...
Related Articles
  1. Personal Finance

    How To Dispute Errors On Your Credit Report

    It just takes some time and effort to rebound from a nasty case of "credit rejection shock."
  2. Investing

    Credit Report Alert!

    Chances are your credit report has mistakes – which could cost you hundreds a year in mortgage, car loan or credit card interest. Here's how to correct it.
  3. Personal Finance

    Fixing Your Credit Score: A Do It Yourself Guide

    Following these five steps can go a long way toward repairing a low score.
  4. Personal Finance

    What's On A Consumer Credit Report?

    A look at the various components and considerations that go into one's credit report and credit score.
  5. Personal Finance

    Best Ways to Repair Your Credit Score

    Follow these 6 steps and you'll be on your way to a better credit score.
  6. Personal Finance

    10 Tips For Steering Clear Of Credit Scams

    The recession has made many vulnerable to credit-fixing scams. Don't be fooled!
  7. Personal Finance

    5 Steps To Disputing A Credit Card Charge

    Federal and state laws offer protection to consumers when credit card charges are in question.
  8. Managing Wealth

    Business Vs. Consumer Credit Reports: What's the Difference?

    Find out the difference between a business credit report and a personal credit report, and why it should matter for business owners.
  9. Personal Finance

    5 Ways to Up Your Credit Score in 90 days or Less

    Getting that credit report glowing again may be easier than you think. Read on for some quick fixes.
  10. Personal Finance

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
RELATED FAQS
  1. How do I fix an error on my credit report?

    Take control over your credit report by disputing false claims, accounts and information to the three major credit reporting ... Read Answer >>
  2. What’s the difference between a consumer disclosure and a credit report?

    Find out why consumer disclosures and credit reports are considered different documents, even though they contain similar ... Read Answer >>
  3. What's the difference between credit score and credit history?

    Check out the differences between credit score and credit history, and learn how your credit history is used to create your ... Read Answer >>
  4. What information do lenders need when I apply for a credit limit increase?

    Increase your credit limit by making sure your current credit is paid on time and by paying the largest amount you can afford ... Read Answer >>
  5. What do creditors have to report to credit bureaus?

    Protect your credit score by understanding how creditors report information about your debts and payments, which can affect ... Read Answer >>
  6. How often is my credit score updated?

    Discover how often credit bureaus update credit scores, change credit information and receive updates from lending agencies ... Read Answer >>
Trading Center