How to Repair Credit

With the slow down in the economy, rising foreclosures, and unemployment American’s credit scores have suffered a decline, and some consumers are contemplating turning to a so called “Credit Repair Services” to fix their credit or improve their credit scores, and unfortunately, these outfits, according to federal officials, are proliferating,

Credit Repair Organizations

The Credit Repair Organization Act was enacted to inform consumers of their rights when seeking to engage credit repair services. Most of these companies dishonesty and falsely lead consumers into believing that they can remove derogatory information from their credit and enhance their credit scores, but settlements by the Federal Trade Commission indicate that the “fast credit repair” come-ons can turn to be costly mistakes for those consumers.

Some credit repair companies even claim that they can erase bankruptcies, tax liens and other derogative information permanently from credit bureaus. Consumers generally pay large fees up-front, when it is actually a violation of Federal Law for a credit repair organization to collect fees before performing the services promised. It is actually an illegal practice to claim to be able to remove derogatory information from credit bureaus is the information is factual.

Fair Credit Reporting Act

The “Fair Credit Reporting Act” was enacted to afford consumers “accuracy and fairness of credit reporting”. It is a law that “regulates the collection, dissemination, and use of consumer information, including consumer credit information”.

In conjunction with the Fair Credit Reporting Act, The Fair Debt Collection Act was created with the purposes to “eliminate abusive practices in the collection of consumer debts, to promote fair debt collection, and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information's accuracy”.

The FCRA promotes the accuracy and privacy of information in the files of the nation’s consumers of consumer credit reporting companies

Because the information contained in your credit file is so crucial to your livelihood, financial advisors and consumer advocates suggest that you review your credit report periodically.                      

You are entitled to a copy of Your Credit Report

According to the Federal Trade Commission, “The FCRA requires each of the nationwide consumer reporting companies, Equifax, Experian, and TransUnion to provide you with a free copy of your credit report, at your request, once every 12 months”. For details, see your access to your Free Credit Reports at ftc.gov/credit.

How to Order Your Free Report

According to the Federal Trade Commission, “The three nationwide consumer reporting companies have set up one website, toll-free telephone number, and mailing address through which you can order your free annual report. To order, visit annualcreditreport.com, call 1-877-322-8228”.

Disputing items on your credit report

Although there is no quick-fix for factual derogatory information reported by creditors, often credit reports contain a number of erroneous information such as: accounts that do not belong to the consumer, accounts that have been closed or paid off still sowing a balance, and even possibly a charge off or bankruptcy which exceeds the statutory reporting period. All of those items can be challenged or disputed by consumers by writing to the agency reporting the erroneous information.

When writing to credit agencies make sure to include your name, social security number, file number (if available), and a concise explanation of the item(s) disputed. Request that the credit reporting bureau send you revised copy of your credit report along with their response if any changes or corrections have been made. Since credit reporting agencies must adhere to time limitations in responding and correcting errors, they generally will get a response within 30 days.

Getting professional help

There are good companies that can assist you in resolving your debt and credit repair. Contact a professional Financial Planner who could refer you to a trusted company.