Credit Repair Services: Why Pay When You Can Do Yourself |
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You should be aware that credit repair services are not capable of accomplishing anything more than what you can do yourself. The federal Fair Credit Reporting Act applies nationwide to all credit reporting agencies, credit reports and credit report users. Consumers try to correct the errors that may have crept into their credit reports due to mistakes committed by the credit bureaus or the creditors. Unfortunately, many consumers turn to the so-called credit repair services for assistance.
You may have seen or heard the advertisements: Erase Bad Credit! or Remove Bankruptcy and Liens from Your Credit File! Some of these credit repair services charge consumers hundreds of dollars to "repair" or "improve" their credit and even try to fool consumers that damaging information in credit files, even if accurate, can be removed. But accurate information, however damaging, cannot be removed by anyone until legal time limits have expired. The legal time limit for reporting information and other requirements covering credit reports are governed by the Federal Fair Credit Reporting Act. The legal time period for reporting bankruptcies in credit reports is ten years, while the legal time limit for reporting other adverse information is seven years. Federal law also requires credit repair services to give you an explanation of your legal rights, a detailed written contract, and three days to cancel (this applies to for-profit services, not to nonprofit organizations, banks and credit unions, or the creditors themselves). If a consumer still wants to retain the credit repair services, it is critical to know these important facts: Credit bureaus collect and maintain information on your credit-worthiness, credit standing and capacity, credit history and general character as reported to them by financial institutions, department stores and other creditors. For a fee, potential creditors, employers, insurers or anyone who needs it for a legally approved purpose can purchase your credit file. Up front fees for credit repair services are illegal in most states. Consumers should never pay until the repair service has been performed. Credit repair services are required to offer written contracts to clients, indicating the items that the company expects to remove from a credit report in a given timeframe. The basic tactic of a credit-repair company is to dispute every negative item in your credit report, accurate or not, by asking the credit bureaus for verification. Credit bureaus then request creditors to verify the information, and they delete a negative item from a file if they don't receive a response within 30 days. Temporarily deleted items however, get restored if the credit bureau later receives verification from the creditor. Credit reporting agencies can continue to report accurate items that are within the legal reporting period, and companies that advertise credit repair services cannot ever permanently erase such items from your credit record. Generally, only time can cure your negative credit history, regardless of the circumstances under which it was incurred. You have the right, under the Federal Fair Credit Reporting Act, to dispute the accuracy or completeness of any information in your credit file. Once you tell the credit-reporting agency of your dispute, the agency is legally obligated to reinvestigate the information, note its current status, and promptly inform you of the results of the investigation. Consumers should have evidence to support their claims about disputed information because the reporting agency is not obligated to pursue inquiries that it reasonably believes are frivolous. This usually allows reporting agencies to completely ignore blanket disputes the credit repair services file as part of their repair tactics. If the reinvestigation fails to resolve the dispute, you have the right to submit a 100-word statement about any disputed item in your file, at no cost to you. This statement will be included in any future reports as long as the reporting agency reasonably believes the dispute is not frivolous. Credit repair services, which claim that they can upgrade your rating, mislead you about their function and charge money for a service that you can get for free. You need not end up paying money for what you can fix yourself. |
