The definition to credit repair is the systematic process for challenging credit report information by formal dispute. This includes any derogatory marks with information that is inaccurate, incomplete, duplicated, outdated (not within the 7 year allowable reporting time), or unverifiable with the credit bureaus and/or creditors. The main emphasis will be to dispute these items for removal or correction to your credit report. Credit repair may also include promoting proper budgeting, credit education, establishing new credit, eliminating debt, getting approved for credit cards, loans, or credit in general, as well as making sure everything reporting on your credit report is 100% accurate.
How long does credit repair take?
The time it takes for credit repair will vary per person, according to their unique credit issue(s). Many credit repair businesses are able to make very good progress within the first 90 days or 3 months. This really depends on two factors, (1) the severity, and (2) the number of derogatory marks reporting on their credit. It will also depend on the cooperation of the credit bureaus and/or creditors. Dispute letters are sent out in carefully timed rounds, or every 35 days. The credit bureaus and/or creditors have 30 days to investigate and respond back to the request. Once they do respond, the process is repeated. This can be a very repetitive process and may take multiple rounds of disputes. Clients with less severe issues may take as little as 3-6 months, while the clients with more severe credit issues may take up to 12 months.
Is credit repair legal?
There is nothing illegal about credit repair, only the methods used in repairing a person's credit. In fact, the Fair Credit Reporting Act (FCRA) states the legal rights and protocols for disputing items on a credit report. Also, the Fair Credit Billing Act (FCBA) allows the right to request broad amounts of information from a creditor regarding billing and payment history. The Fair Debt Collections Practices Act (FDCPA) gives consumers the rights and protections against the activities and duties of debt collectors. Of course, there are some credit repair companies that do questionable things like making false promises or guarantees while misleading consumers. As a result, the Federal Trade Commission (FTC), the ones responsible for enforcing consumer protection, developed the Credit Repair Organizations Act (CROA). Here are some credit repair methods that are strictly illegal and must be AVOIDED: - Illegal: Changing someone's social security number to obtain a clean bill of credit. - Illegal: Acquiring a Taxpayer Identification Number (TIN) from the IRS to use as a replacement of someone's social security number. - Illegal: Taking over a person's identity who is near the same age and has recently died.
What is the difference between credit repair and some of the other credit services?
Credit repair should not be confused with other credit services, such as debt consolidation, credit counseling, or debt negotiation. Let's briefly go over what each credit service is below: - Debt Consolidation - is the process of combining all outstanding debts into one loan account. The purpose of debt consolidation is to lower monthly repayments or interest rates on a loan. - Credit Counseling - is advice given by counselors to people about how to use credit responsibly and how to get out of serious debt. When someone participates in credit counseling, their creditors may note it on their credit reports. The fact that they have resorted to a credit counseling program is a huge red flag for prospective credit grantors. Remember, paying off debts is a step in the right direction. - Debt Negotiation - is when a third-party negotiates on behalf of the debtor with their creditors to establish a payment plan.
Are there legal credit repair methods credit repair companies use?
There are strategies credit repair companies can utilize to have the credit bureaus or creditors remove items from consumers' credit reports regardless of accuracy without telling lies. Below, is a quick look at 5 basic principles of credit repair: (1) Lies should never be told in dispute letters. (2) Telling the truth is a powerful and effective tool. (3) Credit repair involves using creative and truthful tactics, such as: (a) Polite and courteous requests. (b) Request for information. (c) Deliberate and aggressive. (4) Credit repair involves using several federal laws. (5) Making false claims, such as this account is not mine goes against the CROA and FACT Acts.
Is it legal to have accurate information removed?
There are NO laws that say credit information must be reported in the first place. There are also NO laws that say the credit bureaus have to even exist. Finally, there are NO laws that say credit report information has to remain for a set period of time. As a result, accurate and truthful information can be removed from a credit report legally, if the information is inaccurate, incomplete, outdated, duplicated, or unverifiable. If you look on the internet, you may find there are a lot of conflicting information about removing accurate information. This is because the FTC and credit bureaus spend BIG money trying to convince consumers otherwise. If they convince consumers that they are powerless, people won't even bother to dispute in the first place, and people with poor credit will continue to have poor credit.