Do It Yourself Credit Repair
by Jennifer Wallis, Vice President Consumer Credit Counseling Service of Central Oklahoma, Inc.
As I drive through my hometown, it seems that everywhere I look, there are little signs advertising credit repair poking up out of the grass like summer weeds. One local company charged a client $250.00 to dispute items in his credit report for him. After his credit wasn’t magically repaired, as promised, he began calling to see if he could get his money back. More…
It’s funny. They were certainly eager to take his call when he wanted to give them money but when he started asking for it back, they were suddenly unavailable. He turned to a local consumer reporter who was able to help him track down the owner and get his money back. The bottom line is that credit repair companies can’t do anything legally to repair your credit that you can’t do yourself… for free.
According to the Fair Credit Reporting Act (FCRA), consumers have a right to dispute any inaccurate information that is contained in their credit report. The credit bureau has 30 days to investigate the dispute. If the information is out of date or inaccurate, it will be updated or removed. If it is proven to be accurate information, it will remain in the credit report. This may not be good news if you have had some lapses in good payment history but there is no legal way to have accurate information removed from your report.
This dispute process is FREE to consumers so there is no reason to pay anyone to do it for you. Keep your money and file the dispute yourself. If you obtain your credit report on-line, you can dispute accounts the same way. If you obtain it by mail, a dispute form should come with the report. It’s a pretty simple process that is easy to do yourself.
Here are a few tactics of credit repair companies to watch for:
* They dispute every item in your credit report hoping that the credit bureau won’t be able to investigate all accounts in the 30 day time frame required by law. If the account information can’t be verified within 30 days, it must be removed from your report. While it is true that the credit bureau has 30 days to investigate and must remove the account if it can’t be verified in that time frame, the credit repair companies don’t mention that once the account is verified, it can be placed back on. Also, if the credit bureau suspects that your dispute is frivolous, they may not investigate at all. Disputing every item in your report would likely set off some red flags at the credit bureau.
* They dispute accounts that report derogatory information (late payments, charged off accounts, settlements) even though it is accurate information. They are hoping that the credit bureau won’t be able to verify the information. They also advertise the claim that they can have accurate, derogatory information removed from your report. Any accurate information will stay in your credit report for 7 years or more. There is no legal way to have accurate, verifiable information removed from your credit report. Advertising these claims is illegal.
The best thing you can do to repair your credit is to pay your bills on-time and begin building a positive credit history. Again, if any accounts aren’t being reported correctly, you can dispute it yourself for free.
* Some credit repair companies will encourage you to apply for an Employer Identification Number (EIN) to use as your Social Security number. This creates a separate credit identity, thus a clean record. An EIN is a 9-digit number that some companies recommend you use as your Social Security number. This is fraud and can land you in jail. Don’t fall for it. Even though the credit repair company may have recommended it, you will be the one held responsible if you commit fraud.
* They may ask for money up front for credit repair services. According to the Federal Trade Commission (www.ftc.gov), credit repair companies can’t require you to pay until they…