Last Updated: May 20th, 2012 - 04:33:28
| Common Credit Repair Questions
By Credit Repair
Apr 20, 2012, 18:25 PST
Credit Repair Questions
What does the law say about repairing your credit?
As the credit bureaus computerized their processes and
greatly expanded their reach and influence in the late 1960s and early
1970s, consumer complaints began to pile up at the FTC and state attorney
generals' offices. The credit reporting agencies quickly became huge
bureaucracies second only in size to the federal government. Yet, the
credit bureaus expressly served only the needs of their clients,
the credit grantors.
Many consumers were negatively effected by the
credit bureaus, but they had no way to correct or change their credit
information. The American consumer lay completely at the mercy of the
credit bureaus. The United States Congress enacted the Fair Credit
Reporting Act (FCRA) in 1971 to insure that the credit bureaus investigate
the credit items disputed by consumers. This federal law set procedural
guidelines which gave the consumer the right to challenge the accuracy,
validity, and verifiability of the credit listings appearing in their
consumer credit report. It also required that the credit bureau repair any
credit listing if it was inaccurate or could not be verified.
In theory, the FCRA charges the credit bureaus with
responsibility to the consumer as well as the credit grantor. In reality,
the credit bureaus resist, resent, and reject consumer disputes. The
credit bureaus would rather be left alone to make a profit. And, each time
a consumer challenges his credit, profit is lost.
The credit bureaus first defend their profits by
erecting walls of stall tactics, including requests for more information,
further clarification, and additional identification. The vast majority of
consumers give up before they even receive copies of their credit reports.
If a consumer manages to get a credit report, decipher the codified
information, write a coherent dispute, and mail it, the bureaus may still
find some reason to disregard the challenge. The entire dispute system is
designed to frustrate and discourage the consumer.
Many consumers have the idea that the credit bureaus
must complete their investigation within thirty days or be forced to
remove all disputed information. They threaten to sue the credit bureaus
if they don't conclude their investigation in time and repair their
credit. In practice, such thinking is delusional. Nobody forces the credit
bureaus to do anything.
However, if you manage to submit a valid dispute
letter, and the credit bureau investigates your dispute, the chances of
success are good - whether or not the negative listings are accurate!
Accuracy actually has little to do with the deletion of negative items.
If a credit bureau cannot verify an item before
completing its investigation, that item will be removed. Many creditor
grantors are simply reluctant to take the time to verify the data. While
the credit bureaus may be in the business of reporting credit histories,
creditor grantors are not.
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What is the truth about credit repair companies? Can
they really do what they say they can do?
Many "credit repair" companies claim to remove negative
credit with the flick of a wrist. Their advertisements make bold
assertions and money back guarantees; "Bankruptcy, tax liens, judgments, .
. . no problem!! One hundred percent guaranteed!! Credit report 100%
cleared in 30 days!!" Can they really make such sweeping guarantees?
While some credit repair companies are outright
frauds, others are not frauds and they use the dispute process to obtain
impressive results. In fact, they delete thousands of negative credit
listings every day - regardless of whether or not the listings are
technically accurate. In truth, credit repair fraud is less common today
then five years ago. Vigorous regulatory sweeps by state and federal
regulators have cleared away most of the illegitimate (and some of the
legitimate) credit repair companies.
Unfortunately, it's risky to trust anyone to help
you repair your credit. It is estimated that credit repair companies have
bilked Americans out of more than fifty million dollars. The majority of
credit repair companies were started by entrepreneurs with a penchant for
marketing. Consumers have flocked to these "credit doctors" only to
discover that their advertisements proved far more impressive than their
results. Hiring a credit repair company is like playing Russian roulette.
Many of them are effective and legitimate, but it is difficult to tell a
rip-off from the real article.
Working within the credit bureau maze requires
substantial background knowledge; knowledge it takes credit repair
companies years to learn. In fact, U.S. District Court Judge J. Wexler
entered the following legal opinion in the Federal Supplement. "Since
allowing third parties to assist consumers will likely lead to the
expedited correction of credit reports, it will further the purposes of
the [Fair Credit Reporting] Acts."
So, can credit repair companies really guarantee
Not a chance! No credit repair company is so good
that it can guarantee a specific outcome. It would be like a defense
lawyer guaranteeing that the jury will find his client innocent.
Guarantees are a sure sign of credit repair fraud. A warranty, where the
credit repair company promises a refund if certain results don't occur, is
a better, more realistic claim.
Not surprisingly, the credit bureaus have declared
war against the credit repair companies and those selling instruction on
how to do-it-yourself. The bureaus lambaste credit repair companies in the
media and send anti-credit repair literature to anyone whom they suspect
of using credit repair services. The bureaus unflinchingly deny that
accurate information can be removed from a credit report.
Some time ago, a couple in the Northwestern United
States, who were using the services of a legitimate credit repair company,
received a scathing letter of reproach from their local credit bureau. The
letter chastened them for relying on the "unethical" methods of credit
repair, and pointed out how all their efforts had come to nothing. "As you
can see," the letter chastened , "your credit reports remain unchanged."
The couple was bewildered because almost all of their many negative credit
listings, including a bankruptcy, had long since been deleted.
The simple truth is that you don't have to endure
bad credit for seven to ten years. It is possible to repair your credit
within a much shorter time.
However you decide to address your credit
challenges, realize that regardless of what you may hear in the news
media, thousands before you have sought help and repaired their credit.
They can show you their homes, cars, and credit cards. Despite the
newspaper articles, TV reports, and other credit bureau propaganda to the
contrary, you can repair your credit.
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How long can the credit bureaus keep a negative item on my credit report
and what actions will restart that date?
On this issue, there is much confusion. Almost every
so-called credit repair expert has a different opinion regarding the
actual credit reporting period allowed by law.
Most negative listings may be kept on your credit
report for a period of 7 years beginning on the date that you were last
reported late before they repair themselves. This means that if you were
late every month from March to August of 1995, that your date of last
activity would be on August of 1995. In this case, the item would be due
to repair itself on August of 2002. You don't have to live with 7 years of
Bad Credit. Download "Give Yourself Credit" Today
There are several exceptions to the seven year rule.
Bankruptcies may be reported for 10 years from the date that the
bankruptcy was discharged. Liens and judgments may be reported for seven
years or until the statute of limitations in that state (usually between
seven and ten years) runs out, whichever is longer. However, credit
bureaus usually keep these listings on the report for the seven year
period regardless of the local statute of limitations, unless you repair
The other interesting exception is in the case of a
negative listing that has been sent to collections or has been charged
off. The seven year limit begins 180 days after the last late payment
before the account was charged off or sent to collections. In other words,
if you didn't pay a certain bill from January to March, and the creditor
sent the account to collections in June, then the negative listing could
remain on your report for 7 and 1/2 years from that last payment in March
unless you repair your credit first.
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How long do the credit bureaus have to respond to a dispute letter when
credit repair is attempted?
most recent version of the Fair Credit Reporting Act, the credit bureaus
must complete a reinvestigation within 30 days of receiving a dispute
letter from the consumer.
However, the credit bureau still has the right to
consider a dispute letter "frivolous and irrelevant" at their own
discretion, if they feel that someone is attempting credit repair. While
the credit bureaus are careful not to overuse this privilege, they may
deem virtually any dispute frivolous or irrelevant without having to
justify their decision or point to credit repair methods. Learn how to get
the credit repair companies to take positive action on your dispute.
Download "Give Yourself Credit"
While the credit bureau is required to complete
their reinvestigation in 30 days or less, the consumer has little recourse
against them if they don't. Many consumers assume that the credit bureau
must repair all disputed credit if the investigation isn't completed
within the required time. This is not the case. The credit bureau may take
as long as it likes to repair the credit. The only real recourse a
consumer might have would be to gather a class-action lawsuit to penalize
the bureau for taking too long. At Trans Union, for example, it is common
practice to receive the credit repair dispute letter, take a week or two
to process it, then send the consumer a letter saying that the
reinvestigation will begin on the date that the credit repair dispute was
finally processed. This often gives them a total of six weeks from the
date of receipt of the dispute to complete the reinvestigation.
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