Credit repair clinics purport to guarantee to "fix" the negative information contained in your credit history for a tidy fee--but what they don't tell you about is that free credit repair is right at your fingertips. The federal Fair and Accurate Credit Transaction Act of 2003 (FACTA) established a procedure by which consumers can dispute errors and inaccuracies contained in credit reports maintained by the three major credit bureaus, Experian, Equifax and TransUnion. If there are genuine errors or expired records in your report, you can do your own credit repair free of charge.
Credit Repair and Your Rights
The Fair and Accurate Credit Transactions Act was passed to ensure that every consumer's credit report contains information that is both accurate and reported in a timely manner. One of FACTA's more notable provisions gives consumers the right to access a free copy of their credit reports maintained by the three bureaus once a year. But FACTA also authorizes consumers to dispute data included in their credit files that is inaccurate or outdated with the party that supplied it, with the credit bureau acting in an investigative capacity.
What's In Your Credit Report
To exercise your right to free credit repair, first obtain a copy of your three credit reports from the online portal authorized to supply them (see Resources) and identity legitimate errors. According to the financial experts at Credit.Com, your credit history is comprised of numerous types of records that can negatively impact your credit rating: charge-offs, foreclosures, bankruptcies, slow payments and tax liens, to name a few. Each of these records has its own "life" in your credit file. Most records expire after seven years, while others, such as bankruptcy, are reflected for 10 years, and unpaid tax liens can remain on record indefinitely. Expired records that linger on your credit report can successfully be disputed. But credit reports may be subject to simple administrative snafus, such as when a creditor fails to apply the payments you made to your account, thus reflecting a history of slow- or no-pays. Particularly troublesome are cases in which a consumer acquires negative data in his report due to identity theft.
What To Do
The key ingredient to successful credit repair is to dispute information contained in your reports that is truly in error--credit bureaus are not required to investigate claims they deem frivolous. The FTC advises disputing negative information with the bureau in writing, as well as supplying a copy of your credit report with the negative information highlighted and copies of documentation (such as canceled checks) that support your dispute. Before you mail your dispute, make copies of your letter and enclosures to keep.
What You Can Expect
The FTC indicates that the credit bureau will investigate your dispute with the entity that supplied the negative information and send you its written findings, usually within 30 days. If your dispute results in corrections being made to your credit report, the bureau will send you a revised copy. Additionally, the reporting entity is required to inform all other credit bureaus or consumer reporting agencies to which it supplied the information that it should be removed. Not every dispute will result in successful removal of negative records; if you're unhappy with the results of the credit bureau's investigation, FACTA allows you to send the bureau a brief statement (100 words or less) that tells your side of the story. This statement will be contained in the credit files maintained by the bureau.
Avoid Credit Repair Scams
Free credit repair is possible--but it often requires a lot of time and good organizational skills. Why not simply use a credit repair clinic? Because, according to the FTC, almost all companies that offer "guaranteed" credit repair don't deliver on the promises they make. If there are numerous black marks on your credit reports, the FTC notes, the only sure fix is through the passage of time.
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