Credit repair might sound like the solution to a low credit score but the Federal Trade Commission warns about companies offering to fix your credit by removing negative information for a fee. Such companies often charge excessive fees and make promises they cannot keep, according to the FTC. They cannot legally remove legitimate information. They can only remove items that contain a mistake. You can repair your credit for free by doing the same things these companies do.
Definition
Credit repair is the process of removing as many erroneous negative items as possible from your Equifax, Experian and TransUnion credit reports. This is known as credit repair because it improves your credit rating and raises your credit score. Lenders, insurers and employers who request your reports will no longer see the items that are removed and they will no longer be factored into your score.
Process
You can repair your credit by challenging negative items. The Fair Credit Reporting Act gives the consumer the right to dispute erroneous entries on his credit report. The credit bureaus must investigate and remove the items if they cannot get verification. You can dispute an item for any mistake, no matter how small or obscure. Often creditors do not bother to verify or correct the information. The credit bureau must then remove it under the law.
Cost
There is no cost to dispute items on your credit report with the credit bureaus. You can send a letter spelling out your position and enclosing any proof you might have, like receipts or statements, the Federal Trade Commission explains. The bureaus also have online dispute forms on their websites, but the FTC recommends using certified mail to obtain proof of receipt. Consumers who are not familiar with credit repair or the dispute process sometimes hire credit repair companies that might charge several hundred dollars to do the same thing you can do for free on your own.
Procedure
The procedure for free credit repair involves getting copies of your credit reports, which are available at no cost every year through the government's annualcreditreport.com website. You can get one free report from each bureau. Read through them and find every inaccuracy, no matter how small. The Credit Infocenter do-it-yourself credit repair guide advises looking for things including wrong creditor names, account numbers, account opening dates, high credit limits, current balance, account status and payment dates. The FTC provides a free sample dispute letter on its website. The items you have disputed will be removed if your challenge is legitimate and then your credit will be repaired.
Warning
You are not permitted to make frivolous challenges to information on your credit reports in an attempt to repair them, creditreport.com warns. The Fair Credit Reporting Act allows the credit bureaus to refuse to investigate disputes they believe are irrelevant or frivolous. They will get suspicious if you file multiple disputes on the same items for the same reason or if you submit disputes for different reasons within a short time frame. Space out your free credit repair efforts. If one dispute is turned down, wait at least 60 days before disputing the same item for a different reason.
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