Credit repair is a growing industry -- but companies that offer to fix your credit history are likely to be up to no good. In March 2010, the Federal Citizen Information Center reported a 50 percent increase in credit repair scams over the prior year. Finding the best information for free credit repair isn't easy, given the conglomeration of companies and online services that purport to have "connections" or knowledge of legal loopholes that can erase your bad credit. What these companies don't want you to know is that the best free credit repair information is accessible to all consumers in the Fair Credit Reporting Act (FCRA), which explains all you need to know about how your credit records are maintained.
About the FCRA
Most consumers know the Fair Credit Reporting Act as the law that permits them to receive a free annual credit report each year through the government-authorized website, AnnualCreditReport.com. However, the provisions of this act extend much further than guaranteeing your access to your own credit history; the law was passed to ensure that the information in your credit report is correct and timely -- and that it's kept private. Consumer reporting agencies that maintain your credit report, such as Equifax, Experian and TransUnion, are required to maintain data that accurately reflects your history of paying back debt, regardless if this information consists of positive or negative information.
FCRA and Free Credit Repair
Under the FCRA, credit repair is as free as it gets, minus the cost of a postage stamp or certified mail service. This act establishes a dispute process for consumers who pull their credit reports and notice records that are clearly inaccurate, reflecting no wrongdoing on their part. For example, if you've been the victim of identity theft, this may occur if the thief used your name, Social Security number and other personal data to open a credit card account or get a loan, and then welshed on the terms of repayment. But sometimes information is entered into your credit report due to administrative error. By law, you are entitled to ask the consumer reporting agency to initiate an investigation on your behalf so that inaccurate information can be removed from your credit report.
Credit Repair: How to Do It
To exercise your right to free credit repair, the Federal Trade Commission states that you should inform the consumer reporting agency in writing that you've noticed a legitimate error on your report. Make sure to include your name, address and other contact information, as well as the specific record you are disputing, as well as why. The FTC suggests including a copy of your credit report along with your correspondence, as well as copies of any supporting documentation (for example, in the case of identity theft, a police report). You'll want to make sure that the consumer reporting agency receives your dispute, so it's preferable to send it by certified mail/return receipt requested. After receiving your dispute, the consumer reporting agency must investigate it and provide you its findings, generally within 30 days, in writing. If the erroneous record was removed from your report, you'll also get a revised copy from the agency.
Credit Repair Scams
Poor financial decisions and unfortunate life events -- divorce, unemployment and serious illness -- can take a toll on your credit report. While no one likes to see records of delinquent accounts, foreclosure, repossession or bankruptcy tarnishing their once-pristine credit history, under FCRA, this information must be contained in your file until the record expires, which is usually seven years for most unpaid debt types. Others, such as bankruptcy, endure for 10 years, and a tax lien can remain indefinitely. Consumers who follow the siren song of a credit repair service that guarantees it will wipe out any negative records may not realize the futility of this endeavor, says the FTC. One of the red flags of a credit repair scam is that you won't be informed of your rights to correct your credit report yourself free of charge. Other federal laws come into play as well, such as the Credit Repair Organizations Act, which prohibits these companies from collecting your money before they provide the services they promise to perform. More nefarious credit repair scams might suggest that you apply for an Employer Identification Number (EIN) through the Internal Revenue Service, rather than using your Social Security number when applying for new credit. Inventing a new identity for purposes of getting new credit is illegal, notes the FTC.
If You're the Victim of a Credit Repair Scam
If you want the best credit repair information, heed the advice of consumer watchdogs such as the FTC, which work to ensure that you don't fall prey to schemes and scams that drain your pocketbook and encourage you to break the law. If you've been the victim of a credit repair scam, report it to your state attorney general's office. Additionally, file a complaint with the FTC though the government website at FTC.gov or call 1-877-382-4357.
Member Comments