Do It Yourself Credit Repair
By Jennifer Delcamp

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. 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 If the information is out of date or inaccurate, it will be updated or removed.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 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 complete the services they have promised. It is illegal to charge you until they have performed their promised services.

*     They pressure you to sign a contract and don’t inform you of your rights.

According to the Credit Repair Organizations Act (CROA), credit repair companies must inform you in writing before you sign a contract that you have the right to dispute incorrect information yourself. There is also a three-day waiting period during which you may cancel the contract without penalty.

If you have had issues with your credit in the past, there are some free, legal steps you can take to make sure your credit is in the best possible shape.

1. Obtain your credit report: Under a new law that is going into effect in stages across the country, consumers may get a free copy of their credit report from each of the three credit bureaus (Equifax, Experian, and Trans Union) per year. Eastern States and U.S. Territories will be eligible September 1, 2005. The rest of the country can obtain free reports now by going to www.annualcreditreport.com or by calling 1(877)322-8228.
   
2. Review your report to check for any errors: Credit reports mistakes and inaccuracies are not uncommon. Make sure your report is correct by reviewing it and checking it for accuracy.
   
3. Dispute any inaccurate or out of date information: You can do this through the Internet when you obtain your report of in writing by contacting the credit bureaus. This is your right by law and is free to you. If you have proof backing up your claims, please provide it with your dispute.
   
4. Review your report annually: Since you may obtain a report annually, be sure to review it every year to make sure it is accurate. Another good reason is that if you are a victim of identity theft you may only discover this by reviewing your report.
   
5. Consider your scores: Credit scores are not included in the free credit report so you will have to pay extra if you want to see it. However, it may be a good idea to know where you stand by getting your credit score occasionally. Most mortgage lenders like to see scores in the 650 and above range. If you are well below that, you will know how much work you have to do to bring up your score.
   
6. Build a better future: Credit mistakes won’t haunt you forever. Even though late payments stay on for 7 years (10 years if you have filed Chapter 7 bankruptcy) many creditors are most interested in the past 2 years. It is a good idea to pay off any outstanding debts and start paying your bills on-time.
   

Just remember that if it seems too good to be true, it probably is. This is quite true of credit repair. They just can’t erase your past credit mistakes. Handling your bills responsibly is the only thing that can counteract past credit mistakes. If the whole subject of credit reports seems overwhelming, many communities have reputable, non-profit credit counseling offices that can help you learn how to read your report and correct it. Their counselors are trained credit experts and many offer advice for free. Don’t trust your credit to just anyone and don’t pay someone to do something for you that you can do yourself for free.


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