How Credit Repair Works
What is a Credit Score
Let’s think about your credit score like this. Your credit score is based on information from your credit report which is updated by your creditors, such as the lending company who you may have a home loan through. The credit reporting agencies, Equifax, TransUnion, and Experian, maintain the information that your creditors report to them. As you go about your daily life, your credit score is changing due to positive or negative items added or even when information is requested by others regarding your credit report. This constant activity happens even without your knowledge.
How Credit Repair Services Work
Legitimate credit repair agencies will tell you that they cannot guarantee they will improve your credit score by leaps and bounds. Those credit repair services that have been around for a while and that operate honestly know how to navigate the rules, what loopholes to look for and how to approach your credit issues so they can work to get your credit rating upgraded.
There are federal laws that are designed to protect the consumer. If a creditor violates these federal laws, they have a limited time to correct the error on the report. The Fair Credit Reporting Act (FCRA) works to protect the rights of the consumers from improper and illegal collection practices.
Steps to Fixing Bad Credit
Here are the steps required:
- We dispute any questionable credit entry that is on your credit report such as you are not familiar with the debt or or if the information that is reported is incorrect.
- If they verify the item that you have disputed on the report, get your copy of the report and call the credit bureau using their toll-free number.
- Using the reference number from the credit report, ask the credit bureau how they verified the entry and ensure they used a method of verification as instructed in FCRA Section 611(a)(7). If they did not use the entry that the law requires, you can dispute it further.
- Most often, credit bureaus use an online program that automates the verification process. If they cannot provide you with solid proof that they actually made a phone call to the original creditor, ask for the phone number of the original creditor so you can contact them yourself.
- For the next step, call the original creditor and ask them to provide you with a copy of your records. If the original creditor indicates that they have no records, call the credit bureau and inform them of the name of the representative you spoke with, the number you called and that the original creditor has indicated that they have no records. At that point, you can open another dispute.
- If the original creditor tells you that the collection agency holds the records pertaining to the debt, ask for the number for collection agency and call the creditor directly asking for the records under the new FACTA Act (Fair and Accurate Credit Transactions Act). When you get those records, immediately look them over to check for inaccuracies. If the records do not prove that the negative entry belongs on your credit report, call the credit bureau and ask to open another dispute, providing them with a copy of the report to assist in your dispute.
- If the credit bureau includes a negative item for more than 7 years, which is the statute of limitations on your credit report, they are violating the FCRPA (Fair Credit Reporting Practices Act). Delinquent debt must be removed from the credit report as soon as the statute of limitations has passed.