Know Your Rights About Credit Repair

Credit Repair

When it comes to how to repair bad credit there are many things that you can do. The first thing that you should know is that no one is able to remove negative information that is accurate from a credit report.

However, when it comes to negative information on your report you do have the right to ask for an investigation. This investigation will not cost you anything and can be done on any information that is found in your credit file that you find to be incomplete or inaccurate.

Credit Repair

When it comes to the best way to repair credit there are two main options. You can choose to hire a credit repair company to conduct the investigation for you. The other option is to complete the investigation on your own. This method of free credit repair is sometimes the best way to repair credit, but it can be a long and difficult process.

Self Credit Repair

When it comes to self credit repair it is important to know what your rights are. By law you should know the following:

If any company takes a “harmful action” against you, such as denying your credit application, denying you an insurance policy, or even denying employment based on your credit, you are required to a free credit report.

When a company takes adverse action against you they will supply you with a notice of this action. This notice should include the name, telephone number, and the address of any consumer reporting agency that supplied the information to the business. You will have 60 days to request the credit report after receiving this notice of action.

60 DAYS TO REQUEST CREDIT REPORT AFTER NOTICE OF ACTION

If you are on welfare, are unemployed and are looking for a job, or if your report is not accurate because of any type of fraud, such as identity theft, you are also entitled to a free report each year.

Second, each of the three main credit reporting agencies - Experian, Transunion, and Equifax, are all required by law to provide you with a credit report once every year. You must request this report from each of these companies. You can request these reports by visiting www.annualcreditreport.com or by calling 1-877-322-8228.

You can request all three reports at once or you may stagger the requests over the course of the year.

Credit Report Reading

Another important thing to note if you are attempting to repair your credit on your own is that it is free to dispute any outdated items or mistakes that are found within your credit report.

The credit reporting business as well as the company, person, or organization, that is providing the information to the credit reporting company are each responsible for making the corrections to any information that is found to be inaccurate or incomplete.

In order to take advantage of your rights as a consumer make sure to contact both the company providing the information as well as the credit reporting company.

Taking The Appropriate Steps To Dispute Inaccurate Information

After you understand your rights as a consumer, the next thing to understand is the steps to take in order to begin repairing your credit.

1. Write The Credit Reporting Agency

The first step that you need to take to repair your credit is to write the credit reporting business to tell them what information you found on your credit report that you feel is inaccurate. There are sample letters available that can be used to help you write this letter.

When sending the letter to the company you will want to include copies of any documents that can be used to support your position about the inaccurate information. The letter needs to include your name and your address as well as a list of all of the items that you found were wrong within your report.

Three Credit Report Errors

Make sure to state the facts about why you feel the information is wrong. Ask for the information to be corrected or removed. It is also a good idea to include your credit report and to highlight the information on it that you found to be inaccurate.

The letter should be sent through certified mail and a return receipt should be requested. This will let you know when the company received your documents. Make sure that you have copies of the letter as well as all of the documents that you sent in with the letter explaining your dispute.

The credit reporting agency will then begin their investigation of the dispute. They have 30 days to begin the investigation. In addition, the agency will be required to send all of the information that you provided to them to the provider that gave them the information about your accounts. This information provider will also investigate your dispute and contact the credit reporting agency with their results.

If the information you provided leads to the findings that the information is inaccurate, the provider will notify the national credit reporting companies so that all of the information can be corrected in your credit file.

Credit Card Dispute

Once the investigation is over, you will receive in writing the results. If the dispute results in items being changed on your credit report you may request a new credit report be provided to you at no cost.

Any item that is changed or deleted cannot be put back in your credit report. Written notice must be provided by the reporting agency that includes the name, phone number, and address of the information provider.

If you request, the credit reporting agency will also need to send notices of the corrections to any company, person, or entity that received a copy of your report over the past six months. You may also request that the report be sent to anyone that received a copy in the past 2 years for employment purposes.

If your dispute is not resolved during the investigation you can ask that a statement of the dispute be included in your credit report and all future reports. You can also request that the reporting agency include your statement with anyone that has received your credit report in the recent past. This service may cost a fee.

2. Contact The Information Provider

Even though the credit reporting agency will contact the information provider it is still important for you to contact the information provider in writing as well. Send the information provider a letter of dispute as well as any copies of the documents that support this position.

Co sign Credit

Most providers will provide an address for these disputes. If a provider reports an item to the consumer reporting agency they must include your letter of dispute. Any information on your credit report that is found to be incorrect cannot be reported by the information provider again.

Reporting Negative Information That Is Correct

When there is negative information on your account that is correct, the only thing that will make it go away is time. Credit reporting agencies can report correct negative information for 7 years. Bankruptcy information can be reported for ten years.

Any information about an unpaid judgement that was made against you can be on your credit report for 7 years or until the statute of limitations ends, whichever time is longer. The 7 year span starts on the day that the negative action took place.

There are no time limits for information about criminal convictions. There is also no limitation on reporting responses about job applications for positions that pay over $75,000 per year or for information reported if you apply for a life insurance policy that is worth $150,000 or more per year.

Credit Repair Companies

When you know your rights as a consumer it is important to also know that you do not have to go about trying to repair your credit all on your own. There are many multiple credit repair service companies available that can help you through the process of fixing your credit.

A quality credit repair service will go over your credit report and then dispute anything that may not be accurate. There are some credit repair companies that will make false claims about helping you repair your credit, but there are also many legitimate firms that will work with you to improve your credit and can also help you make a huge difference in your overall credit score.

Legitimate credit repair services know how to get things done with results that are satisfactory.

Before selecting a credit repair company to work with you should check other agencies, consumer reports, and the records of the Better Business Bureau in order to learn more about the company.

Lexington Law BBB Credit

In addition, when choosing one of the legitimate companies to work with make sure that you consider the price and what services are included within that price. Some companies will provide services that you may not need.

How Credit Repair Services Work

A legitimate credit repair agency is going to tell you upfront that they can make no guarantees about improving your credit score by great amounts. These companies have been around for many years and operate honestly and within the rules that have been set in place.

In addition, a legitimate company will know the loopholes to look for and how to approach any credit issues that you may have in order to help you improve your overall credit scores.

Credit Score is Important to Lenders

If you do choose a company and have issues with them, there are different laws in place that can help protect you from these fraudulent companies. These laws are designed to protect the consumer and if a creditor has violated a federal law they have a limited amount of time to correct the errors on the reports or they may be required to pay you up to $1000 for damages.

The Fair Credit Reporting Act is the federal law in place in order to protect your rights.

Credit Repair Organizations Act

The CROA (credit repair organizations act) has made it against the law for a credit repair company to lie about the job that they can provide for you. It is also against the law for these companies to charge you any amount of money before they perform any services for you.

The FTC (Federal Trade Commission) enforces the Credit Repair Organizations Act. Some of the key elements of this act that you should be aware of include:

  • Credit repair companies are required to provide you with your legal rights through a written contract. This contract must also provide details about all of the services the company will provide.
  • The company must provide you with a minimum of 3 days to cancel the service without being charged.
  • A credit repair company must tell you exactly how long it is going take to get your results
Credit Repair Organization Act
  • They must tell you upfront how much you will be required to pay for the services
  • Must provide any guarantees in writing

If you hire a credit repair company to help you dispute your debt or to help fix your credit and the company does not deliver on its promises, there are several options available. You will be able to:

  • Sue the company in federal court for your losses or what you paid the company, whichever amount is higher.
  • You may seek punitive damages, which is money to punish the company for breaking the laws.
  • Join other individuals to create a class action lawsuit against the credit repair services company. If you win the lawsuit the credit repair company will be required to pay the attorney fees.
Collective Lawsuit

Reporting Fraudulent Companies

If you work with a fraudulent credit repair company it is important to note that there are many states that have laws regulating these companies as well. If you have any issue with one of these companies you should also contact your state attorney general as well as your local consumer affairs office and report the company.

Federal Trade Commission

In addition, you may file a complaint with the Federal Trade Commission. While the FTC cannot resolve individual credit disputes, action can be taken against a credit repair agency company if there is a pattern of possible legal violations. You can file your complaint against a company at ftc.gov/complaint.

Finding Legitimate Help For Credit Repair

It is important to know that even if you have a bad credit history this does not mean that you cannot get credit. Each creditor sets its own standards and not everyone will look over your credit history in the same way.

There are some creditors that may only look over recent years when evaluating you for credit and may offer you credit if your history of paying bills has improved. At times it may be worth it to directly contact a creditor to discuss informally the standards they have in place in regards to credit.

If you do not have enough discipline to stick to a budget, to work out repayment plans with your creditors, or to keep track of your current bills, a credit counseling organization may be your best choice.

Animated Loan

There are many nonprofit organizations that are willing to work with you in order to help you solve any financial issues that you may have.

It is important to remember that nonprofit does not mean that this is a free credit repair service. It also does not mean that the company is affordable or even legitimate. In fact, there are some credit counseling services that claim nonprofit status, but charge high fees or may even hide their fees by pressuring consumers to make a “voluntary” contribution that causes even more debt.

The majority of credit counselors will provide services by phone, online, or through a local office. Try to find an organization that you can work with in person. There are many military bases, universities, housing authorities, credit unions, as well as branches of the United States Cooperative extension service that operate legitimate non profit credit repair counseling programs.

Other good sources of information include your local CPA, your local financial institution or even family and friends.

Another consideration if you feel your credit is beyond repair is to consider bankruptcy. However, when considering bankruptcy it is important to know that there are bankruptcy laws in place that require credit counseling from an approved organization within six months before filing or any type of bankruptcy relief.

Filing For Bankruptcy

The United States Trustee Program website provides a list of approved organizations that can be used for credit repair counseling. Be aware that there are credit counseling organizations that state they are approved by the government, but these companies are not on the lists provided. Avoid these companies as they are often fraudulent.

A reputable credit counseling service will provide you with advice about how to manage your money as well as your debts. These counselors will help you create a budget and also provide you educational workshops and materials.

Each of the counselors that work for a government approved agency are trained and certified in the areas of money management, debt management, credit, and budgeting.

They will discuss your entire financial situation with you and will help you personalize a plan to solve the money issues that you have. Typically the first counselling session will last around an hour and follow up sessions will be available.

How Long Does It Take To Repair Credit?

After learning about how to dispute items on your credit report as well as how to find a legitimate credit repair company, chances are you are wondering exactly how long it will take to repair your credit.

Unfortunately, there is no direct answer to this question. If your current credit score is considered poor or bad, it could take anywhere from several months up to a year before you enter into the fair or good credit rating territory.

Credit Score Ratings

The amount of time that it takes to repair your credit depends directly on how much you are willing to do in order to get better credit. This will mean that you will need to be extremely frugal, pay more attention to your payment due dates, and using cash in order to avoid building up more debt on your current credit cards.

If you are extremely diligent and look over your credit reports regularly and use your credit responsibly it is possible to see a slight improvement in your credit score in just a few months. However, this will take a lot of effort and you will have to be very disciplined in order to see these improvements.

Conclusion

When it comes to credit repair the first step will be go go over your credit report with a fine toothed comb. You want to make sure that your credit report is completely accurate. If you find that there are items on your credit report that are not accurate it is important to make sure that you dispute them right away. You can do this on your own by writing letters as mentioned above.

Another option is to use a qualified credit repair agency in order to help you find any items that may be incorrect. Credit repair agencies often can find items that you may have missed and can help get these items removed from your report.

If you simply have bad credit and the items on your report are correct, the next step toward credit repair is to pay off any debts that you can and to make sure that you are paying all of your bills on time. Remember, there are some creditors that only look at recent history so the faster you can begin rebuilding your credibility, the better.

Overall, credit repair is possible, but it does take time. It is important to be patient when trying to rebuild your credit and do not fall for any of the scam companies out there that make empty promises about being able to help you improve your score by a ton of points in a short amount of time as this is simply not possible.

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