About Credit
Reports > Credit Report Errors and
Optimization > Does It Work?
Does Credit Report Repair
Really Work?
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Does Credit Report Repair Really Work?
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Click on the questions below for more information.
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Why is it so common to hear that bad
credit can't be repaired?
Credit is a way of life in
America. Without good credit, you have to take your seat in the
second-class section of our economy. But, if your credit is in
shambles, you may not be willing to wait for seven years while your
credit report repairs itself.
Is there anything you can do to
speed your credit repair?
Many authorities, such as the
news media, will tell you there is nothing you can do to repair your
credit. Newspapers, magazines, and TV news journals all seem to be
unanimous in discouraging you from making any effort to repair your
credit before the seven year limit.
How do these journalists
explain Lexington Law Firm? We have repaired over one hundred
thousand negative items from individual consumer credit reports
in the last two years. What about the thousands of Americans who have
repaired their own credit? Why has the media repeatedly denied the
possibility of repairing credit when substantial evidence points to the
contrary? Who stands to gain from such a broad campaign of
disinformation?
The giant credit reporting
agencies (credit bureaus) have maintained a consistent public relations
effort to dissuade you from repairing the information appearing on your
credit reports. The credit bureaus are especially intent on steering
you clear of "credit repair" companies that promise to help you repair
your credit. The bureaus claim that these companies "cannot have
accurate information removed from your credit report."
If you are like 70% of
Americans that have less than perfect credit, you're sure to be
interested in the truth about credit repair. If there were a legitimate
alternative to seven years of credit denial, that alternative could
mean early parole from the bad credit prison.
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What does the law say about repairing your credit?
As the credit bureaus
computerized their processes and greatly expanded their reach and
influence in the late 1960s and early 1970s, consumer complaints began
to pile up at the FTC and state attorney generals' offices. The credit
reporting agencies quickly became huge bureaucracies second only in
size to the federal government. Yet, the credit bureaus expressly
served only the needs of their clients, the credit grantors.
Many consumers were negatively
effected by the credit bureaus, but they had no way to correct or
change their credit information. The American consumer lay completely
at the mercy of the credit bureaus. The United States Congress enacted
the Fair Credit Reporting Act (FCRA) in 1971 to insure that the credit
bureaus investigate the credit items disputed by consumers. This
federal law set procedural guidelines which gave the consumer the right
to challenge the accuracy, validity, and verifiability of the credit
listings appearing in their consumer credit report. It also required
that the credit bureau repair any credit listing if it was inaccurate
or could not be verified.
In theory, the FCRA charges the
credit bureaus with responsibility to the consumer as well as the
credit grantor. In reality, the credit bureaus resist, resent, and
reject consumer disputes. The credit bureaus would rather be left alone
to make a profit. And, each time a consumer challenges his credit,
profit is lost.
The credit bureaus first defend
their profits by erecting walls of stall tactics, including requests
for more information, further clarification, and additional
identification. The vast majority of consumers give up before they even
receive copies of their credit reports. If a consumer manages to get a
credit report, decipher the codified information, write a coherent
dispute, and mail it, the bureaus may still find some reason to
disregard the challenge. The entire dispute system is designed to
frustrate and discourage the consumer.
Many consumers have the idea
that the credit bureaus must complete their investigation within thirty
days or be forced to remove all disputed information. They threaten to
sue the credit bureaus if they don't conclude their investigation in
time and repair their credit. In practice, such thinking is delusional.
Nobody forces the credit bureaus to do anything.
However, if you manage to
submit a valid dispute letter, and the credit bureau investigates your
dispute, the chances of success are good - whether or not the negative
listings are accurate! Accuracy actually has little to do with the
deletion of negative items.
If a credit bureau cannot
verify an item before completing its investigation, that item will be
removed. Many creditor grantors are simply reluctant to take the time
to verify the data. While the credit bureaus may be in the business of
reporting credit histories, creditor grantors are not.
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What is the truth about credit repair
companies? Can they really do what they say they can do?
Many "credit repair" companies
claim to remove negative credit with the flick of a wrist. Their
advertisements make bold assertions and money'back guarantees;
"Bankruptcy, tax liens, judgments, . . . no problem!! One hundred
percent guaranteed!! Credit report 100% cleared in 30 days!!" Can they
really make such sweeping guarantees?
While some credit repair
companies are outright frauds, others are not frauds and they use the
dispute process to obtain impressive results. In fact, they delete
thousands of negative credit listings every day - regardless of whether
or not the listings are technically accurate. In truth, credit repair
fraud is less common today then five years ago. Vigorous regulatory
sweeps by state and federal regulators have cleared away most of the
illegitimate (and some of the legitimate) credit repair companies.
Unfortunately, it's risky to
trust anyone to help you repair your credit. It is estimated that
credit repair companies have bilked Americans out of more than fifty
million dollars. The majority of credit repair companies were started
by entrepreneurs with a penchant for marketing. Consumers have flocked
to these "credit doctors" only to discover that their advertisements
proved far more impressive than their results. Hiring a credit repair
company is like playing Russian roulette. Many of them are effective
and legitimate, but it is difficult to tell a rip-off from the real
article.
Working within the credit
bureau maze requires substantial background knowledge; knowledge it
takes credit repair companies years to learn. In fact, U.S. District
Court Judge J. Wexler entered the following legal opinion in the
Federal Supplement. "Since allowing third parties to assist consumers
will likely lead to the expedited correction of credit reports, it will
further the purposes of the [Fair Credit Reporting] Acts."
So, can credit repair companies
really guarantee results?
Not a chance! No credit repair
company is so good that it can guarantee a specific outcome. It would
be like a defense lawyer guaranteeing that the jury will find his
client innocent. Guarantees are a sure sign of credit repair fraud. A
warranty, where the credit repair company promises a refund if certain
results don't occur, is a better, more realistic claim.
Not surprisingly, the credit
bureaus have declared war against the credit repair companies and those
selling instruction on how to do-it-yourself. The bureaus lambaste
credit repair companies in the media and send anti-credit repair
literature to anyone whom they suspect of using credit repair services.
The bureaus unflinchingly deny that accurate information can be removed
from a credit report.
Some time ago, a couple in the
Northwestern United States, who were using the services of a legitimate
credit repair company, received a scathing letter of reproach from
their local credit bureau. The letter chastened them for relying on the
"unethical" methods of credit repair, and pointed out how all their
efforts had come to nothing. "As you can see," the letter chastened ,
"your credit reports remain unchanged." The couple was bewildered
because almost all of their many negative credit listings, including a
bankruptcy, had long since been deleted.
The simple truth is that you
don't have to endure bad credit for seven to ten years. It is possible
to repair your credit within a much shorter time.
However you decide to address
your credit challenges, realize that regardless of what you may hear in
the news media, thousands before you have sought help and repaired
their credit. They can show you their homes, cars, and credit cards.
Despite the newspaper articles, TV reports, and other credit bureau
propaganda to the contrary, you can repair your credit.
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How do you go about completely
repairing your credit and getting new credit lines, mortgages, etc.?
Any credit repair consists of
two phases: removing the negative listings from your credit report and
adding new, positive listings.
Since just a couple of negative
listings will earn a rejection from most creditors, repair of your
negative credit should be the first priority. After bankruptcy, for
example, the credit report will show many negative listings including
the bankruptcy filing, discharge and numerous "included in bankruptcy"
listings. While removing a bankruptcy from your credit report is no
easy proposition, it is possible and definitely worth the effort. For
more help, see repair
Your credit.
It is important to note that
you may be able to obtain much of the credit you need even without
repairing your credit report.
Most home loan guidelines
(including FHA guidelines) require that you have no negative credit
appearing within the last two years. This means that you may have no
late pays within the last two years and that any collection, lien or
judgment has been paid more than two years ago. Even if you have some
bad credit in the last two years, you can often find a mortgage amongst
the "sub-prime" or "sub-A" lenders that will finance you even before
you repair your credit. These loans will charge a higher interest rate
and require more equity or a larger down payment before they will
close. If you have good income and a reasonable debt to income ratio, a
sub-prime loan may be the key to refinancing or getting a home while
you repair your credit. In any case, if you are working on your credit
repair, you may be able to refinance within a year at better terms.
Automotive financing will
typically allow some negative credit before credit repair, but with
less than optimal terms. If you have a few late pays, you may pay a
little more in interest (but it adds up fast, to be sure.) If you have
truly awful credit, you may still get an auto loan, but at very high
rates (but you should definately repair your credit in the meantime.)
Standard rate credit cards seem
to be the most difficult when it comes to credit that still needs
credit repair. Most standard rate cards will reject you immediately for
any negative credit whatsoever. Yet, there are many credit cards that
work with bad credit and help you to repair your credit. Some require
deposits and others require a significant annual fee. Most have low
credit limits.
So, once your credit repair is
underway, you can turn attention to adding positive credit. You may
have to accept some of these less-than-standard credit options while
you repair your credit. But, a word to the wise, there are many credit
repair scams out there that prey upon the credit distressed. Even your
local auto dealership may take advantage of your vulnerable position
and your desire to repair your credit. Many phony credit card offers
exist that allow you a card, but one that is only good for the
company's limited line of merchandise. Mortgage brokers often hide
exorbitant fees in loans to borrowers who need credit repair. It is not
uncommon to charge credit repair customers four to eight "points" on a
sub-prime mortgage loan. These points amount to tens of thousands of
dollars that you must pay over the life of the loan. Make sure that you
read the fine print and compare your mortgage, auto loan or credit card
to the typical terms of regular financing if you are applying before
your credit repair is complete.
With that said, there are many
good options for repairing and rebuilding credit that you can find on
the internet or at your local credit union.
Maybe you've recently finished
repairing your credit or maybe you're young and haven't used credit
yet. In either case, here are a few tricks to credit repair and
building a positive credit history quickly and cheaply. Most times you
start building some good credit in just a couple of weeks. But, beware,
if you stack too many open accounts, or too many credit inquiries, you
will be denied based on debt to income ratio and excessive credit
inquiries.
If you know someone (like a
good friend or parent) who has good credit, you can "borrow" their good
credit listings and begin to repair your credit. This friend must have
credit cards, and must trust you enough to allow you to become an
"authorized user" on his or her credit cards. Just have your friend
call the credit card company and request that you be placed on his card
as an authorized user. A copy of the card will be sent and you may
simply return it to your friend. Your credit file should soon show an
open account with all of the positive history that your friend has
created over the years with that credit card. A small footnote will
sometimes show that you are an authorized user of that card. Remember,
though, when a new credit grantor goes to review your file, he may
insist that the balance on the card appear on your debt to income
ratio. That shouldn't disqualify you for credit if your income is
sufficient and you don't have an excess of debt on your file.
There are a number of good
secured and unsecured credit cards that advertise on the internet.
These cards are designed to help you to repair your credit. Understand,
however, that secured credit cards will appear on your credit report as
"secured" and will not necessarily repair your credit history as much
as an unsecured card.
There are a number of creditors
who are traditionally more accepting of those with little credit
history or who are in credit repair. For example, many college credit
unions will extend low limit credit cards to students without a credit
history. Many department stores, such as Sears, will extend a credit
line to encourage you to shop at that store, even if your credit repair
isn't yet complete. Electronics stores, furniture stores and cosmetics
shops are all usually open to extending credit to credit repair
candidates.
As with any line of credit, you
must make sure that you handle these new accounts responsibly. It is a
temptation to use a department store credit card frivolously. Just
remember that you have to pay back every dime, with interest.
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Can you add good credit to your
credit report by having another person add you as an authorized user to
one of their credit cards?
When another person adds you to
a credit card as an authorized user, the credit card company will
typically place the account on your credit report as well, serving to
help repair your credit. Often, the account will carry a note
indicating that you are an authorized user rather than the primary
cardholder. Even so, this serves to substantially improve your credit
history.
On the other hand, the account
will not typically show up with the entire account history, but will
show only from the time you were added as an authorized user.
Beware: if the account goes
delinquent, it may negatively effect your credit report and the credit
card company may even attempt to recover payment from the authorized
user. If this happens, your credit repair can slip even further behind.
Click Here to Learn More about Credit Repair.
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If you have inaccurate
information on your credit report you can Let a Law Firm Remove your Negative Items from your
Credit Report! Lexington is the
largest and most trusted credit report repair firm in
America. We offer exceptional service at a very affordable price. In
over 15 years of practice, Lexington Law has helped more than 300,000
clients clean up their credit reports.
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