Every time the economy cycles down, businesses taking advantage of the downturn arise. The recent recession (or what some economists have actually labeled, “Depression”) and resulting credit crunch have resulted in credit issues for many consumers, and a related dip in their credit scores. Here come Credit Repair companies to the rescue, right? They can raise credit scores by deleting negative information like it never happened? Late payments? Settlements? Bankruptcies? No problem, right? WRONG.
Federal law, specifically the Fair Credit Reporting Act (FCRA), is very specific as to what can go on a credit report and what can come off the credit report, and when. Most credit repair companies sell a misconception that they can delete negative information off a credit report. Not necessarily true. The FCRA expressly prohibits the removal of a negative item if the other requirements as to the reporting of that item are met (i.e. the reporting is accurate (the late payment really happened), complete and verifiable). If the negative item honestly occurred and is reported correctly, Federal law prohibits its removal. I’m sure I’ll get comments from credit repair folks saying that’s not true, but it is. Read the law.
The lesson here is that consumers shouldn’t pay a company to do something that’s against Federal law. Honest credit repair takes time. Some helpful things to do to repair your credit:
- Pay bills on time.
- Don’t max out your accounts.
- Don’t continue to default.
There is much more detailed info out there on this, but for the most helpful advice on credit repair, visit www.ftc.gov.
Now, all that being said, I am aware of some very good, honest, credit repair companies. You can do credit repair yourself – all three credit bureaus have a very easy online dispute process where you can dispute inaccurate items on your credit report. However, credit repair is like anything else you can do yourself – you may want to pay someone with more expertise. Just do your due diligence and don’t get scammed by a company that makes promises they can’t deliver on.