Is Credit Repair for Real?
You Can Dispute Bad Credit Items to Improve Your Credit Scores
Nov 17, 2008
The idea that credit repair is impossible, unethical, or illegal is credit reporting industry propaganda. This is used to discourage you from disputing or hiring someone to dispute your bad credit. Investigating disputes creates more work and expense for them.
Keep in mind that the so called credit “bureaus” are not government agencies. They are private enterprises known as Consumer Credit Agencies or CRAs. It’s more economical for them to simply deny disputes than prosecute or litigate questionable “laws”.
Ethically, it’s only playing the letter of the law game for your benefit rather than a corporation’s. Besides, these corporations do have their share of factual errors that create havoc anyway.
Fair Credit Reporting Act (FCRA) – The Beginning
The FCRA of 1971 mandated CRAs to be able to prove the “accuracy” of items disputed within 30 days of receiving a consumer claim of “inaccuracy”. Accuracy is the key word to the letter of the law game. If the CRA could not prove the accuracy of any derogatory items disputed within 30 days, the items had to be removed. This wording gave rise of third party credit repair entrepreneurs.
It didn’t take long for the credit repair industry to realize the Achilles heal of CRAs. In order to prove the authenticity of a derogatory credit item, the CRA has to obtain that proof from the furnisher. A furnisher is the creditor who extends credit and reports payment histories to the CRA. And if the furnisher went out of business, how could it provide proof?
The possibility of records being lost, located, or too difficult to retrieve within 30 days became too obvious a loophole to ignore. Since those early days, the CRAs have come up with their own strategies to close up the loophole. It’s gradually become a game of cat and mouse that only the experienced credit repair specialists should play. But they do charge a lot.
A much cheaper and effective route is to use a mortgage broker when you apply for a mortgage. They can use a special system that will permanently remove derogatory items within 3 working days. You must have documentation or canceled checks to back up your disputes.
FCRA Amended in 1996
A couple of items that were added to the FCRA are that the consumer is entitled to one free credit report per year or a free one on demand if the consumer was denied credit within the last 60 days. Any item being disputed is now also required to show “under dispute” on the credit report. But that won’t affect your credit scores.
An item successfully disputed can reappear later if the CRA receives notification from the furnisher. But the CRA is also required to notify you of that action and explain why.
If you can provide proof that a CRA did not investigate your dispute with due diligence as required by law, you can file a suit for $2,000 in your local small claims court. If you are getting jerked around, let them know that. If that doesn’t get you what you want, chances are they won’t send a representative from their company to your court. A no show is an automatic defendant default. At least you’ll win some money!
Disputing Anything Derogatory Yourself
If you are motivated enough to go it alone, start with ordering your consumer credit reports and get ready for the fight. When you get those reports, you’ll need to be able to pick and choose your battles. Knowing which items are important and how to handle them is crucial.
