In the world of credit repair, there is so much conflicting information that it confuses consumers. Consumers look to mortgage professionals for help and guidance when it comes cleaning up their credit. So, in order to help clear up some confusion, here are five facts and fallacies about credit repair.
1. Can only time change the information on a credit report?
No! The Fair Credit Reporting Act (FCRA) was put in place so that consumers would have the right to challenge a reporting agency for the accuracy of their credit report. People make mistakes, and there could very well be mistakes on the report when someone enters the information. The government realized that these credit bureaus play a vital role in whether or not a consumer could get access to credit. They developed the FCRA to force the credit bureaus to act fairly when it comes to fairness and impartiality. When it comes to credit repair, the recommendation from the Federal Trade Commission (FTC) is that consumers NOT use credit repair services. The FTC says that “everything that a credit repair clinic can do for you, you can do yourself at little or no cost;” however, this is not entirely true.
2. Can accurate derogatory information be removed from a credit report?
Yes! The FCRA provides that the credit bureau do not have to remove accurate derogatory information from a credit report unless the information is outdated. In some cases, if one disputes with the credit bureau and challenges derogatory information, it is possible to get it removed, even if it is valid. This is because when one challenges a credit entry, the bureau has 30 days to verify the information. So, they contact the reporting agency, who must either confirm the information within that time frame or the information has to be removed. Sometimes, they do not respond to the bureau, so that entry has to be removed whether it is valid or not. While the law says that they are not required to remove the valid information, it does not prohibit them from doing so, and if done correctly, one can have accurate derogatory entries removed.
3. Is credit reporting subjective?
Yes! There are three different major credit bureaus in the United States: Experian, Equifax and TransUnion. Each has its own resources of information, and each will also be very different from the other in most cases. A credit score can also vary from one agency to the next. Credit scores will vary from 365, which is the worst, to 840 which is the best. If a score is less than 720, one may benefit from credit repair services. The actual formula used to arrive at a consumers credit score seemed to be a mystery. There are several factors that will arrive at your final score, including delinquencies, the age of your credit file and other factors. It’s a true mystery of how the scores are actually calculated, and each score will be different between the three bureaus.
4. Lenders are the only ones who will review a credit report?
No! Many businesses that deal with consumers are now running credit reports for their customers. Many companies are also running credit reports as part of the background check process when they hire new employees. Even insurance companies run credit reports before they will issue a policy to someone. They say that their justification is that because a credit report will give them an indication as to whether a particular client will file a fraudulent insurance claim. The sad part of all of this is that a company may prevent one from being hired because their credit is poor. If a company does reject one for a job based on their credit report, they are supposed to send a letter of explanation to the applicant. Many companies get around this requirement by simply saying that the applicant was not qualified for a job. The bottom line is that when someone has poor credit, it can negatively influence so many different aspects of their life. Whether or not it is right is irrelevant.
5. Can a legitimate credit repair company do more for a consumer than they can do for themselves?
Yes! A reputable credit company has many clients. Therefore, they have the experience necessary to deal with creditors and credit bureaus to get negative information removed from a credit report. Credit dispute procedures can be complicated in some cases. When a case arrives where the consumer is not able to have a negative entry removed, a legitimate credit repair company can probably get it done for them. When it comes right down to it, one has to weigh the benefits against the cost of the service. In other words, legitimate services know things about the credit industry that consumers do not. They deal with these issues on a daily basis and they are up-to-date on all of the current credit laws. They know the angles for getting results.
Chad Evanson is a principal of Prime National Inc. “The fastest credit repair in the business: 30 days.” He may be reached by phone at (800) 795-PNCR or e-mail [email protected]