Given the current liquidity crunch in the US credit market linked to the mortgage market, more individuals will be faced with the need of obtaining credit counseling. It is an appropriate approach to take when an individual’s credit is in default or on the verge of default. But at the same time it is also a vulnerable moment for a distressed individual seeking help who may naturally get attracted to the current barrage of radio, television and print ads that promise a turnaround in credit problems by ‘repairing’ or ‘fixing’ the consumer’s bad credit file.
A credit-file or credit-history is maintained by a credit bureau. Credit bureaus also known as credit reporting agencies are private companies that collect payment information on individuals predominantly from employers, landlords and lenders (banks and credit card companies, including the ones issued by large retail chains or departmental stores). They also collect any public information on an individual to report any bankruptcy and/or judgments awarded in courts, on his/her credit file. The credit history or credit file that we have been referring to in this article in common parlance is called a ‘consumer credit report’.
These credit reporting agencies in the US are governed by the Fair Credit Reporting Act (FCRA) and in Canada by Consumer Reporting Act. Depending upon the nature of information they can legally report accurate credit information anywhere between seven to ten years. Factual information can not be erased from the individual’s credit report for a specified time period, unless proven to be inaccurate.
Credit repair services can charge a fee only if they are able to accomplish a ‘material improvement’ in their client’s credit report. The fee for fixing/repairing a credit-file by these so-called ‘credit-repair’ companies could range anywhere from $50 to $1,500.
An example of a material improvement would be correction of incorrect information contained in a credit report through their efforts. It is therefore logical to say that a credit repairer can not claim to make a material improvement to a consumer’s credit file without reviewing and researching the consumer’s credit report. Thus prepayment of credit repair services is illegal in certain jurisdictions.
If you hire the services of a Credit repairer, the repairer must provide you with a written and dated contract. Some jurisdictions provide a cooling-off period (about 10 days), which typically begins from the time you receive a copy of the contract. If the credit repairer fails to refund the money you can file the claim in small claims court. (Link: Credit Repair Organizations in the US are governed by Title IV of the Consumer Credit Protection Act)
If you have concerns about information contained on your credit report the same will be investigated free of charge by the credit bureau reporting it. It is therefore not required or necessary to hire a third party to obtain and/or investigate the items that you deem questionable in your credit report. Information contained in your credit report can not be deleted by these companies that claim that they can perform ‘credit-repair’ and ‘fix’ your credit report. The only information that can be purged or altered is the one that is found to be inaccurate. You can personally contact the credit reporting agency with details of the disputed (erroneous, misleading, or outdated) entry on your credit report. Each consumer credit report has a provision for an individual to add a short ‘consumer statement’. Typically a consumer statement is up to 100 words that a credit reporting agency allows from an individual to comment on information that is disputed in the consumer’s credit report.
There in no quick-fix for bad credit. Remember credit is a privilege and creditworthiness can only be improved with the passage of time and by judicious use of credit granted to you since accurate and historical credit information generally cannot be removed from your credit report. Over time with responsible and remedial creditworthy etiquette going forward you may be able restore your creditworthiness and reinstate an optimal credit limits with potential creditors. ( To learn more about how to fix your credit report follow this link to a fairly detailed article by CreditGuru.com )
So consider yourself warned about credit repair scams!
A credit-file or credit-history is maintained by a credit bureau. Credit bureaus also known as credit reporting agencies are private companies that collect payment information on individuals predominantly from employers, landlords and lenders (banks and credit card companies, including the ones issued by large retail chains or departmental stores). They also collect any public information on an individual to report any bankruptcy and/or judgments awarded in courts, on his/her credit file. The credit history or credit file that we have been referring to in this article in common parlance is called a ‘consumer credit report’.
These credit reporting agencies in the US are governed by the Fair Credit Reporting Act (FCRA) and in Canada by Consumer Reporting Act. Depending upon the nature of information they can legally report accurate credit information anywhere between seven to ten years. Factual information can not be erased from the individual’s credit report for a specified time period, unless proven to be inaccurate.
Credit repair services can charge a fee only if they are able to accomplish a ‘material improvement’ in their client’s credit report. The fee for fixing/repairing a credit-file by these so-called ‘credit-repair’ companies could range anywhere from $50 to $1,500.
An example of a material improvement would be correction of incorrect information contained in a credit report through their efforts. It is therefore logical to say that a credit repairer can not claim to make a material improvement to a consumer’s credit file without reviewing and researching the consumer’s credit report. Thus prepayment of credit repair services is illegal in certain jurisdictions.
If you hire the services of a Credit repairer, the repairer must provide you with a written and dated contract. Some jurisdictions provide a cooling-off period (about 10 days), which typically begins from the time you receive a copy of the contract. If the credit repairer fails to refund the money you can file the claim in small claims court. (Link: Credit Repair Organizations in the US are governed by Title IV of the Consumer Credit Protection Act)
If you have concerns about information contained on your credit report the same will be investigated free of charge by the credit bureau reporting it. It is therefore not required or necessary to hire a third party to obtain and/or investigate the items that you deem questionable in your credit report. Information contained in your credit report can not be deleted by these companies that claim that they can perform ‘credit-repair’ and ‘fix’ your credit report. The only information that can be purged or altered is the one that is found to be inaccurate. You can personally contact the credit reporting agency with details of the disputed (erroneous, misleading, or outdated) entry on your credit report. Each consumer credit report has a provision for an individual to add a short ‘consumer statement’. Typically a consumer statement is up to 100 words that a credit reporting agency allows from an individual to comment on information that is disputed in the consumer’s credit report.
There in no quick-fix for bad credit. Remember credit is a privilege and creditworthiness can only be improved with the passage of time and by judicious use of credit granted to you since accurate and historical credit information generally cannot be removed from your credit report. Over time with responsible and remedial creditworthy etiquette going forward you may be able restore your creditworthiness and reinstate an optimal credit limits with potential creditors. ( To learn more about how to fix your credit report follow this link to a fairly detailed article by CreditGuru.com )
So consider yourself warned about credit repair scams!
No comments:
Post a Comment