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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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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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On this issue, there is much confusion.
Almost every so-called credit repair expert has a different
opinion regarding the actual credit reporting period allowed
by law.
Most negative listings may be kept on your
credit report for a period of 7 years beginning on the date
that you were last reported late before they repair
themselves. This means that if you were late every month
from March to August of 1995, that your date of last activity
would be on August of 1995. In this case, the item would
be due to repair itself on August of 2002. You don't have
to live with 7 years of Bad Credit. Download "Give
Yourself Credit" Today
There are several exceptions to the seven
year rule. Bankruptcies may be reported for 10 years from
the date that the bankruptcy was discharged. Liens and judgments
may be reported for seven years or until the statute of limitations
in that state (usually between seven and ten years) runs
out, whichever is longer. However, credit bureaus usually
keep these listings on the report for the seven year period
regardless of the local statute of limitations, unless you
repair them first.
The other interesting exception is in the
case of a negative listing that has been sent to collections
or has been charged off. The seven year limit begins 180
days after the last late payment before the account was charged
off or sent to collections. In other words, if you didn't
pay a certain bill from January to March, and the creditor
sent the account to collections in June, then the negative
listing could remain on your report for 7 and 1/2 years from
that last payment in March unless you repair your credit
first.
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Under the most recent version of the Fair
Credit Reporting Act, the credit bureaus must complete a
reinvestigation within 30 days of receiving a dispute letter
from the consumer.
However, the credit bureau still has the
right to consider a dispute letter "frivolous and irrelevant" at
their own discretion, if they feel that someone is attempting
credit repair. While the credit bureaus are careful not to
overuse this privilege, they may deem virtually any dispute
frivolous or irrelevant without having to justify their decision
or point to credit repair methods. Learn how to get the credit
repair companies to take positive action on your dispute.
Download "Give
Yourself Credit"
While the credit bureau is required to
complete their reinvestigation in 30 days or less, the consumer
has little recourse against them if they don't. Many consumers
assume that the credit bureau must repair all disputed credit
if the investigation isn't completed within the required
time. This is not the case. The credit bureau may take as
long as it likes to repair the credit. The only real recourse
a consumer might have would be to gather a class-action lawsuit
to penalize the bureau for taking too long. At Trans Union,
for example, it is common practice to receive the credit
repair dispute letter, take a week or two to process it,
then send the consumer a letter saying that the reinvestigation
will begin on the date that the credit repair dispute was
finally processed. This often gives them a total of six weeks
from the date of receipt of the dispute to complete the reinvestigation.
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