Credit Repair - What Is It?

Credit Repair - What Is It?

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Credit repair is a broad term that is typically referring to correcting your credit report. In general you are trying to remove negative items from your credit file.

This is important because when your FICO score is determined, the negative marks on your report are taken into account. This will impact your score by roughly 40% and is called your payment history.

I Thought Credit Repair Was Illegal?

This is a common myth, however you can have items removed from your credit report. In 1970, Congress passed the Fair Credit Reporting Act (FCRA) and have periodically updated this law. The most recent update entitles you to get one free copy of your report from each bureau annually.

The FCRA has provided some important rights and rules for our credit system:

1. An item can remain on your report for a maximum of seven years. However this is regularly violated as the time your debt starts to age is often manipulated. For example, lets say you have a credit card that you stop making payments on. By Federal Law this debt begins to age from the month you stopped making payments.

After 6 months the credit card company is going to sell your debt account to a collection agency. Now the collection agency is going to view you debt as a new account and they are going to report to the bureaus for a full seven years from when they purchased your account, despite it already being 6 months old. If this agency doesn't collect they are going to sell your debt account to another agency and this will continue. The size of your debt directly impacts the number of times it will be sold to other agencies, if it is not paid.

As you can see it is common for one financial mistake to spiral into multiple negative marks on your report. It is also common for collection agencies to view your debt as a brand new account whenever they purchase it and they will try to keep it on your report for seven years from their purchase date. While this is illegal and you can file a consumer complaint to the FTC it is common practice in the debt system.

2. You can dispute any item you feel is inaccurate - in other words you can dispute any item on your report and the credit bureau must investigate it. They will contact the lender and get verification on the account.

To file a dispute you must write a letter to each bureau. In your letter you need to include the item you are disputing, the reason, and the dates. Once the bureau investigates a result letter will be mailed to you. In this letter they will inform you if the item was verified or if it was removed from your report. Often investigations result in the removal of items because many lenders are unwilling to spend the time and man power to verify an old non collectible debt.

Using the aforementioned example with the credit card company that sells your debt, once they have sold it they have no legal right to collect on it. Therefore it is only going to cost the credit card company money to keep the records of your account and even more money to have someone physically verify the account for the bureaus. Many lenders are unwilling to do this, because their is no benefit for the company.

In sum, stop living with the expense of bad credit. Take action and remove the negative items from your credit reports.

About the Author:
For a free credit consultation call 1-800-232-2903 or for more about bad credit repair or for information about how to improve credit score visit us.



Article Originally Published On: http://www.articlesnatch.com


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