Credit Repair: Self-Help May Be Best
the advertisements in newspapers, on TV, and on the Internet. You
hear them on the radio. You get fliers in the mail. You may even
get calls from telemarketers offering credit repair services. They
all make the same claims:
problems? No problem!"
"We can erase your bad credit100% guaranteed."
"Create a new credit identitylegally."
"We can remove bankruptcies, judgments, liens, and bad loans
from your credit file forever!"
Do yourself a favor and save some money, too. Dont believe
these statements. Only time, a conscious effort, and a personal
debt repayment plan will improve your credit report.
page explains how you can improve your credit worthiness and lists
legitimate resources for low or no-cost help.
Everyday, companies nationwide appeal to consumers with poor credit
histories. They promise, for a fee, to clean up your credit report
so you can get a car loan, a home mortgage, insurance, or even a
job. The truth is, they cant deliver. After you pay them hundreds
or thousands of dollars in up-front fees, these companies do nothing
to improve your credit report; many simply vanish with your money.
If you decide to respond to a credit repair offer, beware of companies
you to pay for credit repair services before any services are provided,
Do not tell you your legal rights and what you can doyourselffor
Recommend that you not contact a credit bureau directly;
Suggest that you try to invent a "new" credit report by
applying for an Employer Identification Number to use instead of
your Social Security Number; or
Advise you to dispute all information in your credit report or take
any action that seems illegal, such as creating a new credit identity.
If you follow illegal advice and commit fraud, you may be subject
You could be charged and prosecuted for mail or wire fraud if you
use the mail or telephone to apply for credit and provide false
information. Its a federal crime to make false statements
on a loan or credit application, to misrepresent your Social Security
Number, and to obtain an Employer Identification Number from the
Internal Revenue Service under false pretenses.
the Credit Repair Organizations Act, credit repair companies cannot
require you to pay until they have completed the promised services.
No one can legally remove accurate and timely negative information
from a credit report. But the law does allow you to request a reinvestigation
of information in your file that you dispute as inaccurate or incomplete.
There is no charge for this. Everything a credit repair clinic can
do for you legally, you can do for yourself at little or no cost.
According to the Fair Credit Reporting Act:
entitled to a free copy of your credit report if youve been
denied credit, insurance or employment within the last 60 days.
If your application for credit, insurance, or employment is denied
because of information supplied by a credit bureau, the company
you applied to must provide you with that credit bureaus name,
address, and telephone number.
You can dispute mistakes or outdated items for free. Ask the credit
reporting agency for a dispute form or submit your dispute in writing,
along with any supporting documentation. Do not send them original
Clearly identify each item in your report that you dispute, explain
why you dispute the information, and request a reinvestigation.
If the new investigation reveals an error, you may ask that a corrected
version of the report be sent to anyone who received your report
within the past six months. Job applicants can have corrected reports
sent to anyone who received a report for employment purposes during
the past two years.
the reinvestigation is complete, the credit bureau must give you
the written results and a free copy of your report if the dispute
results in a change. If an item is changed or removed, the credit
bureau cannot put the disputed information back in your file unless
the information provider verifies its accuracy and completeness,
and the credit bureau gives you a written notice that includes the
name, address, and phone number of the provider.
should tell the creditor or other information provider in writing
that you dispute an item. Many providers specify an address for
disputes. If the provider then reports the item to any credit bureau,
it must include a notice of your dispute. In addition, if you are
correctthat is, if the information is inaccuratethe
information provider may not use it again.
reinvestigation does not resolve your dispute, have the credit bureau
include your version of the dispute in your file and in future reports.
Remember, there is no charge for a reinvestigation.
Accurate negative information generally can be reported for seven
years, but there are exceptions:
information can be reported for 10 years;
Information reported because of an application for a job with a
salary of more than $75,000 has no time limitation;
Information reported because of an application for more than $150,000
worth of credit or life insurance has no time limitation;
Information concerning a lawsuit or a judgment against you can be
reported for seven years or until the statute of limitations runs
out, whichever is longer; and
Default information concerning U.S. Government insured or guaranteed
student loans can be reported for seven years after certain guarantor
The Credit Repair Organizations Act
By law, credit repair organizations must give you a copy of the
"Consumer Credit File Rights Under State and Federal Law"
before you sign a contract. They also must give you a written contract
that spells out your rights and obligations. Read these documents
before signing the contract. The law contains specific protections
for you. For example, a credit repair company cannot:
false claims about their services;
charge you until they have completed the promised services; or
perform any services until they have your signature on a written
contract and have completed a three-day waiting period. During this
time, you can cancel the contract without paying any fees.
Your contract must specify:
terms for services, including their total cost;
a detailed description of the services to be performed;
how long it will take to achieve the results;
any guarantees they offer; and
the companys name and business address.
Have You Been Victimized?
Many states have laws strictly regulating credit repair companies.
States may be helpful if youve lost money to credit repair
had a problem with a credit repair company, dont be embarrassed
to report them. While you may fear that contacting the government
will only make your problems worse, thats not true. Laws are
in place to protect you. Contact your local consumer affairs office
or your state attorney general (AG). Many AGs have toll-free consumer
hotlines. Check with your local directory assistance.
Help? Dont Despair
Just because you have a poor credit report doesnt mean you
wont be able to get credit. Creditors set their own credit-granting
standards and not all of them look at your credit history the same
way. Some may look only at more recent years to evaluate you for
credit, and they may grant credit if your bill-paying history has
improved. It may be worthwhile to contact creditors informally to
discuss their credit standards.
cant resolve your credit problems yourself or you need additional
help, you may want to contact a credit counseling service. There
are non-profit organizations in every state that counsel consumers
in debt. Counselors try to arrange repayment plans that are acceptable
to you and your creditors. They also can help you set up a realistic
budget. These counseling services are offered at little or no cost
to consumers. You can find the office nearest you by checking the
white pages of your telephone directory.
nonprofit counseling programs sometimes are operated by universities,
military bases, credit unions, and housing authorities. Theyre
also likely to charge little or nothing for their services. Or,
you can check with your local bank or consumer protection office
to see if it has a list of reputable, low-cost financial counseling
Even if you dont have a poor credit history, its a good
idea to conduct your own credit check-up, especially if youre
planning a major purchase, such as a home or car. Checking in advance
on the accuracy of the information in your credit report could speed
the credit-granting process.
entitled to one free report a year if you can prove that:
unemployed and plan to look for a job with 60 days;
youre on welfare; or
your report is inaccurate because of fraud.
Otherwise, a credit bureau may charge you up to $8.50 for a copy
of your report.
bureaus usually are listed in the yellow pages of your telephone
book under "credit reporting agencies." Three large national
credit bureaus supply most credit reports: TRW, Equifax, and Trans
Union. You may want to contact each of them for a copy of your report.
P.O. Box 2002
Allen, TX 75013
(888) EXPERIAN (397-3742) Equifax
P.O. Box 740241
Atlanta, GA 30374-0241
(800) 685-1111 Trans Union
P.O. Box 1000
Chester, PA 19022