Important Questions and Answers |
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Why should I want to have a good credit rating? |
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Not just for the convenience of getting additional credit! Actually, additional credit should be avoided and pursued as a last resort. Nevertheless, you often need good credit to rent a home, apply for a job, rent an automobile, confirm travel arrangements, etc. |
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| Q: |
Is it legal to repair my credit? |
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The Fair Credit Reporting Act (FCRA) of 1970 guarantees you the right to dispute negative information on your credit reports. |
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| Q: |
What exactly is the Fair Credit Reporting Act? |
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The FCRA is the base federal legislation that governs the practices of the various credit bureaus across the US. It was enacted to protect consumers from the abuses of credit bureaus and creditors. It is a complex law that has been amended a number of times and carries with it a number of protocols that cover use and application in specific situations. |
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What are my rights as a consumer under the Fair Credit Reporting Act? |
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You have the following legal rights in relation to your credit reports:
- the right to know about all the information in your credit reports
- the right to free copies of your credit reports if denied credit within the past 60 days
- the right to one free credit report from each credit bureau annually
- the right to know the sources of the information
- the right to remove erroneous, incomplete, obsolete, or misleading information
- the right to remove any information that cannot be re-verified within the legal time
- the right to add your own explanations for situations reflected on your credit reports
- the right to know the name of anyone that has requested a copy of your credit report
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| Q: |
Are credit bureaus powerful government agencies that can resist my attempts to hold them accountable? |
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Credit bureaus are private companies that gather confidential information for profit. They are not government agencies and through the FCRA legislation, they can be held accountable. |
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| Q: |
Is it true that credit bureaus are required by law to keep derogatory items on my credit reports for up to 10 years? |
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The law is not about the credit bureaus being required to publish your personal information. In fact the FCRA requires the opposite: credit bureaus are required by law to remove all history that is older than 7 years or in the case of bankruptcy 10 years. |
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Why should I use the services of a professional credit counselor? According to the law, can’t I perform the Credit Repair myself? |
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In theory, yes. We can even sell you our own how-to-do-it-yourself book at your request. However, unless the case is relatively simple, many people will have difficulty completing the job satisfactorily on their own because of the complexity of the law and because of the related administrative burden. |
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How does Credit Repair work? |
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Once the items to be disputed on the credit report are identified, specific dispute letters are sent to the various credit bureaus using wording that appropriately refers to the legislation. The credit bureaus have 30 working days to re-verify any disputed item or remove it from the credit report. |
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How do Negotiated Debt Settlements work? |
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Most creditors are willing to negotiate the settlement of old debts that are in a collection status or have been charged off. Often they will settle for a fraction of what the consumer owes in a lump-sum transaction but the amount of the creditor concession is likely to be reported to IRS as imputed taxable income. Nevertheless, settled debts will be reported on your credit reports as “Satisfied” which will improve your credit rating. |
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| Q: |
Is it possible to arrange a payment plan in connection with a Negotiated Debt Settlement? |
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Not usually. Most creditors require that you have cash on hand to make a one-time lump-sum payment. Nevertheless, many counseling agencies will allow you to establish an installment plan and then settle your debt for you when you have accumulated enough money. |
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| Q: |
Is it possible to remove a bankruptcy from my credit report? |
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It is possible but typically quite difficult since a bankruptcy is a matter of Public Record. A bankruptcy can be removed if it has been incorrectly reported or is in non-compliance with the strict application of the FCRA. However, if reported accurately and in compliance with the law, bankruptcies are usually not possible to remove. |
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Is it possible to improve my credit score after a bankruptcy? |
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Yes, there are a number of things that can be done but we recommend professional assistance. |
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I have heard of credit repair that is done by creating a new credit file. What about it? |
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Even though this was a widely advertised approach in the past, it may involve applying for a new social security number or using a corporate identification number instead of a social security number when applying for new credit. You should know that either of these acts is of questionable legality and is not contemplated in the Fair Credit Reporting Act. Creating a new credit file is not recommended and you should consult an attorney before doing so. Competent and professional firms perform credit repair legally and in strict compliance with the law. |
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| Q: |
Do credit repair firms guarantee their work? |
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A responsible and professional firm will usually guarantee that they will remove any negative information that is inaccurate or obsolete and that items once removed will not reappear. Other types of negative information may or may not be removed depending upon the situation but a legitimate firm cannot guarantee to remove accurate information because it is unlawful to do so. |
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Once corrected, can the old misinformation be reported again on my credit reports? |
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Generally no. Only new information is reported to the credit bureaus. Once removed, it is permanent. |
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How long will the entire process take before it is completed? |
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The approximate time on average is 3 to 6 months depending on the complexity of the case. More difficult cases require more time, even up to a year. You will need to be patient since there are no legal short cuts. |
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I don’t know with certainty about all the information that appears on my credit reports and I don’t know how many accounts there are that may be reflecting misinformation. |
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The first step by the Credit Repair firm will be to identify which accounts need correcting. The number of creditors reporting misinformation is not relevant and correction can proceed against all of them regardless of the number. |
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In the future, will prospective creditors know that I have corrected my credit reports? |
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No. There will never be a trace. Even if they could know, federal law prohibits credit denial based on the past disputing of misinformation. |
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| Q: |
If I have my credit reports repaired, does that eliminate my existing debts? |
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No. Your existing debts will still be pending with your creditors even though they no longer appear on your credit reports. Even if those removed debts have been officially charged off, they can be returned to active collection status at any time which could subject you to legal proceedings under the laws of your state. Our counsel is that you pay your debts to avoid future collection efforts by your creditors. |
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What if I am not able to pay off my existing debts in a manner acceptable to my creditors? |
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Discuss this with your Counselor. You may be a candidate for a Debt Consolidation Program that will help you develop an affordable payment program or a Negotiated Debt Settlement that will help you settle old debts for a fraction of your indebtedness. |
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If items of past indebtedness become a matter of Public Record, will they be removed from the Public Records if they are removed from my credit reports? |
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No. The Public Record is permanent. |
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| Q: |
Are all professional Credit Repair firms pretty much the same? |
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No. There is a significant difference within the industry that requires great care by consumers in choosing the right firm. Unfortunately, there are many firms that don’t really know what they are doing or who are not persistent enough to complete the task. There are also a number of unscrupulous firms that will take your money and fail to perform anything. Be careful!!
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