Having a bad credit score can severely impact your life. It can impede your ability to get a mortgage, an apartment, a car, or even a job. In today’s economy, and with the average household having a credit card debt of over $15,000, it’s more common than ever for people to have negative items on their credit report. It doesn’t matter if you are working full time or unemployed, sometimes making credit cards payments just isn’t possible, and people get into trouble.
Most people are not aware of their rights as a consumer, and the legitimate course of action possible to help delete negative items from a credit report. The process is known as a Credit Repair. Unfortunately, with so many people desperate to get out of financial trouble, many illegitimate companies have spring up promising to help raise credit scores without delivering results. Or worse yet, getting people into deeper debt.
Credit Repair is not something that happens overnight. It also cannot be guaranteed. If you find a company that tells you they will definitely raise your credit score quickly for a fee, then beware.
Here is how Credit Repair works. The Fair Credit & Reporting Act of 1996 gives consumers the right to see their credit reports and to dispute any item on the report. All you have to do is write a letter to the credit bureau in question and they have 30 days to validate the item. If they fail to do so, by law, they are required to delete it from your report.
Unfortunately, when a person tries to do this on their own, they are almost always ignored or stalled out by the credit bureaus. It is more effective to hire an attorney, or have a paralegal work on your behalf. Legitimate Credit Repair companies are actually law firms with divisions of paralegals who specialize in drafting effective dispute letters. You should be charged a small monthly fee, and in exchange you get legal representation from experienced professionals.
I personally used Lexington Law firm to repair my credit in 2005. At that point in time, I’d declared bankruptcy and had a credit score of around 500. When I hired Lexington Law firm, I submitted my credit reports to them and gave them power of attorney. I chose the items I wanted to dispute and let the firm do the rest.
The process was slow. But 6 weeks later, I received my first letter from Equifax, one of the 3 credit bureaus. It informed me that my Bank of America debt of around $14,000 had been deleted from my report. I couldn’t believe it. Over the next year, 11 more items were deleted from my report and my score went back up to 700.
After 2008, when credit tightened up, the bureaus became a little more savvy about responding to disputes. But the technique is still effective. And though the results cannot be guaranteed, there is a very high success rate.
As a consumer, know that you have the right to improve your credit report and make a fresh start. Just make sure you do it legitimately and with a reputable business that can explain their methodology and has a track record for effective results.
Seth Jared is a writer who blogs about Financial Literacy, Higher Education, and Credit Cards for College Students.