DIY Credit Report Repair for Dummies

by Neal Frankle, CFP ®

There is such a thing as “do-it-yourself credit repair for dummies.” That’s not to say that this subject is straightforward. There is so much noise on the radio, newspaper, TV and internet. Private companies promise to fix your credit and say they’ll even guarantee results. Where do you start? Who do you turn to?

Credit Report Repair DIY For Dummies

First, you have to understand that nobody can get rid of negative credit information from your credit report if the information is true. Please remember that if something sounds too good to be true, it usually is. Don’t waste money. Jack and the Bean Stock was a fairy tale and so are the stories that most of these companies tell you.

Here’s an in-depth post on how to fix your credit yourself and also how to tell if a company offering debt relief is a scam artist or for real.

If you want a thumbnail sketch, here are the main points:

a. Under the Credit Repair Organizations Act, companies can’t make you pay them until they finish the work. That means you should never pay upfront.

b. The company must tell you your rights.

c. If the company tells you not to contact the three big credit reporting companies directly, they are likely scammers.

d. If they tell you they can get rid of most or all accurate negative credit history, they are lying to you.

e. If they suggest you get a new identity by getting an Employer ID Number and use it rather than your Social Security number get out of there. You are not Jason Bourne or 007. You don’t get multiple identities.

f. If the company tells you to dispute all negative history on your credit report, they are going to get you into even worse trouble. Leave immediately.

g. You can (and should) correct any credit report errors yourself. You don’t need to pay anyone for this.

Ignorance is no excuse. If some jerk advises you to break the law, you’ll be in hot water if you follow that advice. If you lie on a credit application or use an Employer ID Number in order to deceive creditors, you could be prosecuted. You don’t want that. I don’t want that. Forget it.

Before you sign a contract with any of these companies, make sure it spells out:

  • How much they’re going to charge you in total.
  • Exactly what they’re going to do for you.
  • How long it will take and how long they’re prepared to work for you
  • Any guarantees they offer.
  • The company’s legal name and address.

What’s next? First, understand what your credit score range means and then take steps to improve it. You need to really be clear on where you are now in credit land and where you want to go.

Now that we’ve kept you out of jail and are clear on what you want to accomplish, let’s move on to see what you can do legally to improve your credit score fast.

First, by law, you can ask for an investigation and report on any data you feel is wrong. This is available for free. Of course, there are companies that are willing to relieve you of some of your hard earned money in exchange for doing this ,but don’t fall for it. You can and should do this for yourself. It’s free (or almost free) and simple.

This right is covered by the Fair Credit Reporting Act (FCRA). It spells out the following:

If a company takes an “adverse action” against you, you have a right to a report explaining why. You have to request this report within 60 days of receiving the bad news. An “adverse action” is being denied credit, insurance or a job.

You are entitled to one free credit report every year from each of the big three agencies: Equifax, Experian and TransUnion. All you have to do is ask for it. If you stagger your three requests every four months, you’ll get a free credit history throughout the year and you’ll be able to monitor what’s going on with your credit.

Keep in mind that these reports only show your credit history. They do not show your credit score rating or what that means. It is important to know your credit score range as it puts your credit history in perspective.

You can get a free credit score with no credit card charge or “trial” signups.

If some company has reported negative information that is out of date or wrong, take them to task. It doesn’t cost you anything but a little time. Under the FCRA, you have a lot of protection. Both the reporting agencies (the big three) and the company who reported this inaccurate intel are responsible to clean it up.

Tell them in writing.

Write the reporting company and tell them what you think is wrong about their report and include copies (not originals) of any documents you have to support your claim. State the facts of the issue – not how you feel about it – and tell them you expect them to correct the mistake immediately. Keep a copy of your letter but send it by registered mail so you have proof they received it. It also shows the company that you are serious.

Unless they think your claim is frivolous, the consumer reporting agencies have to look into your complaint within 30 days. They also have to send the important information you sent them to the company who reported the negative information to the credit agency in the first place.

At that point, they (the company who first reported the negative information about you) have to do their own research and report back to the reporting agencies. If they determine that they made a mistake, they have to let the three reporting agencies know about it, and they will then correct your credit report file and give you a free report showing the correction.

At this point, it’s up to you. Tell the consumer reporting company to send correction notices to anyone who got your credit report over the past six months. They have to comply with your request. On top of that you can direct the reporting agencies to send that report to anyone who looked into your credit over the last two years if their research was related to your employment.

What do you do if the dispute doesn’t go your way?

If the agency doesn’t settle the dispute in your favor, you still have some juice left. (Read “Credit Builders“.) Tell the agencies to include a statement about the dispute in your file. Also, tell them to give anyone who gets a copy of your credit report a copy of your dispute statement. They have to comply. You might have to pay for this, but it might be very helpful in neutralizing a bogus hit against your credit that you can’t resolve otherwise. If all else fails, contact a company like Lexington Law to see if they might be able to throw their weight around on your behalf.

What if you have a lousy credit report but all the data is correct?

If that’s the case, the only thing that will help you is the passage of time. In most cases, negative credit information will come off your credit report after seven years unless we’re talking about bankruptcy (10 years) or criminal behavior (if you did something illegal, it will may never come off your report.)

What steps have you taken to clean up bad credit data? What was your experience?

Related Post:

The Worst Debt Relief Scams and How to Avoid Them

 

photo by Nacmias Auto, Flikr

 

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