The Real Story!
Why “Credit Repair” as advertised, does not work!
The Truth and Lies about “Credit Repair”.
How many times have you been driving down the road and noticed a sign advertising “Credit Repair”? Hundreds of times, I’m sure. If not thousands! We see them at the expressway exits, at intersections, in newspapers, and all along the highways, and of course the internet is flooded with “Credit Repair” websites.
For over thirty years consumers have been paying so called “Credit Repair” companies throughout the country to repair their bad credit. And for thirty years, these same people have been getting scammed into believing that these companies can somehow, through their expertise, “fix or repair” their bad credit.
What you are about to read will change your life if you have bad credit. It will hopefully save you from being suckered in by these companies that make their outlandish and false promises. What we are about to discuss is: Understanding how their “Credit Repair” process actually is done and most importantly, why it does not work the way these companies advertise.
First of all, in order to understand our discussion, it is important that you understand just a little bit about the FCRA (Fair Credit Reporting ACT). There is one part of this law that these companies try to utilize in their “Credit repair” process the most to do all of your work. Section 611, 15 USC 1681i, is the main section of the FCRA that is used. I have given you a link below to go to that will enable you to read the entire law. However, for our discussion we will focus on this particular section that these companies use.
Section 611 of the law, states that a consumer has the right to dispute any information appearing on their credit report at any time. This particular part of the law was basically put there to enable the consumer to dispute, and have removed, things on their credit report that are false, incorrect, or just in error. It also states that the credit reporting agencies, the credit bureaus as many people refer to them, will give the creditors 30 days to respond to your dispute, with a 15 day extension on the dispute, if necessary, provided the consumer provides the consumer reporting agency information that would warrant the 15 day extension. So, basically the credit reporting agency will give the creditor up to 45 days to respond to the dispute. If the creditor has not provided the verification within that period of time, the consumer reporting agency will delete the account under the assumption that the account is not verifiable, or they will update it appropriately depending on what is provided in the response. Sounds simple enough. Right!
It’s important to understand how the creditors verify information. It’s a very simple process. They simply take the disputed request submitted to them either electronically, or manually (by mail), and they do one thing. The creditor / source of the information look up the account on their computer, and they verify the information they have on the consumer’s account. They simply verify all of this information by their computer and send that verified information back to the reporting agency that initiated the dispute. Nothing more, nothing less. It is very important for consumers to understand that this is all the creditors do. They are not mandated or required under the FCRA to do any more. In depth production of written documents, sales receipts, contracts, etc., is not required for any verification on a dispute by the creditor or the credit reporting agencies. The credit reporting agencies have made it their policy to not require the creditors to provide this information for any dispute. Since the FCRA does not require this information, the credit reporting agencies policies control how verifications are conducted.
It is not difficult to remove legitimate errors from a consumer’s credit report. All the consumer has to do is dispute the information that is incorrect, and the creditor will update the account so it will read accurately. However, in the case of a consumer with bad credit, it is important to know that the items of concern on his/her credit report are in fact usually accurate and negative. This poses a huge problem. How do you get accurate and negative items removed by the credit reporting agencies that are in fact verifiable?
For a consumer with bad credit, the most important thing for them to be able to do is to have their negative account information removed from their credit reports. Under the FCRA, the creditors have the legal right to report that negative account information for up to seven (7) to ten (10) years, and in some cases even longer. We will discuss all of these.
# 1 All charge offs, collection accounts, accounts included in bankruptcy, and past due payments, can stay on the credit reports for up to seven (7) years from the date they were originally charged off, or the date the past due payment occurred by the original creditor. So, if you have an account that is charged off in 1/2003, the creditor and credit reporting agencies have the legal right to report this negative account until 1/2010. Seven (7) full years. If the account is sold to a collection agency or is included in bankruptcy, the account still only remains on the report until 1/2010. The seven (7) year clock does not start over again every time the account is sold. Even if you filed bankruptcy five (5) years after it was charged off, it will still only remain on the reports for the remainder of the seven (7) years, or in this example, two (2) years. Many people (who have no understanding of the law) will try to convince you otherwise. Do not believe them. It is NOT TRUE! This is FACT and 100% accurate. In addition, no one can legally change the charge off date, or date of last activity as it is called, in order to keep an account on a consumer’s credit report for an extended period of time on any account. It is against the law per the Federal Trade Commission.
#2 Public records such as judgments and garnishments stay for seven (7) years from the date they were filed. After that, they are automatically removed from the report by the reporting agencies.
#3 Tax liens fall under another part of the FCRA that allows the reporting agencies to report them for an indefinite period of time if the lien shows not paid, not resolved, or unsatisfied. Once the lien is paid / resolved / satisfied, the credit reporting agencies have the legal right to report them for up to seven (7) years. Yes, I said seven (7) years from the date they are paid. This is a reported item that is very misunderstood on a credit report. Each reporting agency has their own policy regarding the reporting of liens. Equifax and Trans Union follow the above ruling. However, Experian’s policy is to keep unpaid / unresolved / unsatisfied liens on their report for fifteen (15) years. So, with Experian, the longest a lien would remain on a report would be fifteen (15) years, paid or unpaid.
#4 Bankruptcies can stay on your reports for up to ten (10) years. Here’s the law.
Chapter 7 discharged bankruptcies can remain for ten (10) years.
Chapter 13 dismissed bankruptcies can remain for ten (10) years.
Chapter 13 discharged bankruptcies can remain for seven (7) years.
Don’t let anyone tell you different! This is what the law allows the credit reporting agencies to do in regards to their reporting of these items.
#5 Student loans can remain on your report for a period of seven (7) years. However, the liability does not ever go away. You must pay them! There is NO statute of limitations on student loans. Get them paid as soon as possible. Interest and penalties will kill you.
Now that you’ve learned a little about the rights of the creditors and credit reporting agencies, let’s discuss how the “credit repair” works. Keep in mind that in order to get the bad credit removed, the consumer must get the reporting agencies to remove this accurate / negative account information.
The “credit repair” companies that consumers find out in the marketplace across the country, from the signs on roads and at intersections, to the internet, are all claiming they can “repair” your bad credit. Many of them go so far as to claim they can “fix” it in 45 days. Many offer you a monthly service. Some guarantee that they can improve your credit or credit score, with no guarantee of the end results. Others tell you that they do guarantee their work, but end up going out of business and disappearing. All of these types of companies have one major thing in common. They all rely on Section 611 of the FCRA mentioned above as their method of “credit repair”.
It does not work and here’s why! Their method of “cleaning up you credit” is based on the premise that they can dispute accurate / negative account information with the reporting agencies, with the hopes and aspirations that the creditor / source will not be able to respond to that dispute within the 30 to 45 day period required by the FCRA. Many of these companies will actually put in multiple disputes on the same item over and over again within a 30 day period. Their claim, which by the way is 100% a LIE, is that the reporting agencies will have to do each investigation / dispute on the same item multiple times causing the creditor to not be able to respond to all of the bombardment of disputes, or simply get tired of hearing from them, resulting in the item being deleted from the report. Let me tell you why it is a LIE! First of all, the reporting agencies, under the FCRA, can interpret ANY dispute request as frivolous. When this happens, the reporting agencies do not even send the multiple disputes to the creditor / source. Their policy is to dispute an item one (1) time. After one dispute is done the reporting agencies are not mandated by law to do another. Having a “credit repair” company do these types of disputes will definitely ruin your credit. The credit reporting agencies will not ever do another dispute for you on an item by using this method. You are now left with a bad credit report that can only be healed by time. You have to let the seven (7) to ten (10) years expire so the items fall off naturally.
Secondly, when these guys are disputing your accounts they are disputing accurate / negative information. What are the chances that the creditor is not going to be able to respond to that dispute within a 30 day period? The answer is that 90% of the time the creditor does respond to the dispute with 30 days and your accurate / negative information is verified. Even if the negative information on your account is inaccurate, the reporting agencies DO NOT take the account off of the report for this reason. They simply update the negative account so it will read accurately, and they continue to report the negative account. However, now it is an accurate negative account. Many of these companies will tell you that the reporting agencies will have to remove the account by law if it is being report inaccurately. This is simply NOT TRUE. The reporting agencies simply correct the error.
These “credit repair” companies rely on the creditors not responding within the 30 day period to get items off of a credit report. If the creditor does respond, then the “credit repair” company cannot be successful. A small percentage of the time the creditors will not be able to respond within the 30 day period, and therefore, the credit reporting agency will delete the account. They delete it only because the creditor did not respond. It is NOT deleted permanently. Again, the account is only deleted by the reporting agency because the creditor did not respond. So, next month or the month after, when the creditor sends in their updated data tapes to the reporting agencies, as they do each month, the creditor will re-report the account to the reporting agency. The account was never removed from their computer. It was nothing more than an oversight that resulted in the account being deleted previously. Again, accounts can remain in the computers of the creditors for seven (7) years. This is something that these types of “credit repair” companies cannot control. because the account is unverifiable, but instead, it is usually due a logistical reason on behalf of the creditor causing them to not be able to respond in the allotted time.
So, what do we have so far? 90% of the time items are verified because they are accurate and verifiable. The other very small percentage of the time that an item is deleted from a no response dispute results in that item being re-reported at a later date. We have a lot of frivolous disputes being done that have resulted in very little or no improvement in your credit, and in many cases, the credit report is “red flagged” by the reporting agency as a frivolously disputed file.
Items that are usually removed by these types of “credit repair” companies using the above method, disputing items frivolously in the hopes that the creditor does not respond within 30 days, are items that would have usually fallen off of the report on their own very shortly from being seven (7) years old. In some cases the company is now out of business and no one has purchased the accounts, therefore, there is no one existing to respond to the dispute.
Stay away from any “credit repair” company that uses this approach. They cannot get accurate / negative / verifiable information removed permanently by disputing the item frivolously over and over again, in the hopes that the creditor cannot respond with 30 days. This does not work!
Finally! Negative information can be removed permanently from a credit report, but not by using the methods mentioned above. The Barrington Financial Group, Inc. is a mortgage consulting company who specializes in assisting consumers who are trying to purchase a home with these very issues. We have been in business for over 16 years. Our company works one on one with each individual client from start to finish, assisting the client in their mortgage qualification process. We have a proven track record in helping our clients straighten out credit issues and putting them into their dream home.
If you are not already working with The Barrington Financial Group, Inc. and are looking for a company that can legitimately help you with your credit issues, as well as assist you in purchasing a new home, there are several questions you should always ask.
#1 Do you dispute items by hoping the creditors cannot respond in
30 days? If they say yes, DO NOT use them.
#2 How long have you been in business? They should have at least
a five (5) year history.
#3 Are they incorporated? They should be incorporated with a
spotless track record.
#4 Do they have any complaints against them with the Attorney
General of their state, Governors Office of Consumer Affairs,
or the Better Business Bureau. Note: They do not have to be
a member of the BBB. They do need to have a good record,
with no complaints, however.
#5 How many completed files to they have? This will give you
a good idea if they are being honest with you or not. A lot of
completed files in a short period of time is a big red flag
to be a scam.
#6 Can they give you legitimate references?
They should be able to give you at least ten (10).
If they are unwilling to do this, DO NOT use them.
#7 How many major financial institutions can they verify
that they do work for? Or, is most of their work done
for the general consumer? You definitely want a company
that does work for financial institutions.. Major financial
institutions, nor the person working for that institution,
would not put their reputation on the line for any company
that is not doing things legally.
You need to be able to have ALL of these questions answered. If you cannot, then you may not want to use that particular company. The
The best way to find a company that can legitimately help you with your credit issues and purchase of a new home is through a friend or personal acquaintance. Many times these individuals have used the company themselves or have first hand knowledge of someone who has used them. They have usually done all of the due diligence on the company, so you can feel assured that the company is legitimate.
Any company that can give you the answers to ALL of the above questions is a company you would want to use.
We hope this information will help to educate the consumer about “credit repair” scams and why they do not work.
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