Credit Repair Organizations: Beware!
Companies who promise to fix
your credit for money are called Credit Repair Organizations
("CROs") and are chiefly governed by the Fair Credit Reporting Act
(FCRA - 15 U.S.C. § 1681) and the Credit Repair Organizations Act
(15 U.S.C. § 1679), as well as a variety of other state and
federal laws and regulations.
Theoretically, anyone can
provide a service which assists consumers in exercising their
rights to correct inaccurate credit information on their
consumer credit reports, so long as they comply to the letter
with every single provision of every single state and federal law
which regulates credit repair. And that's very hard to do.
Affordable, meaningful credit
repair from a CRO is highly improbable. It's a little like
saying, "My kid brother says he is going to fly a rocket to the
moon." In truth there is the possibility that someday he will
become an astronaut, train for a mission, get selected, and walk
on the moon. But it is highly improbable.
Frankly, most credit repair
organizations are rip-offs and scams. They are a waste of
money and a waste of time. Oftentimes, these organizations are set
up as 501(c)(3) charities which are not covered by most laws
governing credit repair. There is nothing that a Credit Repair
Organization can legally do that a consumer can't do themselves,
just as easily, and for free.
The truth of the matter is
that credit repair can only best be done by a consumer
challenging inaccurate information in writing, waiting to see if
it is remedied by the consumer reporting agencies (Experian,
TransUnion, CSC/Equifax), then adding a written dispute to the
credit report and then bringing suit if the information is not
fixed.
The majority of people,
though, want to remove accurate negative information from their
consumer reports. That's not going to happen, at least not
legally, anyway. Accurate negative information, will generally
remain on a consumer's credit report for 7 years, 10 years for
bankruptcies and judgments. That's the law.
Depending on how you see it,
negative information is as useful to creditors as it is
detrimental to consumers. The best way to repair credit is to
build it over time, handle it responsibly, and work hard to keep
it in good shape. CLick here to learn more about how you can
challenge inaccurate information.
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