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Credit Repair ServicesAfter the Fair Credit Reporting Act was passed into law, credit counselors started setting up offices, claiming they could clear up credit records. The system they used, and continue to use, does work. It can clear up damaging negative items listed on credit reports years before they would have been eliminated by Federal time-limit laws. Unfortunately, this is also an area where scams and con artists have settled. If you do not have the time to follow the credit repair process on your own, a credit repair service may be a viable option for you. Look for a credit repair service where you pay for results and avoid large upfront fees. Also beware a company that recommends you do anything that sounds illegal, such as creating a new identity. Beware of credit counselors that advocate getting a new social security number or telling you it's acceptable to get a federal employee identification number (FEIN) and start using that in place of your social security number. While you will start to build a new credit profile, this is an illegal scheme. Tampering with your social security number is a federal offense. If you are going to use an FEIN, be sure that it's in conjunction with a legitimate business. Most credit repair counselors will send a letter on your behalf to any credit bureaus holding your file denying all of the inaccurate negative entries in your credit report. You would be asked to indicate in your letter that the negative entries are not correct, that it is not your account, and that you have absolutely no recollection of any late payments, etc. Basically they take the same steps you would were you contesting the information yourself. You can achieve the very same results, and save yourself a few hundred dollars or more in the process! Like all decisions, it's one that weighs the time and money involved. More advanced credit counselors will attempt to verify and validate with the source creditor. While removing items by disputing with the credit bureaus may produce some results, you can expect as much as 10% of the items to return since the source creditor still has the items in their file. Only by challenging the source can you be certain of permanent results. Credit counselors may also go to bat for you and negotiate with the creditors for payoffs and removals of bad information. This alone may be worth the price of their services. They have, in many cases, developed relationships with the creditors that may save you a lot of time and aggravation. If your credit repair counselors actually set up repayment plans for you, make sure it's part of the written agreement that the lender agrees to report your payments as being on time and current under the plan. A settlement should also include, in writing, that all negative information is removed from the account. Monitor your credit report throughout the process to make sure the lender is keeping up their end of the bargain. Generally, creditors will only maintain credit-account information for two years. Credit counselors know that if you challenge an account that is more than two years old, chances are the records won't be available for verification. When you receive your new updated credit report, you will note that many, if not all, of the negative items have been removed. After a few months have passed, a credit counselor will have you repeat the process by once again challenging the credit bureau's information with denials. This process is usually repeated until all negative items are removed. When a creditor receives a second or third inquiry in a short time span, he may think it is just a follow-up of one received earlier. That, however, is not the case, and if he doesn't respond to each one, your report has one more item removed. This procedure can place you years ahead in re-establishing your credit. |
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