Consumers desperate to fix bad credit often call on the services of a credit restoration company to repair their credit reports and improve their credit scores. What most consumers do not realize, however, is that they have the legal right to dispute negative credit report entries on their own without having to pay for the services of a credit repair company to do it for them.
Disputing Errors on a Credit Report
The Fair Credit Reporting Act (FCRA) governs consumer credit reports and reporting practices. Section 611 of this document states that every individual has the right to contest the information being reported within his or her credit file by notifying the credit bureaus of the dispute and giving each credit bureau 30 days to conduct a thorough investigation.
Although FCRA dispute guidelines are only intended to apply to legitimate credit reporting errors, credit restoration companies will dispute every negative item within a credit report. In some cases, this can result in accurate negatives vanishing and an individual’s credit score improving. Accurate information, however, may be reinserted into an individual’s credit report by the creditor (See Reinserted Negatives on a Credit Report).
There is No Secret Formula to Credit Repair
In addition to disputing negative items with the credit bureaus, consumers also have the right to dispute the entries with the creditors that are furnishing the information. A credit restoration company does not have any rights that consumers themselves lack. There is no secret formula for credit repair.
Of course, for individuals who don’t know the first thing about fixing bad credit, a credit repair company may look like a sure bet. Some credit restoration agencies even claim to possess “trade secrets” that allow them to remove negative credit information more efficiently than other companies or consumers themselves. These trade secrets, however, are usually just creatively phrased dispute letters (See 7 Myths About Credit Repair).
Credit Restoration is Expensive
The irony of the credit repair industry is that credit restoration companies often prey on the very people who cannot comfortably afford their services - those with poor credit. These services not only charge a hefty fee up front to set up a consumer account, many charge a monthly fee. Thus, it is in the company’s best interests not to actively work to raise the consumer’s credit scores. Doing so would result in the individual canceling his or her membership and the company would lose the monthly membership fee.
In addition, not all negative items can be removed from a credit file. If the creditor properly documented the debt and account information, the credit bureaus are well within their rights to leave the derogatory debt untouched.
Individuals interested in repairing their credit should understand that the best credit repair method is paying bills responsibly and demonstrate patience. The FCRA sets a time limit for how long derogatory debts can remain within a consumer credit report. The time limit varies, depending on the type of entry, but most negative items will be removed after seven years (See The Federal Reporting Period for Bad Debts). Individuals who are unable to wait that long can attempt to dispute items on their own but should never forget that there is nothing a credit repair company can do for them that they cannot do for themselves.
Candice Edwards - Candice Gillingwater is a credit specialist and consumer advocate currently living in Georgia. Her goal is to educate the public about ...
