Many Consumers Want to Know...Does Credit Repair Work?
Does credit repair work? Yes, it does. Or, more correctly stated, credit repair can work. It depends on many factors regarding the specific account(s) on a consumer credit report. In fact, the process of credit repair is dictated by the Federal Trade Commission in a law called the Fair Credit Reporting Act. The premise of this law is that creditors must verify the information they’ve previously placed on a consumer credit report.
Because this is a federal law, credit repair works for consumers in all 50 states. Therefore a consumer seeking credit repair in Tampa has the same rights as a consumer seeking credit repair in San Diego.
ERA Credit Services is an Independent Agency representing a 501(c)(3) non-profit organization
and does not directly provide credit repair services or accept funds from clients for credit repair services.
To learn the answer to the question, "does credit repair work?", it’s vital to understand 'how' credit repair works.
When a creditor places information on a consumer credit report there’s a chance the information is incorrect. Or, that it will become outdated and incorrect over time as the status of the account changes. There must be a mechanism for the consumer to challenge that information and have it corrected. One of the main purposes of the Fair Credit Reporting Act is to give the consumer a resource and process to follow to have the information corrected.
In this process, the creditor is under obligation by federal law to validate the information they have previously placed on a consumer credit report. If the account listed is erroneous or inaccurate the creditor must correct it. If the account is obsolete the item must be removed by the credit reporting agencies (Experian, Equifax, Transunion). An account is considered obsolete when there has been no activity for a minimum of 7 years. Or, 10 years in the case of bankruptcy filed by the consumer.
Here’s the key to understanding that consumers can potentially have items reported within 7 years removed as well.
The creditor is required to verify what they previously reported upon request by the credit bureau within 30 days. If they do not respond the federal law requires that the credit bureau remove that account from the credit report. That is regardless of the age or status of that account.
What are some scenarios where the creditor cannot or does not verify the information previously reported?
- The creditor no longer is in business
- The creditor has sold the account to a collection agency. And that collection agency does not have the complete or accurate information on the account
- The account is old (even if not yet 7 years old) and the creditor cannot locate the information or chooses not to
- The outstanding balance has since been paid. And, therefore the creditor has no incentive to respond to the inquiry from the credit reporting agency
Will all negative items be removed?
Does this mean that all derogatory or negative items will be deleted from a consumer credit report through the credit repair process? Certainly not. Here’s what will be:
1- Erroneous accounts
2- Obsolete accounts
3- Those accounts that the creditor does not verify as accurate when contacted by the credit reporting agency when that item is challenged
Credit repair is not a panacea or fix for all past credit problems of a consumer. But by going through this process it can clean up a consumer's report and increase their score. It may give them enough of a credit score increase to qualify for a purchase and simply look more creditworthy to a future creditor.
Does Credit Repair Work? Consumers considering this process should consult a professional company that has a successful track record. They should also seek a company that will provide education. Such as making specific recommendations on what they can do to increase their score. And keep that score as high as possible in the future.
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