The FTC did not set out to do you wrong. Without a doubt, they are well intentioned and have your well being at heart. Unfortunately, the heavy-handed FTC campaign against the bad apples in the credit repair business has tainted the rest of the barrel and has unintentionally imposed a terrible cost on consumers.
The Credit Repair Conundrum
Credit repair is in a similar class with taxes and healthcare. All of these are of great importance and are somewhat shrouded in mystery. The more important an issue is, the more likely it is to evoke fear. There are few things as important to your financial wellbeing as your credit, and few things as complex. Millions of people ought to be seeking credit repair help, but when they encounter the FTC warnings at the outset of their efforts it is often enough to stop them in their tracks. The social cost of this delusion is enormous.
Credit Repair Good Guys
It is true that there are bad guys in the credit repair business. The last time I looked this was true of every industry without exception. As of the time of this writing the bad guys in the credit repair business are fewer than ever, and a significant number of credit repair good guys have emerged. These white knight companies deliver essential and valuable services in a professional manner to the great benefit of their customers.
The Prevalence of Errors
There are several reasons credit repair is an essential service in today’s world. The product produced by the credit bureaus is enormously influential. You might not think of credit reports as products, but that is exactly what they are, no different really from automobiles or computers. They are assembled, passed through a quality control process, and sold. Unfortunately, like many other products there are flaws.
The Crazy Cost of Errors
The flaws in the credit reporting system can be as dangerous as a manufacturing flaw in an automobile. Your life can depend on the quality of the product you buy and your credit report is no exception. About seventy percent of all credit reports contain errors. Credit report errors can lead to higher interest rates and loan denial; these are life-changing consequences.
Credit Repair Reality
Congress spent years debating the fearful impact of the credit bureaus on our lives. The legislation they hammered out is called the Fair Credit Reporting Act (FCRA). In a way this is a consumer protection law, but it is equally intended to protect the three national credit reporting agencies we refer to as the credit bureaus. It is true that congress was heavily lobbied by the credit reporting industry during the creation of the FCRA, but I can’t cry conspiracy. There are economic realities involved with running any big business and these must be respected.
Look Out For Yourself
Congress had little choice but to attempt to balance the need for credit-reporting accuracy with the economic restrains of quality control. The end result is simple. Credit reports are as accurate as they are going to get, and consumers’ better look out for themselves. The creation of AnnualCreditReport.com, the site where you can get your credit reports once a year for free, is a stipulation of the FCRA and an attempt by congress to provide us with an opportunity to manage our own credit repair efforts.
Overcoming Inertia
You just need to get off your butt. Inertia is natural when we are faced with any confusing task, but like jumping into the water it’s not so bad once you get into it. Get your credit reports. Start your credit repair project. There are numerous ways to do this. Not withstanding the deceptive advertising of dozens of websites that offer so-called free credit reports, AnnualCreditReport.com is the only site you can get your reports for free.
On the Other Hand
This is not to say that it is the best site to get your reports for free. On the contrary, in spite of my approval of the creation of the site, it’s really pretty difficult to maneuver. Personally, I’d spend a few bucks and get a simple tri-merged report. If you look carefully through the TrueCredit.com site (A TransUnion site) you can get a great tri-merged report without joining their monthly program, for $14.95.
Hire a Credit Repair Pro
Many people find the prospect of digging into the credit repair project just too much to handle. If you are busy and have enough going on in your life without taking the time to figure all of this out, just get on line and find one of the credit repair good guys. There is plenty of credit repair help available if you need it. Either way, it’s your credit, so please take care of it!
Jim Kemish, a nationally recognized credit repair and restoration expert, is the president and founder of Sky Blue Credit, a leading credit repair service since 1989. Jim is also the president of Power Mortgage, a Florida mortgage company based in Delray Beach, Florida.
You have decided to repair your credit. You need to make sure that all of your payments are made on time from now on. Make sure your finances are organized and that there is enough room in your budget for the occasional unexpected expense. Credit repair requires effort and you don’t want to slip backwards. Credit repair can transform your life; make the right effort and you will be richly rewarded.
Review Your Credit Reports
Get copies of all three of your credit reports. You can get them online at AnnualCreditReport.com for free one time each 12 months. This website is government mandated and is the only place where you can get your reports for free. All of the other websites that advertise free credit reports require you to join a monthly service; there is value in these monthly services, but make sure you know what you are buying. Once you have your reports it’s time to start your credit repair project.
Correct Your Account Limits
Credit repair can be daunting. I suggest you take one manageable step at a time. Begin by proofreading the credit limits on your revolving accounts. A significant part of your credit scores are based on the ratio of your current revolving balances to your credit limits. Many credit card issuers underreport these limits and inadvertently harm your credit scores. Put your credit repair plan into action. If you discover any underreported limits communicate the issue to the creditor and provide a copy of a credit card statement to the credit bureaus.
Eliminate Extraneous Accounts
Examine your reports for extraneous accounts. These can include closed and paid accounts that are reporting as open with balances. You should also look for duplicate accounts. Take your time. Credit repair requires a little patience. A duplicate account with no derogatory information may blend into the background, but can have a negative impact on your credit scores. Duplicate accounts are common occurrences and can be easily rectified with a bit of credit repair. The credit bureaus rather than the creditors most often cause these errors, so a letter to the offending bureau ought to do the trick.
Challenge Collections
The collection industry may be the largest single contributor to credit reporting errors and well worth your credit repair attention. The FTC has made it clear in their elucidation of the Fair Credit Reporting Act that when a collector sells debt to another collector or returns it to the original creditor they should withdraw their reporting of the item. Unfortunately, there is no incentive for compliance and so these erroneous collection accounts continue to report, often for years. Generally speaking, you would be well advised to challenge collections as part of your credit repair project; an easy credit repair task.
Use Debt Validation
If you get a collection letter in the mail open it right away and prepare to respond. For a thirty-day period following receipt of a collection letter you are in the legal drivers seat. Don’t miss this credit repair opportunity. If a stranger knocked on your door and asked for money would you hand it over? I hope not. Don’t give a penny to a collector without validating the debt. You have the right to demand proof from a collector that they have the legal right to collect, and an objective accounting of the amount claimed due; do this within thirty days, and do it in writing.
Know Your Statutes of Limitation
Debts are not collectable forever. If you are embarking on a credit repair effort this is one of the truly important facts to know. Statues of limitation vary based on state and debt type. This information can easily be found on the Internet. Once the statute of limitation has expired a collector can no longer sue you for the debt, and hence cannot get a judgment. Read this credit repair fact carefully. If a debt is beyond the statute of limitation a collector has absolutely no way to enforce collection. This gives you two wonderful credit repair options. You can send them a cease communication letter and you will never hear from them again, or you can contact them to negotiate payment. Once they know you understand your rights they should be happy to settle.
Save for the Future
With all of the effort you are putting into your credit repair project you will want to insure that nothing comes along to send you back to square one. The best credit repair insurance in the world is a healthy saving account. If unexpected expenses arise, and they will, you will not bust your budget if you have some money set aside. Saving also offers some amazing fringe benefits that transcend the obvious, like self-confidence and peace of mind, which can’t be measured, but are definitely priceless. Good luck!
Jim Kemish, a nationally recognized credit repair and restoration expert, is the president and founder of Sky Blue Credit, a leading credit repair service since 1989. Jim is also the president of Power Mortgage, a Florida mortgage company based in Delray Beach, Florida.
Credit repair is a discovery process. The vast majority of consumers in the United States are intimidated by the thought of credit repair. The credit bureaus are viewed in the same light as the Internal Revenue Service; a temperamental and potentially ruthless big brother. Oddly enough, this perception could not be farther from the truth. It turns out that the credit bureaus are quite tame and even reasonable, if you know how to manage them.
Protecting the Myth
Like the Wizard of Oz, the credit bureaus live happily behind the curtain of illusion, benefiting from the aura of power. Let’s dispel the myth a bit to spark your credit repair efforts. The credit bureaus are not government entities, nor do they have any government blessing. They are big business, and exist to make money. And they do a great job of it. They are well managed, well focused, and extremely profitable. And in spite of the fact that they have become indispensible intermediaries and guardians of your precious credit score, any communication from you is an unwanted burden on their bottom-line.
Credit Repair and the Truth
So, what went wrong? If the credit bureaus are doing such a great job of running their operations why are there so many errors in consumer credit files? Why is credit repair even needed? There is no contradiction here. Profitability and competence in no way guarantee an accurate product. In fact, by moderating the effort that goes into quality control the credit bureaus demonstrate their business savvy and bolster their bottom line. Does this seem outrageous? After all, your financial life depends on your credit scores. Shouldn’t the credit bureaus be held to the highest level of accuracy when it comes to such important data? Yes and no.
Legislation Cuts Both Ways
Because of the importance of the product they offer, the credit bureaus have been on the business end of countless lawsuits. In fact, a day does not go by when a non-compliance lawsuit is not filed against one of the three major credit bureaus. The importance of credit repair and the groundswell of consumer concern have not escaped the notice of federal lawmakers. The law that governs the credit reporting industry and provides legal leverage used by professional credit repair services is called the Fair Credit Reporting Act (FCRA). There is much in the way of consumer protection built into the FCRA, but there is just as much protection for the credit bureaus.
Credit Repair to the Rescue
The law simply demands of the credit bureaus that reasonable steps be taken to maintain quality. And here is the essential point for all of those interested in credit repair to be aware of; reasonable steps may be determined by the credit bureaus based on the costs associated with implementation. In other words, if it costs too much to fix, it’s going to stay broken. But, not to worry, you are not without a remedy. Credit repair to the rescue.
Credit Repair and the Bureaucracy
As frustrating as it may be to discover that there such a margin of error allowed in an industry that has so much power over your life, there are ways you can make sure that your credit report shines. All the credit repair tools you need are built into the same tome of law, the FCRA. Many people think of the FCRA as the consumer protection law that was designed to force the credit bureaus to provide more accurate data. It’s not so.
Looking More Closely
A close reading will reveal the fact that the overriding focus of the consumer protection built into the FCRA provides consumers with basic legal rights to rectify credit reporting errors. This is a radical difference from forcing the bureaus to be accurate. The true message of the FCRA is, look out for you, because no one else will.
How Bad is it?
If the FCRA puts so much of the burden of accuracy on the consumer, it means, by inference, that in the absence of consumer participation credit reports are likely contain errors and require credit repair. And that is exactly what has occurred. Fully seventy-five percent of consumer credit reports contain errors. Fifty percent contain errors significant enough to cause those afflicted to pay premium interest rates and even get denied for loan requests.
The Law is Your Sword
Credit repair, as a result, is as an essential process in your life as a regular physical examination or tuning up your car. Credit repair is far more than a credit rejuvenation for those with past credit issues, it is a necessity for everyone. If you don’t have the time to manage the credit repair process on your own, hire a professional. It’s important, it’s your credit, take care of it. Good luck!
Jim Kemish, a nationally recognized credit repair and restoration expert, is the president and founder of Sky Blue Credit, a leading credit repair service since 1989. Jim is also the president of Power Mortgage, a Florida mortgage company based in Delray Beach, Florida.
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Posted on March 10th, 2010 by admin
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