Easy Credit Report Repair

Consumers do not need professional assistance to repair their credit reports, despite what some companies may claim. Although these companies promise to eliminate every negative item from a credit report, or create new credit identities for their customers, the Federal Trade Commission (FTC) explains that there are only a few legal repair strategies. The legitimate methods do not cost anything, and are easy enough for any person to use.

Definition

• Credit repair means improving a consumer's credit reports from the Equifax, TransUnion and Experian credit bureaus, when that consumer has a history of delinquent payments, charge-offs, wage garnishments, repossessions or past bankruptcy filings. Each of these bad entries brings down the consumer's credit score, making it harder for him to get credit or obtain loans at reasonable interest rates. Credit repair restores the consumer's ability to open new accounts at favorable terms.

Process

• The FTC recommends that consumers request the free annual credit reports from Annualcreditreport.com and review them for mistakes. The Fair Credit Reporting Act lets people dispute even the smallest errors on a credit report, as long as the disputes are not frivolous. Each credit bureau provides online dispute forms, and is supposed to investigate complaints, correct errors and remove any items that creditors do not verify.

Time Frame

• Credit report repair usually takes a little more than a month, because the credit bureaus have 30 days to investigate disputes and make changes. The bureaus will notify consumers of the dispute resolution once they finish these investigations. They will also provide a fresh credit report that reflects the repair work.

Considerations

• There are other ways to repair credit reports, but they take more time and require good financial management practices. FICO, the biggest credit score company, explains that 35 percent of a consumer's score derives from her account payment history. People with bad credit can improve it by catching up on delinquent accounts and not skipping or delaying any more payments, according to FICO. Paying off debt also raises credit scores.

Warning

• The FTC warns consumers to beware of fraudulent "credit repair" firms that offer to wipe out every negative credit report entry, despite the fact that the credit bureaus can legally ignore frivolous disputes. Sometimes, these businesses offer to create a new credit history by helping their customers get Employer Identification Numbers to replace their Social Security numbers. The FTC states that this is illegal, and can result in mail or wire fraud charges.