What is Legal Credit Repair?

Posted by John Wells on 11:00 pm. Filed under Credit Tips, Photo Gallery Category. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

Most people are confused by credit repair.  They have heard things like “There is no such thing as legal credit repair” and made the mistake of believing that this is true.  While there are certainly firms that attempt to engage clients in illegal credit restoration tatics, there are certainly ways that you can improve your credit score that are completely legal.

Understanding Your Rights

credit repairUnder the Fair Credit Reporting Act, you have the legal right to file a dispute on any account that you find questionable.  It is up to you to decide what questionable means.  You may have heard that there is no legal way that you can get accurate information removed from your credit report.  This is true to a point.  There is no legal way that anyone can guarantee that they can remove accurate information from your credit file.  But, you may work the system put in place by the Fair Credit Reporting Act and you may get lucky and get accurate items removed.  How?  The credit bureaus notify your creditors when you file a dispute.  Once this happens, the creditors have just 30 days in which to respond.  If they are backed up and fail to respond then the item must be removed from your credit file.  Now, thanks to computers, this strategy is not as effective as it once was.  But, that doesn’t mean you shouldn’t try it.  Also, you may have heard that it is common for things to reappear at a later date.  That is true.  But, if the credit bureaus add something that was removed by dispute without notifying you, you are entitled to sue them in small claims court for $1,000.

Things to Avoid

Since we are discussing legal credit repair, we should mention a few thing that you want to avoid.  Under FICO 08, the only people who can add you to an account as an authorized user are a parent or spouse.  Paying a stranger to add you to their account is no longer a viable credit repair strategy.

Also, if a company claims that they can get you a new credit file, RUN!  This strategy, called file segregation, is highly illegal.  Worse, you, not the company that you work with, are the one on the hook.  Essentially, they have you file for an EIN under false pretenses.  They then use this to help you create a new credit file.  When you make an application, you are instructed to use the EIN rather than your social security number.  If this is discovered you could go to jail and they could walk free.


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