Credit Repair 101 - Beware of scams

by William E. Lewis Jr.,

While the economy has been showing some signs of improvement, your good name and reputation is becoming more important within the community. Creditors have tightened their guidelines effectively barring millions of Americans from borrowing money. Even those with high credit scores have experienced closed credit card accounts and equity lines. When an account has not been closed, credit limits have been reduced to the current balance due.

Mortgage lenders, auto finance companies, credit card issuers and banks have all raised the bar. Borrowers with low FICO scores can expect to be denied or to pay significantly higher interest rates than those with excellent histories. Long gone are the days of obtaining credit, goods, benefits, services and/or employment with a 620 score. In more instances than not, a consumer will be denied if they maintain a credit score lower than 740.

The terms credit repair, credit restoration or credit rehabilitation are somewhat synonymous. Those with bad histories cannot afford to ignore the potential benefits of credit repair. In today's economy, a strong FICO score is more important than ever. Approximately 78 percent of credit profiles in the United States contain some sort of error or omission materially impacting credit worthiness. Absent self-help and the "do-it-yourself" approach, a consumer may hire a credit service organization (CSO) in the restoration of their good name and reputation within the community.

Most - but not all - CSOs specialize in the restoration of consumer credit worthiness as well as issues related to identity theft. Assuming that said organization is performing within the law, they utilize laws enacted by Congress to dispute negative, erroneous, obsolete, and/or fraudulent information contained within your consumer credit profile.

Utilizing the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Fair Credit Billing Act, and the Fair and Accurate Credit Transactions Act, a reputable CSO will assist a consumer in the submission of disputes electronically, verbally and in writing to the Equifax, Experian and Trans Union consumer reporting agencies in addition to creditors, collection agencies, third-party record providers and state, federal, local, or private regulatory authorities.

Keep in mind that anything a CSO can do, you can do yourself for little to no cost. With that said, a reputable organization should have the edge as they will possess the education, knowledge and a source proven method that is generally unknown to the average consumer. Unlike most credit repair clinics that submit the same written dispute letters monthly, a reputable CSO will have devised a strategy whereby disputes are submitted electronically, verbally and in writing over a long period of time to the credit reporting agencies, creditors, collectors, and third-party record providers reporting negative, inaccurate, obsolete and/or erroneous information.

A reputable CSO should have a provable track record of results as well as the ability to modify and/or remove erroneous or inaccurate judgments, liens, foreclosures, bankruptcies, short-sales, student loans, inquiries, derogatory tradelines, personal identifiers and other transient data from a consumer's credit report. Although the credit restoration process can take anywhere from 30 days to six months, most individuals should see some results within the first 45 to 60 days.

Credit repair, credit restoration and/or credit rehabilitation is as legal as pleading "not guilty" in a court of law. With that said, one must understand that most CSOs are not law firms and that their employees are not licensed to practice law. As such, even a reputable CSO cannot provide legal advice nor represent a consumer before any court or in any legal proceeding. In the event that legal representation is required, said organization should provide an appropriate attorney referral for consultation.

When self-help or the "do-it-yourself" approach is not feasible and you decide to hire a CSO to restore your credit, be sure to check them out. While the majority of credit repair clinics are scams, a few good ones do exist. Consumers can check out a credit repair clinic through their state Attorney General - www.MyFloridaLegal.com in Florida - or through the Better Business Bureau at www.BBB.org

SOURCE : www2.highlandstoday.com