Credit Repair And The Law

Let’s face it, credit repair doesn’t have the best reputation within the financial services industry but that doesn’t mean that the services are not needed by any means or illegal.  The truth is 1 in every 5 credit reports have an error or fraudulent account listed on it, and according to a report made by the FTC approximately 651,000 complaints of identity theft were made by American’s in 2019 alone.

The need for credit repair is there, and it’ll continue to be there as a result of security breaches, cyber attacks, and continued fraud and theft attempts Nationwide for many years to come further it’s a Federally protected right, backed by not just one but two laws on the books, and is legal across all 50 states.

The Fair Credit Reporting Act creates the foundation across all 50 states and serves as a guide to consumers and credit repair companies in how to successfully repair a consumer’s credit report and remove incorrect, fraudulent, and negative information off of your credit reports.

The History Behind The Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act otherwise known as the FCRA was brought into law in 1970 alongside the Fair Debt Collection Practices Act (FDCPA) the Fair Credit Reporting act was signed into law with the intention of protecting consumers from willful and or negligent inclusion of inaccurate, fraudulent, and out of date information across their consumer credit reports.

What Is The FCRA?

Today, the Fair Credit Reporting Act (FCRA) in collaboration with the Fair Debt Collection Practices Act ensures that fairness, accuracy, and consumer privacy and protection are at the forefront of what is shared across one’s credit reports given the amount of decision making that is based off of those documents in today’s society that originally started in the 1960’s but that can now include not just credit reporting but, new credit inquiries, new utility company inquiries, and accounts, rental information, and much more.

What Are Your Consumer Rights Under the FCRA:

Under the Fair Credit Reporting Act, A Consumer Is Guaranteed several rights as set forth below creating a protection measure from erroneous reports and information being shared that would end up damaging a consumer’s credit reports, and credit scores while potentially creating a trickle effect into other accounts creating account closures, loan defaults, and potential risk in sending a consumer into bankruptcy due to higher fees, penalties and higher interest rates along with a potential threat risk of judgments, liens, and garnishments being awarded to incorrect reporters, collection agencies, and various other credit reporters inaccurately reporting information to gain additional money from consumers, unfairly.

The laws and rights that protect consumers are as follows:

  1. The FCRA limits who can view your credit report.  

Your credit reports contain sensitive information and a lot of data about you, and as a result of this not just anyone should be allowed to access that information.  Under the Fair Credit Reporting Act of 1970 your credit report can only be reviewed for the following things:

  • Loan & Credit Applications (Including Credit Consulting and Counseling Sessions As Well As Utility Bill Set Ups and Apartment Rental Or Rental Home Applications)
  • Insurance Purposes
  • Court Cases
    Employment
  • Bank Closures
  1. In most decision making cases, authorization to review your credit reports in WRITING must be granted by you as the consumer.

Under the FCRA you need to be given a form to sign to provide your consent to access your credit reports.  Unless that form is signed even by electronic communication methods, it is null and void until it is signed, and no one can legally pull your credit reports without that signed documentation.

  1. The FCRA Limits What Can Be Shared In Your Credit Reports.

Did you file for bankruptcy 20 years ago, and worked really hard to rebuild your credit from scratch over the last 20 years?  That bankruptcy shouldn’t be appearing on your credit reports.  Under the FCRA, most items have a timeframe of when it has to fall off your credit reports (if the item is there in truthfulness).  

The Timelines For How Long An Item Can Stay On Your Credit Report Are As Follows:

Delinquent Student Loans:  7 Years From The Original Delinquency Date.

Bankruptcies:  Chapter 7 – 7 Years, and Chapter 13 – 10 years.

Closed Accounts:  7 Years

Late Payments:  7 Years From The Original Delinquency or Missed Payment Date.

Collection Accounts:  7 Years From The Original Delinquency Date (If It Remains Unpaid)

Collection Accounts Paid:  Up To 10 Years However, It Will Have Less Of A Negative Impact On Your Credit Score Than If It Were An Unpaid Collection Account.

Charged Off Accounts:  7 Years From The Original Missed Payment Date.

Repos, Foreclosures, Short Sales, Deed In Lieu Accounts:  7 Years From The Date Of The First Missed Payment.

Hard Inquiries: 2 Years From The Date The Inquiry Was Made.

  1. The FCRA Guarantees Your Right To Accuracy.

Because credit reports have been known to have wide amounts of errors on them, the FCRA protects the rights of consumers, and equips them with a law to protect them from allowing inaccurate information to remain on one’s credit report with no way to correct, remove, or replace the incorrect information.

The Foundation Of The Credit Repair Process Is Formed Here with the right of a consumer to file a validation and verification request with the credit bureaus on the accuracy of the item(s) in question that must be validated under the FCRA over the course of following 30 days otherwise, under the Fair Credit Reporting Act it MUST be removed from a consumer’s credit report(s).

  1. Consumers Have The Right To Pull Their Credit Reports Under The Fair Credit Reporting Act.

Imagine starting the process of purchasing a new home and learning that you’ve got 6 accounts with credit card companies that you didn’t open, a dish network, and a utility company collection account listed on a house you’ve never even lived in, and a car in your name that is in default all listed on your credit report going back to again an address on your credit report that you’ve never lived at.  Think it can’t happen?  It does.  Not all the time but, it does, and what’s worse is that there was once a time in our nation’s history when there was nothing that a consumer could do about it.  

Under the Fair Credit Reporting Act, consumers have the right to pull their credit reports for free from each bureau at least once a year however, it can be more if a consumer falls under a protected category as described here or they can elect to sign up for credit monitoring from a 3rd party provider and keep up with their credit reports monthly for a monthly fee.

  1. The FCRA Guarantees Your Right To Protect Your Credit With Fraud Alerts.

Under the FCRA you as a consumer are given the right to place fraud alerts on your consumer credit reports.  These fraud alerts act as a shield to any new applications in your name and with your identifying information being used to take credit out in your name without your consent.  When an application is made, verification that the application came from that particular consumer is done, and is usually done by phone with a series of questions like knowing secret answer passwords (your mother’s maiden name, the city and state of birth etc)…it can be removed at any point in time by contacting the 3 credit bureaus but, has helped millions of consumers prevent fraud since the policy’s inception in 1970.

A List Of The Types Of Rights That The Fair Credit Reporting Act Provides You With:

  • When you elect to repair your credit, the Fair Credit Reporting Act Serves As Your Protection and Defense Against The Following:
  • Credit Reporting Agencies, and The 3 Credit Bureaus MUST accept and investigate verification requests and disputes completely free of charge from consumers.
  • Credit Reporting Agencies, and The 3 Credit Bureaus By Law Have To Investigate Disputes and Verification Requests Within 30 Days (Due To Pandemic This Timeline Has Been Extended To Up To 45 Days).  If A Follow Up Procedure Needs To Take Place An Additional 15 Days Is Granted For This.
  • The Credit Bureaus must contact the original provider of credit account information to verify the information that is in dispute within 5 business days of receipt of the dispute.
  • If a disputed or unverified item can not be verified it MUST be removed from the consumer credit report issued by the bureau initiating the request for verification and validation.
  • Once an investigation into your account is conducted and any disputed information is removed, the credit reporting agency needs to provide you with a free copy of your credit report reflecting the updated information.
  • If an item that was disputed can be verified, the dispute gets rejected however, the consumer has the right to include a statement of up to 100 words in their credit report either further disputing the information or explaining the situation more in depth.  While lenders will take this into consideration in most cases, the information that has not been updated due to verification / validation will still impact your credit scores.

Whether you elect to go at the credit repair process yourself or you choose to hire a credit repair company, the process is pretty straight forward and simple.  By hiring a credit repair company to take on the process of repairing your credit you are doing so more-so out of convenience however, the in either case the process is pretty straightforward because you and your consumer credit file are protected under the Fair Credit Reporting Act (FCRA).

For a customized credit repair strategy, please feel free to reach out to us and book a complimentary 30 minute consultation with a member of our team.

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