How Does Credit Repair
Work?

Credit repair is a method of credit rebuilding for people with a low credit score or past credit issues. Past delinquencies, missed payments, charge-offs, bankruptcies, foreclosures, and even an error on your credit report can affect your creditworthiness. Good credit can be helpful in getting loans, a job, or an apartment and can affect an interest rate or insurance premium. Credit repair is just one method of improving your credit, but here’s a look at what it is, how it can help, and what a credit repair company can and can’t do to help improve your standing with the credit bureaus.

What Does Credit Repair Mean?

A paid service provided by a credit services organization, credit repair is a process in which the service provider tries to eliminate negative information from your credit report. Credit repair is legal per federal law and is considered a crime only in Georgia, where it is a misdemeanor. The information companies promise to remove is most often accurate.

While some companies claim to remove inaccurate information, their main objective is to remove negative details sooner than they normally would. They can also work to modify information so it looks more favorable. Consumers have multiple options when it comes to communicating with a credit repair company; most firms will work via phone, mail, or the internet.

What Do Credit Repair Companies Do?

Credit repair companies can work with you on several different levels. They can:

• Manage Disputes: Familiar with the dispute processes of creditors and credit bureaus, the firm can manage the process and target affected accounts.
• Identify Errors: Credit reports usually have accurate information, but errors do occur. If suspicious activity is found, the repair company can help overcome problems such as identity theft.
• Find Opportunities: The process should involve a close examination of your credit report, which can help look for ways to improve your credit score.
• Research Statutes of Limitations: Lenders and creditors may be limited in the time they have to collect debts, which restrict their ability to legally impose collections activities on you.
• Develop a Credit Management Plan: Suggestions based on experience and your personal credit situation can help take steps to improve your scores over time.

A process known as jamming may also be used. The company will repeatedly send letters that dispute negative information on your report to credit bureaus and other entities. In doing so, the idea is to make it seem the lender, bureau, or debt collector has failed to process the dispute within the required amount of time. The Fair Credit Reporting Act (FCRA) requires disputes to be processed within 30 days and for accounts to be deleted if an organization fails to do so.

What Are Credit Repair Companies Not Allowed to Do?

Certain practices are prohibited by the Credit Repair Organizations Act (CROA). It forbids companies in the credit repair industry from accepting pre-payment, such as a lump-sum payment for a subscription, or charge for services not fully rendered. Companies also cannot make promises that guarantee removal of any type of information. Deceptive representations, such as money back guarantees without a list of conditions, are prohibited too.

In addition, credit repair companies cannot encourage customers to report false information or change their personal details to deceive credit bureaus. Companies must inform customers they can dispute their own credit information for free. The CROA also requires consumers to be informed of their right to sue a credit repair company if they violate the law, and that credit bureaus, while responsible for maintaining accurate information, can make mistakes.

Does Credit Repair Work?

Despite some claims, there are no statistics that prove how effective credit repair services are, or that reveal an average impact on credit scores. There is no average pricing information either. If there is valid negative information on your credit report, it will be removed in seven to 10 years, and you can easily dispute details with lenders, creditors, and credit bureaus. You can check your own credit reports for accuracy at no cost, but a reputable credit repair company can offer a range of benefits.

American Credit: Effective Credit Repair

Not all disputes go smoothly. American Credit specializes in the dispute letter process and a pre-litigation process without the fees charged by a consumer credit law attorney. We have helped thousands of clients improve their credit and can make credit repair work for you. For a free credit repair consultation, call 855-956-1582 or reach out to us online.