What is Credit Repair?

Put simply, credit repair in the process of improving your credit score. Your credit score is in many ways the basis of your financial identity. Judging solely from your credit score, lenders, landlords, and employers make decisions about who you are and how you manage your money. Because if this, your credit score largely dictates the house you live in, the car your drive, and possibly even the job you have.

Poor credit scores make life difficult. Credit repair tries to improve your credit score so you can get a mortgage loan with a reasonable interest rate, get approved for desirable credit cards, purchase a new car, or get a better job.

Why Credit Repair? Is It Legal?

The reasons behind working to repair your credit are obvious. Poor credit leads to high interest rates and denial of credit. With poor credit, even of you can get a mortgage loan, you can expect to pay hundreds of dollars in interest every month more than you would with good credit. Over the life of the loan, this can add up to hundreds of thousands of dollars in additional interest payments, payments you may be able to avoid through credit repair.

But is credit repair legal? The answer is most definitely!

It is your right to make sure your credit score gives lenders the right impression about you. The Fair Credit Reporting Act along with a number of other consumer rights laws are in place to protect you from the credit reporting flaws plaguing the system.

Too many people out there believe their credit reports and their credit score are out of their control. When asked about how to improve credit scores, these people always say the same thing, pay your bills and wait 7 years for bad credit to disappear.

This idealistic mentality does not take into account one glaring fact, the information in your credit reports is probably wrong. Recent studies show that almost 80% of all credit reports contain errors. In addition, millions of Americans have misleading information on their credit reports; information that unfairly gives creditors a bad impression of who they are as a consumer.

Since it is likely that your credit reports don't tell the correct story about you, is it really fair to have to wait 7 years for your credit to improve? And what good is that going to do you if more errors end up on your credit reports while you are waiting?

Think of the negative items on your credit reports as criminal accusations for which the penalty is high interest rates and denial of credit. If these negative items are inaccurate or misleading, you are being punished for something you did not do. Even worse, taking the advice to simply wait for seven years is like being falsely accused of a shoplifting and having your lawyer tell you the only thing you can do is go to jail for a few years and try not to steal anything else.

Going to jail for a crime you did not commit is absurd and so is having bad credit because of the errors in your credit reports. Credit repair is your way of pleading not guilty to the negative items in your credit reports.

Why Are There Errors On My Credit Reports?

Credit report errors exist because of the numerous flaws in the credit reporting system. This system includes the credit bureaus that collect, store, and sell your financial information, the creditors who report information to the credit bureaus, people who purchase your information from the credit bureaus, and you the consumer.

The reasons why errors end up on your credit reports are usually benign and basic human error is usually the cause. Information may be typed incorrectly, the details provided to the credit bureaus may have errors, the same item may accidentally be reported more then once, and items may be added to the wrong report.

Mistakes do happen and as long as people are responsible for reporting to the credit bureaus, there will be errors on credit reports. The big problem with this, however, is that once these errors end up on your credit reports, they are likely to stay there. This is the core flaw in the system and it has to do with the motivations of each part of the system.

To start with, the credit bureaus are motivated by profit. They are not official government entities as many people believe. Instead, they are massive, for-profit corporations that make millions of dollars off of selling information about you. Plus, since they own a virtual monopoly over your information, they know they are going to be able to sell it even if it isn't 100% accurate. Fact checking the information in your credit reports is time consuming, expensive, and does not give them more money. The credit bureaus know the credit reports they sell contain errors but there is no incentive for them to fix them.

Secondly, lenders are motivated by the money they can make from you in the form of interest on loans. To them, your credit reports are an indication of how high of interest rates to charge to offset the risk of lending you money. The lower the credit score, the higher the interest payments. While they are interested in the accuracy of your credit reports, they are only interested in making sure your credit score is not higher than it should be. They don't want to give you a favorable interest rate if you do not deserve it. Conversely, if there are errors on your credit reports that make your score lower than it should be, the lenders are happy. They can charge you higher interest rates and get more money out of you even though you are not a high credit risk. Errors on your credit reports often times mean more money for lenders so they have little motivation to make sure your reports are accurate.

Finally, there is you. Your motivation is to be able to get into a nice home and drive a reliable car. You want an accurate credit report so you can get loans with low interest rates, but unfortunately for you, the credit bureaus and many lenders don't care what you want. To them, you are nothing but dollar signs.

Fighting the Credit Reporting System

At this point it is you against them. You want the credit bureaus to clean up any errors on your credit reports. They want you to leave them alone so they can continue to operate their business. In fact, they want nothing to do with you unless you are looking to purchase a copy of your credit report.

Fortunately, the federal government recognizes that the credit bureaus have all of the power and without legislation, you are completely helpless as was the case prior to the Fair Credit Reporting Act. Before the act was passed, the credit bureaus were free to report anything they wanted about you and you were completely powerless to fight back.

Today, you have the right to view a copy of your credit reports. You also have the right to dispute any item on your credit reports you feel is inaccurate, misleading, or unverifiable. In response to your dispute, the credit bureaus are then required to investigate the validity of the item you are disputing and if they are not able to verify that the item should be on your report, they must remove it. By disputing a negative item on your credit report, you are essentially pleading not guilty and forcing the credit bureaus to prove their case.

And Having the Credit Reporting System Fight Back

You know what the old adage says about something sounding too good to be true and stating that credit repair is as easy as mailing a few dispute letters is certainly too good to be true.

Remember that the credit bureaus do not want to repair your credit reports. There is no profit in doing so. Investigating your disputes consumes resources they would rather spend elsewhere and is such a burden that instead of dedicating sufficient resources to credit repair, the credit bureaus would rather devote resources to making credit repair difficult. They spread misinformation about credit repair, implement stall tactics, and take advantage of a small stipulation in the Fair Credit Reporting Act to deny you an investigation altogether.

The credit bureaus can and do refuse to investigate disputes based on a section of the Fair Credit Reporting Act that gives the bureaus the right to deny an investigation on a dispute they deem to be "frivolous or irrelevant". As you can imagine, getting the credit bureaus to do something they don't want to do in the first place when that vague of a loophole exists is a daunting task.

Getting Help with Credit Repair

Fortunately, you don't have to fight the credit bureaus on your own. Credit repair firms such as Lexington Law have helped thousands of clients effectively fight the credit bureaus. By leveraging expert understanding of credit repair law and years of experience dealing with the credit bureaus, Lexington Law has molded itself into a formidable opponent to the behemoth credit bureaus.