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Credit Repair and the Law

Sep 4, 2008
The Truth About Credit

Credit reporting errors can be very frustrating. Wouldn't it be nice if credit reports were completely accurate? Well, it is not going to happen. Here is a bit of shocking information from a credit repair legal expert that you should read.

Credit Report Errors are here to Stay

The credit bureaus will never produce accurate credit reports. Does this shock you? You might be even more surprised to know that congress has acknowledged this fact and created legislation that virtually guarantees a continuation of credit reporting errors and the necessity for vigilant credit repair. Is that crazy? What am I talking about? Alas, it is true. This legislation is called the Fair Credit Reporting Act (FCRA). Now you are really surprised!

The FCRA Problem

You probably thought of the FCRA as the wonderful federal law that outlines credit repair procedures and allows you to dispute errors on your report. Or maybe you thought of it as the law that imposes responsibility and accountability on the credit bureaus, and, oh, where would we be without it? Okay, there is no doubt that the FCRA limits the potentially catastrophic damage that the credit bureaus would impose on an unwary public, but it also tolerates major errors, and by doing so guarantees that they will exist for the foreseeable future.

A Big Social Cost

The law is a wonderful thing. It protects the innocent and maintains a semblance of social order. But the scales of justice tip two ways, often insulating the offender in a cozy blanket of due process. In the case of the FCRA the law is designed to impose a reasonable degree of responsibility on the subject industry, without overburdening them with excessive and costly guidelines. And this last point turns out to be the problem, at least as far as the one hundred million consumers who are paying premium interest rates because of errors on their credit reports.

The Credit Repair Balancing Act

So what's up with this? I understand that lawmakers face tough decisions. The credit bureaus are massive business entities, and guess what? We can't exist without them. Well, maybe you could, but the business world is completely dependent, totally addicted to credit data. The credit bureaus each manage credit files on two hundred million Americans along with billions of data updates each day. Errors are inevitable. You can't just tell them to adopt a zero-tolerance policy towards errors. It would cost too much and potentially make it impossible for the credit bureaus to stay in business.

What about Me?

So what about you and the errors on your reports? Congress is not unsympathetic, and wants you to facilitate your credit repair efforts and fix the mistakes that might keep you from getting a loan, or a job, or insurance. Oh, yeah. So they mandated the creation of Annualcreditreport.com, the website where you may get your credit reports for free once each twelve months. Have you checked your report lately?

The Plot Thickens

And so the plot thickens. It turns out that those darn credit reports, for most consumers, might as well be written in Greek. And even if you can make sense out of your report do you really know what you are looking at? Credit repair success requires some reasonable working knowledge of the FCRA and access to FTC Staff Opinion Letters that interpret the law in practical application. You would also be well advised to bone up on the Fair Debt Collection Practices Act. And, oh yeah, make sure you know your state Statutes of Limitation. Credit repair is tricky. Phew.

Credit Repair is here to Stay

So, who is looking out for you? You are that's who. You can't count on Big Brother. He may be watching, but he's not going to make sure that your credit report is okay. It's time to step up to the plate. If you can't manage the job on your own there are a growing number of excellent credit repair companies that can handle the job for a smallish fee. Credit repair is a growth industry so you will have to do a bit of homework to identify a truly professional operation.

Professional Credit Repair

If you are going to hire a credit repair service, hire a good one. There are a few things to look out for. It is not legal for credit repair companies to charge a lump sum in advance. A legitimate fee structure would include a setup fee followed by a monthly fee charged at the end of each month of service. You should also check their record with the Better Business Bureau. And personally, I suggest that you pick up the phone and interview two or three before deciding.

Copyright 2008 Ian Webber. All Content. All Rights Reserved.
About the Author
Ian Webber is a financial consultant and expert in consumer law and credit repair. Ian is a graduate of the London School of Economics and The University of Chicago where he earned his LLM, Master of Laws. Ian consults with one of the leading online credit repair services and is currently based in Florida.
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