Credit Repair Organizations

Ever tempted to contact one of those places that say they can fix your credit report? Here's what they can and cannot do:

No one can legally remove accurate and timely negative information from a credit report. But the law does allow you to request a reinvestigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act:

• You are entitled to a free copy of your credit report if you've been denied credit, insurance or employment within the last 60 days. If your application for credit, insurance, or employment is denied because of information supplied by a credit bureau, the company you applied to must provide you with that credit bureau's name, address, and telephone number.

• You can dispute mistakes or outdated items for free. Ask the credit-reporting agency for a dispute form or submit your dispute in writing, along with any supporting documentation. Do not send them original documents.

Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the promised services.

Clearly identify each item in your report that you dispute, explain why you dispute the information, and request a reinvestigation. If the new investigation reveals an error, you may ask that a corrected version of the report be sent to anyone who received your report within the past six months. Job applicants can have corrected reports sent to anyone who received a report for employment purposes during the past two years.

When the reinvestigation is complete, the credit bureau must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the credit bureau cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the credit bureau gives you a written notice that includes the name, address, and phone number of the provider.

You also should tell the creditor or other information provider in writing that you dispute an item. Many providers specify an address for disputes. If the provider then reports the item to any credit bureau, it must include a notice of your dispute. In addition, if you are correct-that is, if the information is inaccurate-the information provider may not use it again.

If the reinvestigation does not resolve your dispute, have the credit bureau include your version of the dispute in your file and in future reports. Remember, there is no charge for a reinvestigation.

What credit repair clinics often say they'll do is to swamp the agency with hundreds of reports filed on the same day about different individuals. They are hoping that the bureau can't meet its obligations for timely acknowledgement or investigation. This may or may not work in your case. Remember, with so many repair agencies using this tactic and sending in dispute letters, your individual request has just as much chance of not being responded to in a timely manner.

Reporting Negative Information
Accurate negative information generally can be reported for seven years, but there are exceptions:

• Bankruptcy information can be reported for 10 years;

• Information reported because of an application for a job with a salary of more than $75,000 has no time limitation;

• Information reported because of an application for more than $150,000 worth of credit or life insurance has no time limitation;

• Information concerning a lawsuit or a judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer; and

• Default information concerning U.S. Government insured or guaranteed student loans can be reported for seven years after certain guarantor actions.

The Credit Repair Organizations Act
By law, credit repair organizations must give you a copy of the "Consumer Credit File Rights Under State and Federal Law" before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before signing the contract. The law contains specific protections for you. For example, a credit repair company cannot:

• make false claims about their services;

• charge you until they have completed the promised services; or

• perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.

Your contract must specify:

• the payment terms for services, including their total cost;

• a detailed description of the services to be performed;

• how long it will take to achieve the results;

• any guarantees they offer; and

• the company's name and business address.

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