What can credit repair remove?

Your credit report is a crucial document that lenders use to assess your creditworthiness. Errors and inaccuracies can significantly impact your credit score, potentially leading to higher interest rates on loans, difficulty renting an apartment, or even denial of credit altogether. Credit repair aims to address these issues, but understanding what it can realistically remove is essential.

Understanding the Basics of Credit Repair

Credit repair involves identifying and disputing inaccurate, incomplete, or unverifiable information on your credit report. The goal is to improve your credit score by removing or correcting these negative items. It's important to note that credit repair cannot legally remove accurate, verifiable negative information. This is a key point to remember: you can't just erase legitimately bad debt with credit repair.

What Credit Repair Is Not

Before diving into what credit repair *can* remove, let's clarify what it *cannot* do. Credit repair is not a magic solution that can erase legitimate debts or bad financial decisions. It's not a quick fix for poor credit management. Attempting to remove accurate information is illegal and unethical. Credit repair companies that promise to remove accurate information are likely scams.

Items Potentially Removable Through Credit Repair

Credit repair focuses on challenging the accuracy and validity of negative items on your credit report. Here are some common types of information that may be removable through the credit repair process:

Inaccurate Information

This is the most common target of credit repair. Inaccurate information can include:

• Incorrect Account Balances: A balance that's higher than what you actually owe.
• Wrong Payment History: Late payments reported incorrectly or missing payments that were made on time.
• Incorrect Account Status: An account listed as "open" when it's actually closed, or vice versa.
• Duplicate Accounts: Multiple listings for the same debt.
• Misspelled Names or Addresses: Errors in your personal information that can cause confusion with other individuals' accounts.
• Accounts Resulting from Identity Theft: Fraudulent accounts opened in your name without your consent.

Incomplete Information

The Fair Credit Reporting Act (FCRA) requires credit bureaus to maintain fair and accurate credit reports. If information is incomplete or lacks sufficient detail to be verified, it may be removable.

• Missing Information: Accounts lacking crucial details, making verification difficult.
• Lack of Supporting Documentation: Creditors unable to provide proof of debt when challenged.

Unverifiable Information

If a credit bureau cannot verify the accuracy of an item within a reasonable timeframe (typically 30 days), it must be removed from your credit report.

• Creditor No Longer Exists: If the creditor who reported the debt is out of business or cannot be contacted.
• Insufficient Documentation: If the creditor cannot provide adequate documentation to support the debt.

Outdated Information

The FCRA sets limits on how long certain types of negative information can remain on your credit report:

• Most Negative Information: Generally, negative information remains on your credit report for 7 years.
• Bankruptcies: Chapter 7 bankruptcies remain for 10 years, while Chapter 13 bankruptcies remain for 7 years. (This depends on the statute of limitations for each state)
• Tax Liens: Unpaid tax liens can remain for 7 years from the date filed, while paid tax liens can remain for 7 years from the date paid.
• Civil Lawsuits and Judgments: Typically, civil lawsuits and judgments remain on your credit report for 7 years or until the statute of limitations expires, whichever is longer.

Specific Types of Negative Items and Credit Repair

Let's delve deeper into specific types of negative items and how credit repair can potentially address them:

Late Payments

Late payments can significantly damage your credit score. While accurate late payments are generally difficult to remove, you can dispute them if they are inaccurate or incomplete. For example, if you made a payment on time but it was reported late due to a creditor error, you have grounds to dispute it.

Collections Accounts

Collection accounts arise when you fail to pay a debt and the original creditor sells it to a collection agency. These accounts can severely impact your credit score. You can dispute collection accounts if:

• The debt is not yours: Due to identity theft or error.
• The debt is past the statute of limitations: The period during which a creditor can sue you to collect the debt.
• The collection agency fails to provide validation of the debt: Upon your request, the agency must provide proof of the debt's validity.

Charge-Offs

A charge-off occurs when a creditor writes off a debt as a loss. While the charge-off itself remains on your credit report for 7 years, you can still dispute it if the information is inaccurate. It's also important to note that a charge-off doesn't eliminate your obligation to pay the debt.

Judgments

A judgment is a court order requiring you to pay a debt. Judgments can significantly harm your credit score. You can dispute a judgment if:

• You were not properly notified of the lawsuit: You have a right to due process.
• The judgment is inaccurate: The amount is incorrect or the information is false.
• The judgment has been paid: Ensure the credit bureaus reflect the paid status.

Bankruptcies

Bankruptcies have a significant impact on your credit score and remain on your credit report for 7-10 years, depending on the type of bankruptcy. While you cannot remove a bankruptcy filing itself, you can dispute any inaccuracies related to the bankruptcy filing, such as incorrect dates or account information.

Foreclosures

A foreclosure occurs when a lender repossesses your property due to your failure to make mortgage payments. Foreclosures can remain on your credit report for 7 years. Similar to bankruptcies, you can dispute inaccuracies related to the foreclosure, but removing the foreclosure entirely is difficult if the information is accurate.

Tax Liens

Tax liens are claims by the government against your property for unpaid taxes. Unpaid tax liens can remain on your credit report for 7 years from the date filed, while paid tax liens can remain for 7 years from the date paid. Disputing a tax lien requires addressing the underlying tax debt with the relevant tax authority.

The Credit Repair Process

The credit repair process typically involves these steps:

1. Obtain Your Credit Reports: Get copies of your credit reports from all three major credit bureaus: Equifax, Experian, and TransUnion. You can get a free copy of each report annually at AnnualCreditReport.com.
2. Identify Inaccurate or Incomplete Items: Carefully review your credit reports and identify any errors, inaccuracies, or incomplete information.
3. Gather Supporting Documentation: Collect any documents that support your claims, such as payment confirmations, account statements, or court records.
4. File Disputes with the Credit Bureaus: Send written dispute letters to each credit bureau, clearly explaining the inaccuracies and providing supporting documentation. You can often do this online.
5. Follow Up: Monitor the progress of your disputes and follow up with the credit bureaus if necessary. They have 30 days to investigate.
6. Review Results: Once the credit bureaus have completed their investigations, they will notify you of the results. If the information is verified as inaccurate or unverifiable, it will be removed or corrected.

DIY Credit Repair vs. Hiring a Credit Repair Company

You have two primary options for credit repair: doing it yourself (DIY) or hiring a credit repair company.

DIY Credit Repair

DIY credit repair involves managing the entire process yourself, from obtaining your credit reports to filing disputes and following up with the credit bureaus.

Pros:

• Cost-Effective: You avoid paying fees to a credit repair company.
• Full Control: You maintain complete control over the process and can tailor it to your specific needs.
• Educational: You gain a deeper understanding of credit reports and the credit repair process.

Cons:

• Time-Consuming: It requires a significant time commitment to research, prepare disputes, and follow up with credit bureaus.
• Potentially Overwhelming: The process can be confusing and overwhelming, especially if you're unfamiliar with credit laws and regulations.

Hiring a Credit Repair Company

Credit repair companies specialize in assisting individuals with the credit repair process. They typically charge fees for their services.

Pros:

• Expertise and Experience: They have expertise in credit laws and regulations and experience in disputing negative items.
• Time-Saving: They handle the entire process for you, saving you time and effort.
• Potentially Faster Results: Their experience may lead to faster results than DIY credit repair. (Although this is debatable and not always the case)

Cons:

• Costly: They charge fees for their services, which can be expensive.
• Potential for Scams: Some credit repair companies are fraudulent and make unrealistic promises.
• No Guarantee of Success: There's no guarantee that they will be able to remove negative items from your credit report.

Important Note: Credit repair companies are regulated by the Credit Repair Organizations Act (CROA). This law provides consumers with certain protections, including the right to cancel a contract within three days and the right to receive a written contract outlining the services provided and the fees charged.

Red Flags of Credit Repair Scams

Be wary of credit repair companies that:

• Guarantee specific results: No legitimate company can guarantee the removal of accurate information.
• Request upfront fees before providing any services: This is a common sign of a scam.
• Advise you to lie or provide false information: This is illegal and can have serious consequences.
• Tell you not to contact the credit bureaus directly: You have the right to dispute errors on your own.
• Fail to provide a written contract: A legitimate company will always provide a written contract outlining the services provided and the fees charged.

Maintaining Good Credit After Credit Repair

Credit repair is just one step in the process of building and maintaining good credit. To ensure long-term credit health, it's essential to:

• Pay Your Bills on Time: Payment history is the most important factor in your credit score.
• Keep Credit Card Balances Low: Aim to keep your credit utilization ratio (the amount of credit you're using compared to your credit limit) below 30%.
• Avoid Opening Too Many New Accounts: Opening too many new accounts in a short period can lower your credit score.
• Monitor Your Credit Reports Regularly: Check your credit reports regularly for errors and inaccuracies.
• Avoid Maxing Out Credit Cards: This can negatively impact your credit utilization ratio and lower your credit score.