Part of financial independence is having access to affordable credit products. If individuals have had past credit problems, they will find this difficult and may be incentivized to work on fixing their credit history.
An entire industry exists selling the idea of credit repair. This is a way individuals can be defrauded. Currently no one can legally remove accurate and timely negative information from a credit report. An individual can request for an investigation, at no charge to them, of inaccurate or incomplete information they find on their credit report. Some individuals will hire a company to assist with this process, but it should be stressed that anything a credit repair company can do legally, an individual can do themselves at little or no cost.
The federal law covering the activities of credit repair is called the Credit Repair Organizations Act (CROA). CROA prohibits a variety of activities by credit repair organization including; committing fraud and making false and misleading statements. Additionally, individuals should not have to make any payments prior to the promised services having been “fully performed.” All services must be under written contract, which must include a detailed description of the services to be performed within what timeframe. CROs must also provide a separate written disclosure statement describing the individual’s rights before entering into the contract and they are also able to cancel the contract within the first three days.
Failure to comply with CROA allows consumers to sue to recover the greater of the amount paid or actual damages, punitive damages, costs, and attorney’s fees.
Ultimately the best form of credit repair for information that is negative and accurate on a credit report, is time. All information will eventually come off of a credit report. A credit bureau can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. The seven-year reporting period starts from the date the event took place. In the meanwhile, paying obligations on a timely basis will help improve one’s credit.For information that is negative and inaccurate there is a dispute process that all of the credit bureaus have in place. They investigate the items individuals question within 30 days, unless they consider the dispute frivolous. They also must forward all the relevant data that is provided about the inaccuracy to the organization that provided the information. After the information provider gets notice of a dispute from the credit bureau, it must investigate, review the relevant information, and report the results back to the credit bureau. If the investigation reveals that the disputed information is inaccurate, the information provider has to notify the nationwide credit bureau they can correct it in the file.