Is This Legal?
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There is no doubt that the numerous dishonest acts of many credit repair companies and certain individuals have given credit repair a bad name.
When reviewing information about credit repair from government websites and pamphlets, the word "scam" is usually in close proximity.
The FTC website states that
"No one can legally remove accurate and timely negative information from a credit report."
This is echoed in other government resources as well, stating that the removal of "accurate and timely" negative information from a credit report is illegal.
Some people take this to mean that credit repair itself is illegal.
Credit Repair, by definition, is the process of improving a person's credit score. It isn't just about removing negative information. It also involves adding positive credit accounts, and other credit profiling techniques that can help raise a consumer's credit score.
Is it illegal to add positive accounts?
Of course not.
Is it illegal to build a positive payment history?
Once again, "NO!"
Is it illegal to change your credit utilization to raise your score?
Obviously, the answer is once again "NO."
But what about removing negative accounts?
Under the FCRA, consumers have a right to request an investigation into items on their credit report.
Here's what the FCRA says about the removal of disputed information:
"(5) Treatment of Inaccurate or Unverifiable Information (A) In general. If, after any reinvestigation under paragraph (1) of any information disputed by a consumer, an item of the information is found to be inaccurate or incomplete or cannot be verified, the consumer reporting agency shall- (i) promptly delete that item of information from the file of the consumer, or modify that item of information, as appropriate, based on the results of the reinvestigation; and (ii) promptly notify the furnisher of that information that the information has been modified or deleted from the file of the consumer."
( FCRA § 611(a)(5)(A))
This text clearly states that any item found to be "inaccurate" or "incomplete" or that "cannot be verified" must be removed (or corrected where appropriate).
As a consumer, you have a right to make sure that every item on your credit report is:
The credit repair process may involve issues with any of the above points.
Is a credit limit wrong?
That's a problem, and you have a right to have it corrected or if the bureau and creditor can't get their "stuff" together enough to figure it out, then it should be removed.
Is information missing?
It's been a common tactic of creditors to leave out key information when reporting accounts in order to make a consumer's credit look worse than it is. They do this to create "captive customers" who won't look as good to other competing lenders. One infamous example of this is Capital One's practice of withholding credit limits as cited in the written testimony of attorney Leonard A. Bennett before the House Committee On Financial Services.
Missing information can cause unjust and undeserved harm to your credit and finances.
You have a right to correct it.
Is the information verifiable?
If a creditor can't verify that the information they are reporting is correct, then it should be removed from your credit report.
What is the DOLA? Should the item have expired?
Unfortunately another common practice of creditors and collectors is what is known as "re-aging".
Re-aging involves reporting a false "date of last activity" to make the negative item look newer than it really is.
This keeps the negative item on your credit report longer, and makes it more damaging to your score.
If you find re-aging on a negative item on your credit report, you have a right to dispute it.
Everything we've mentioned here is a regular part of what we call "Credit Repair".
Is there some part of credit repair that IS illegal?
The sad reality is that some people and companies tout so-called "credit repair tactics" that are, in fact, illegal. Some companies sell information and services that are dishonest, unethical, and illegal.
For example, some companies promote or sell what is known as "CPN Numbers", which is basically a fake social security number or tax payer id number.
CPN Numbers are illegal, and should NOT be considered a part of legitimate credit repair.
Another common so-called "tactic" of some so-called "credit repair experts" goes something like this:
"Just dispute all the negative information on your report as 'not mine'."
Disputing everything on your report as "not yours" when it is indeed yours is dishonest, unethical, and probably illegal. In our opinion, it's fraud.
There are enough ways to honestly go about the credit repair process without resorting to lying.
Besides, if you dispute based on fact you are more likely to have legal ground to stand on when a credit bureau or creditor fails to comply with the law.
So in response to the question...
Is credit repair legal?
Well, the answer is yes. If you act with honesty and integrity, then credit repair is most definitely legal.