The credit-repair industry came under fire in the late 2000s for deceptive advertising practices and for misleading consumers about the types of negative information that can be removed from credit reports. The Fair Credit Reporting Act (FCRA) and the Credit Repair Organizations Act (CROA) protect consumers by regulating the steps credit-repair specialists may take to resolve negative information and the claims they may make as well as the ways in which creditors report negative information. Attorneys who engage in credit repair rely on their expert understanding of these laws to identify every legal and ethical opportunity to improve their clients' credit. Although they don't do anything you can't do on your own, the amount of work involved and time involve often makes hiring an attorney worth the money.
Identify Outdated Information
The law limits how long negative information can stay on your credit report. Common items like lawsuits and legal judgments, late payments and collections and paid tax liens must be removed after seven years. Bankruptcies must be removed 10 years after they're discharged. Inquiries by companies checking your credit report or credit score, such as when you apply for credit, must be removed after two years. Attorneys review credit reports for such outdated information. If it still appears, an attorney will contact the appropriate party -- the creditor or credit-reporting bureau -- to demand that the record be corrected. In the case of liens and judgments, the attorney may gather records herself and submit them as evidence of the credit-reporting error.
Challenge Negative Information
The lengths to which an attorney goes to challenge negative information that isn't outdated depends on the severity of the issue. Modest issues like 30-day late payments might be handled with a request that the creditor act in goodwill toward a loyal customer by removing the notation without question. The attorney will be more aggressive in tackling serious delinquencies, collections and charge-offs. In these cases, the attorney will hold the creditor and the credit-reporting agency responsible for following every tenet, however obscure, of the the FCRA. Options range from asking the creditors to verify the negative information to forcing them to submit an itemized list of all activity on an account. If the creditor doesn't comply within the time allowed by law, or is unable verify that the negative information is true as reported, the attorney will request that the credit bureau remove the negative information or correct the way it's reported.
Facilitate Settlement
Sometimes creditors can prove negative information is accurate. If so, there are no credit-repair techniques that can remove it legally. The debtor can only improve his credit by bringing the account current and ultimately paying off the debt. The attorney will facilitate this by negotiating with the creditor for a settlement -- a reduction in the amount the creditor seeks to collect in return for the debtor making a lump-sum payment or accelerated series of payments. Although the negative information will remain on the credit report for the allowable period of time, the report will also note that the account is now current and is being paid as agreed.
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