In my line of work, I often come across people who have been affected by the economy and have struggled to make their payments on time and now have credit scores that will not allow them to qualify for financing. Many times these people see their dream of homeownership die when they look at their credit file.
I am often asked what they can do to rebuild or repair their credit. Many times the subject of credit repair comes up. For those of you who don’t know what credit repair is, it’s the process of pleading “not guilty” to a negative item in your credit file. It’s a perfectly legal process (when done correctly) that can help restore and rebuild your credit in a short period of time. Often the necessary changes can be made in 3 to 6 months.
I believe this process can be beneficial when it is used by the right kind of person and the work is done by a legitimate and ethical company.
I will often recommend credit repair to a client who has had financial difficulties but has since recovered. You’ll see that one of the biggest misconceptions about credit reports and credit scoring is that an item must remain in a credit file for seven years. The Fair Credit Reporting Act (FCRA) actually states that an item can NOT stay on file for more than seven years (unless it’s a bankruptcy).
Under the FCRA, an item can be removed or updated at any time. My question and concern about our current credit reporting system is why should someone who has climbed out of their financial hole be forced to suffer for seven years for some late payments? If a person has been able to pay off or bring her accounts up to date, has she not shown more financial responsibility than the person who only makes her minimum payments or has no credit at all?
When I come across clients who fit this profile, I often refer them to an attorney who has the same belief system as me and will work on your credit in a legal and ethical manner. A responsible credit repair professional will work within the FCRA guidelines to ensure that a person does not break the law in an attempt to restore their credit.
Many credit repair scams will try to get a person to create a new credit file with a new social security number or try to claim identity theft so they can start over. This is unethical and illegal.
Before hiring a credit repair organization, research their credentials and experience. Ask for references and remember that you get what you pay for. Discount or do-it-yourself credit repair is simply not worth it.
If you have had financial difficulties and are now left behind, credit repair may be a viable option for you. If you need a referral to an honest and ethical credit repair organization, email me and I’ll forward the information to two attorney-backed companies.
If you’re still struggling financially, you should focus on taking care of your finances before you work on rebuilding your credit.
by Tom Barker
