Credit Repair: Is it Legal and Legitimate?

You see advertisements everywhere promising to fix broken or bad credit. Simply pay a fee, and magically, your credit problems will go away, yielding a good credit score. Is that legitimate? What are these companies actually doing?

Technically It’s legitimate

At its core, the concept of credit repair is legal if it is being done legitimately. All credit repair (or at least, should be when it’s not being taken advantage of) is challenging marks on your credit that should not be on your credit.

Some of those reasons may include

• The negative mark is too old and should be erased because the time to report it has expired
• The negative mark doesn’t belong to you (credit reporting agencies mix up people with common names all the time or identity theft can cause something to show on a report that doesn’t belong to the consumer)
• The mark belongs to you but it is inaccurate—for example, it says charged off, when in fact, it was paid, or a mark is showing twice in duplicate

Whenever any of these things happen, a consumer has a legal right to challenge what is there and demand that the mark be erased or corrected by the credit reporting agencies (Experian, Equifax or Transunion) or by the creditor.

If an inaccurate mark on the credit is not corrected after the consumer makes the request, the consumer may have a right to sue under the Fair Credit Reporting Act.

Taking Advantage of the FCRA

The mere act of challenging something that is inaccurate or misleading on a credit report is legal and is technically credit repair.

But many companies advertising credit repair simply challenge every negative mark on the consumer’s credit report—even ones that are legitimate and which are reported accurately. They challenge everything, in the process lying to the credit reporting agencies in the hopes that the creditor or the credit reporting agency will just erase the mark.

And sometimes they do. Creditors and the reporting agencies simply have too much to do and too many clients to serve to investigate every challenge they get for every bad mark on someone’s credit. So, some do slip through the cracks and get erased, thus improving  consumers’ credit, even though the mark was actually accurate and correct.

This blanket “challenge everything on a credit report and hope a few of them get erased” strategy is technically illegal. But that doesn’t stop a lot of companies from doing it and taking consumers’ money to do it.

And because most of what these companies are challenging is, in fact, accurate, there is no guarantee that the “credit repair” will work, and it sometimes does not. That doesn’t stop companies from charging consumers however.

Challenge Inaccurate Marks

This is not to say that you should hesitate to challenge things on your credit which you genuinely feel are inaccurate. If you do see something that shouldn’t be there, it may be time to talk to an attorney to discuss your rights, as there is a precise procedure that must be followed in order to have the legal right to demand that something be erased from a credit report.

Let us help you if you feel that a credit agency or a creditor is illegally trying to collect debts from you, or demanding money you don’t owe. Call the West Palm Beach commercial litigation lawyers at Pike & Lustig today.

Sources:

ftc.gov/legal-library/browse/statutes/fair-credit-reporting-act

consumerfinance.gov/compliance/compliance-resources/other-applicable-requirements/fair-credit-reporting-act/