Consumer Credit Repair Basics – Start Your New Financial Life

Consumer Credit Repair Basics

Last Updated on October 7, 2020 by Nexus Financial

Consumer Credit Repair Overview

Consumer credit repair refers to the process of disputing mistakes and errors in your consumer credit reports. Because one American in five has errors in their credit reports based on a recent report from the FTC. Consequently these errors negatively affect your credit scores since they are calculated solely based on the information in your credit reports.

To help you understand the process of consumer credit repair, we provide you an overview of what it is and how to go about it. Also we set realistic expectations as what consumer credit repair can do to improve your credit score.

mer Credit Repair Overview

DISCLOSURE: Nexus Financial Services is a provider of small business working capital and consumer financing services.

What Is Consumer Credit Repair?

Consumer credit repair is the process of disputing mistakes and errors in your credit reports. In brief, your creditors report monthly your credit activities (payments, credit applications, etc.) to the national credit bureaus.

Each national credit bureau has their own proprietary version of your credit report. In general the information in your credit report is accurate, based on what is received from your creditors. However, your creditors and the credit bureaus commit errors in their reporting.

1 – What Is Your Credit Score?

Your consumer credit score is a statistical summary of the information contained in your consumer credit reports.   Generally it is graded on a scale ranging from 300 (bad) to 850 (excellent).

It is used by lenders, landlords, employers and others to determine your level of credit risk, responsibility, and overall character.   In short,  your consumer credit score represents your financial reputation.

Credit scores are calculated using information found in your credit reports.  For example  your payment history, the amount of debt you have, and the length of your credit history.

A higher consumer credit score means you have demonstrated responsible credit behavior in the past.  Consequently this makes potential lenders and creditors more confident when evaluating a request for credit, like a loan or a credit card.

Consumer Credit Repair Process

2 – What Is The Consumer Credit Repair Process?

By law, information reported about you to the national credit bureaus must be fair, accurate, relevant, substantiated and verifiable. In effect, consumer credit repair involves fixing inaccurate, misleading, unverifiable, untimely, biased or incomplete information listed on your credit reports.

In order to fix these errors, the national credit reporting bureaus (Equifax, Experian and TransUnion) require you to work through a series of formal dispute letters and complicated online disputing systems.

You or a third-party credit repair company will examine your credit reports to identify items that are in error and then register disputes with the three credit bureaus. Undeniably this process takes discipline, patience and time.

Consumer Credit Repair Steps

  1. Credit Report Analysis – Obtain your credit reports from the three major credit bureaus. Because each credit bureau’s report is different and all need to go through analysis. Then you focus on the negative items that are affecting your credit score and you create a disputing plan.
  2. Credit Report Disputing – If you choose to use a third-party credit repair service, they review your negative items, create dispute letters and send to you. Then you sign, add identification information and sends the dispute correspondence to the creditors or credit bureaus. Finally, the disputes need to be done in writing and sent to the credit bureaus via certified mail for bureau accountability.
  3. Dispute Escalating – If a negative item requires more care or correspondence to remove, the dispute is escalated to include legal representation (if you use a third-party credit repair service). Basically the Fair Credit Reporting Act and other laws are used to ensure your credit rights are accurately represented.
  4. Analysis And Monitoring – As disputes are processed, the credit bureaus need to be tracked to ensure compliance with the dispute resolutions. Additionally, you will need to analyze and adjust your financial behavior to take steps to improve your credit score.


3 – What Is The Consumer Credit Report Dispute Process?

A credit dispute is an inquiry sent to a credit bureau about an error on your credit report. In effect it is a request for them to conduct an investigation of questionable information on your credit report. Accordingly, you will need to do this for all three credit bureaus.

Once you have begun a credit dispute, the credit bureau will begin an investigation of any credit information that you challenge. Because the Fair Credit Reporting Act (FCRA) statutes obligate the three major credit bureaus to investigate the items in question. Also, they must forward any data you provide about the error to the organization that reported the information to the credit bureau.

Consumer Credit Repair Dispute Steps

  1. Send A Letter the The Credit Bureau – Each of the major credit bureaus have their process to dispute inaccurate information in your consumer credit report. While you can do this online, it is recommended to send a letter to ensure receipt and accountability. For example, the FTC has a sample dispute letter that you can use for reference.
  2. Contact The Provider Of The Data In Error – The data provider is the lender or creditor that provided the information to the credit bureaus. Similarly they are also obligated to follow the statutes in the FCRA. Consequently this means they are responsible for investigating consumer disputes about the accuracy of the information they provided.
  3. Wait For The Credit Bureau Response – Credit bureaus and data providers must investigate the items you dispute usually within 30 days. Then they have five days to report the results back to you. Finally they must provide the results in writing and give you a free copy of your credit report if the dispute results in a change.
  4. Review The Results – If the information you challenge is verified as accurate by the data provider, the item will remain on your credit report. Otherwise the item will be updated or deleted. Accordingly, review your credit report to verify.
  5. Review Your Credit Score – Filing a dispute and updates to personal information have NO impact on your credit score. Therefore your credit scores could change if information on your credit report is updated (removal of a late payment, change in account status, etc.) and is relevant in the calculation of your credit score.
Note Regarding Frivolous Disputes

Credit bureaus are NOT obligated to investigate a claim they decide is frivolous. For example: a) Submitting inaccurate or incomplete information on the dispute; b) Trying to contest the same item multiple times without new evidence; and c) Attempting to claim without proof that everything on your credit report is inaccurate. Basically don’t waste your time and the credit bureaus doing this.

Consumer Credit Repair Dispute Process

4 – What Are The Consumer Credit Laws Protecting You?

Fair Credit Reporting Act

The FCRA regulates how the credit bureaus treat consumers.

  • Ensures that consumers can acquire their consumer credit reports at a reasonable price (or for free under certain circumstances), and severely restricts “investigative consumer reports”.
  • Ensures that consumers can acquire their consumer credit reports at a reasonable price (or for free under certain circumstances), and severely restricts “investigative consumer reports”.
  • Specifies the running reporting periods for information on credit reports. Generally 7 years for most items except for bankruptcy which can remain for 10 years.
  • Details how a credit bureau must handle consumer complaints.

Fair Debt Collections Practice Act

The FDCPA was enacted to protect consumers civil rights and details credit collection business activities.

  • Provides standards for acceptable third-party collections behavior.
  • Specifies that Collection Agencies (CA) must always include several legal caveats in their dealings with debtors.
  • Prohibits collectors from screaming, threatening or actually employing violence, using profanity, misrepresenting their identity, or hinting at possible imprisonment.
  • Allows any consumer to formally request that the CA “cease and desist” from communicating with them.
  • Obligates CAs to behave in a certain manner when communicating with others.
  • Specifically details a consumer’s right to request further information regarding an alleged debt.

Fair Credit Reporting Act

The Fair Credit Billing Act requires creditors to bill correctly and completely. Basically it is the FTC’s job to make sure that the statute is universally applied.

 

Consumer Credit Score Basics - Conclusion

Conclusion – Consumer Credit Repair Basics

To appreciate the importance of your credit standing you just have to look at what your credit impacts. Basically everything.

Not having ideal credit can cost you thousands of dollars over the course of a home or car loan. Also, it can keep you from getting insurance coverage or even a job. Finally, it can make even everyday needs and decisions more difficult.

If you do not have ideal credit, consumer credit repair should be a first step to improve it.  Simply put, it is a process that takes dedication, time and patience. Also, if your credit reports do not have any errors that will materially affect your credit score, the only way for improvement will be changing your financial behavior.

Whether doing it yourself or with a third-party credit repair company, the value of credit repair should be obvious.

An overview of consumer credit repair is presented. This includes 1) What Is Consumer Credit Repair; 2) What Is A Credit Score; 3) The Credit Repair Process; 4) The Credit Repair Dispute Process; and 5) Laws Governing Consumer Credit Repair.

Please call us at (888) 213-3383 to help review which consumer financial service best serves your needs or Contact Us.

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