A Brief History In Credit Repair: Credit reporting began in the 1960s in the tri-state area of Pennsylvania, Delaware, and New Jersey. Small local agencies kept profiles of consumers to track their borrowing and debt repayment habits. Local banks used this information to help them underwriting, to decide if they should be approved for a new loan.
In 1970, Congress passed the Fair Credit Reporting Act (FCRA). This law protected the rights of consumers and guaranteed the right to a fair and accurate credit report. Part of that protection was the right to dispute information that the consumer deemed inaccurate. Therefore, credit repair was born there.
Over the next decade, credit reporting agencies went from localized businesses to the national credit reporting agencies we know today. Almost all lenders and creditors go through all three credit bureaus (Experian, Equifax, and TransUnion) to receive consumer credit reports. That’s good for consumers because it means they only need to worry about three credit reports. As long as you review those three reports regularly and make sure they are error-free, you can present the best possible credit profile when someone checks your credit.
Credit repair allows you to correct negative items on your credit report that could be hurting your credit score. If you’ve been working your way out of debt, there are a wide range of mistakes that can potentially show up.
Overdue payments that you made on time often happen when you arrange a payment plan with reduced fees.
Incorrect account statements, such as an account that says, “Paid in full” instead of “Paid in full.”
Accounts in collections that you resolved with a payoff clause during debt negotiation.
Penalties should have expired, as negative information can only remain on your credit report for a specified period.
Accounts that were not reconciled as agreed, which is another credit benefit you can get through debt negotiation.
Credit repair does not provide you with a way to remove negative information that is accurate and verifiable. Therefore, this is not a magic bullet that can guarantee you a clean credit report without negative items. If a negative thing can be verified by the creditor or the lender, credit repair cannot help you remove it.
But omissions and errors do happen in credit reports. They happen more often than you might think, especially when faced with debt challenges.
It’s worth noting here that credit repair is not guaranteed to increase your credit score. First, if there is nothing to correct on your credit report, credit repair will not help you. Additionally, credit repair is intended to fix your credit report. Any positive change in your credit score that results is a happy side effect of having your information corrected. In many cases, people who have errors on their credit reports correct to see their scores improve. However, the amount that increases your score varies depending on:
- Where your score started: High scores tend to rise more slowly than low scores
- How many other harmful items do you have, and how long ago did you incur them?
- When you incurred the negative thing, you disputed
But for people who have recently faced debt problems, the potential increase in credit score from credit repair can be huge. It just relies upon your specific monetary circumstance.