When we think of “fixing” our credit, we usually think of the term “Credit Repair”. Virtually every credit repair company executes methods for eliminating bad remarks on your credit report. They typically go about sending dispute letters without regard for whether or not the remarks are valid or invalid, or what kind of impact the remark may have on your credit score. As a result, credit repair companies have generally developed a bad reputation.
Executing some technique or method for repairing credit by trying to eliminate every derogatory remark may have been effective in the past, but more and more, credit reporting agencies, also known as “CRA’s” are effectively stopping credit repair methods in their tracks. Credit “repair” simply isn’t an effective way to improve your credit score for the long term. Plus, it does nothing to keep the same problems from occurring again.
Correcting actual, high impact errors, developing the right mindset, and forming good financial habits and using debt wisely is a far better financial path to take. There is nothing scary or tricky about it. Timing is important, but trying to leverage timing to get bad remarks removed will only frustrate your efforts. Why? Because trying to overwhelm the credit bureaus with letters and demands no longer works. And, it does nothing to improve our lives or make us financially strong. It simply doesn’t work for the long run. We want to embrace financial principles that work now and will continue to work into the future.
The good news about credit repair is, regardless of where you are right now, excellent credit can easily be obtained and maintained with some effort and willingness to do the right things. A little effort now and the development of good financial habits will pay off for a lifetime. Bankruptcy, collection accounts and late payment marks can be overcome.
Ethics In Credit Repair
The Devil’s Advocate
Our philosophy is geared toward disputing high impact errors, and cleaning up erroneous information, while developing sound financial habits and good debt management. Even though we do not agree that disputing accurate remarks is a good idea or entirely ethical, we do agree with some of the ideas behind why many people and companies go after every negative remark. We teach what we believe is a far more effective, less intensive and more secure approach to good credit.
Here is a list of points that we believe are well founded, yet unethical reasons for disputing accurate remarks:
- The credit bureaus are not government agencies, and make up their own rules about what they report. They try to be accurate, but accuracy is not their ultimate goal.
- Legally, what the credit bureaus report about you amounts to no more than allegations. They report what they can find out about you without your approval or knowledge. It’s your responsibility to find out what those allegations are and dispute them, then “force” the reporting agencies to “prove” those allegations.
- Without a hearing, a trial, notification or even telling you about it, credit bureaus throw you into a sort of “credit prison” for 7 years when one of your creditors reports something derogatory about you, like a late payment. Derogatory remarks cause your credit score to go down, and your interest rates to go up.
- The seven-year “penalty” they impose on you is an arbitrary amount of time, and it bears no relationship to justice or equitable repayment of a reported mistake. They use that amount of time as a result of what the FTC declared was allowable, and it does not necessarily represent a fair “punishment” for the remark.
- The things they report about you are allegations, and they should be disputed. If you are accused of something, anything, and there is a legal penalty attached, you have a right to dispute those allegations and make your accuser prove them.
- According the Fair Credit Reporting Act (the law), the credit reporting agencies must open an investigation about a negative remark on your report (but only when disputed), and substantiate the accuracy of the remark in a timely manner, or remove it.
- In any court of law, the burden of proof lies with the accuser. Everything on your credit report is put there without your knowledge or consent, and you are never told about any negative allegations unless you ask (request a copy of your report).
- Negative information often misrepresents the credit worthiness of the consumer.
- Your creditors and the credit bureaus are talking about you behind your back!
Also, Dr. Bonnie Gution, adviser to President Bush on consumer affairs, remarked back in 2003, “…it is our understanding that computer models that predict credit worthiness find most information that is more than two years old non-essential.”
In an important way, it’s very sad. Because of consumer rights allowed by the FCRA, the credit bureaus must allow consumers to dispute anything in their reports. However, people have (and do) try hard to take advantage of their rights beyond what’s appropriate.
The ethical battle is a never-ending one, and the credit bureaus have been fighting this battle for over a century. Still, what the credit bureaus report, affects the financial life-blood of consumers like you and I in many profound ways. So, it’s important to seize our rights, remain true to our selves, to what’s right, and then tackle what’s important to us and to our financial lives.
Making The Credit Rebuilding Process Easier
When you understand that your creditors and the Credit Reporting Agencies are collaborating without your knowledge, and they often make mistakes about you, it becomes a little easier to see how you really need to learn about your rights as a consumer and make sure both the reporting agencies and your creditors report accurately about you by having harmful errors removed.
The thing is, it is your responsibility to ensure the accuracy of what’s in your credit reports and then exercise your right to an accurate report.
You need to understand how money and debt works. You need to understand how the Reporting Agencies work. Then, make sure you do not become a victim of poor reporting. It’s up to you. And remember, the Credit Reporting Agencies are working for your creditors, not you. And, we have credit reporting laws in place that we can leverage.