Does Credit Repair Really Work?

Click on
the questions below for more information.
  • Why
    is it so common to hear that bad credit can't be
  • What
    does the law say about repairing your credit?
  • What
    is the truth about credit repair companies? Can they
    really do what they say they can do?
  • How
    do you go about completely repairing your credit and
    getting new credit lines, mortgages, etc.?
  • Can
    you add good credit to your credit report by having
    another person add you as an authorized user to one of
    their credit cards?

    is it so common to hear that bad credit can't be repaired?

    Credit is a way of life in America.
    Without good credit, you have to take your seat in the
    second-class section of our economy. But, if your credit is
    in shambles, you may not be willing to wait for seven years
    while your credit report repairs itself.

    Is there anything you can do to speed
    your credit repair?

    Many authorities, such as the news
    media, will tell you there is nothing you can do to repair
    your credit. Newspapers, magazines, and TV news journals all
    seem to be unanimous in discouraging you from making any
    effort to repair your credit before the seven year limit.

    How do these journalists explain
    Lexington Law Firm? We have repaired over one hundred
    negative items from individual consumer
    credit reports in the last two years. What about the
    thousands of Americans who have repaired their own credit?
    Why has the media repeatedly denied the possibility of
    repairing credit when substantial evidence points to the
    contrary? Who stands to gain from such a broad campaign of

    The giant credit reporting agencies
    (credit bureaus) have maintained a consistent public
    relations effort to dissuade you from repairing the
    information appearing on your credit reports. The credit
    bureaus are especially intent on steering you clear of
    "credit repair" companies that promise to help you
    repair your credit. The bureaus claim that these companies
    "cannot have accurate information removed from your
    credit report."

    If you are like 70% of Americans that
    have less than perfect credit, you're sure to be interested
    in the truth about credit repair. If there were a legitimate
    alternative to seven years of credit denial, that
    alternative could mean early parole from the bad credit

    Back to top

    does the law say about repairing your credit?

    As the credit bureaus computerized
    their processes and greatly expanded their reach and
    influence in the late 1960s and early 1970s, consumer
    complaints began to pile up at the FTC and state attorney
    generals' offices. The credit reporting agencies quickly
    became huge bureaucracies second only in size to the federal
    government. Yet, the credit bureaus expressly served only

    the needs of their clients, the credit grantors.

    Many consumers were negatively
    effected by the credit bureaus, but they had no way to
    correct or change their credit information. The American
    consumer lay completely at the mercy of the credit bureaus.
    The United States Congress enacted the Fair Credit Reporting
    Act (FCRA) in 1971 to insure that the credit bureaus
    investigate the credit items disputed by consumers. This
    federal law set procedural guidelines which gave the
    consumer the right to challenge the accuracy, validity, and
    verifiability of the credit listings appearing in their
    consumer credit report. It also required that the credit
    bureau repair any credit listing if it was inaccurate or
    could not be verified.

    In theory, the FCRA charges the credit
    bureaus with responsibility to the consumer as well as the
    credit grantor. In reality, the credit bureaus resist,
    resent, and reject consumer disputes. The credit bureaus
    would rather be left alone to make a profit. And, each time
    a consumer challenges his credit, profit is lost.

    The credit bureaus first defend their
    profits by erecting walls of stall tactics, including
    requests for more information, further clarification, and
    additional identification. The vast majority of consumers
    give up before they even receive copies of their credit
    reports. If a consumer manages to get a credit report,
    decipher the codified information, write a coherent dispute,
    and mail it, the bureaus may still find some reason to
    disregard the challenge. The entire dispute system is
    designed to frustrate and discourage the consumer.

    Many consumers have the idea that the
    credit bureaus must complete their investigation within
    thirty days or be forced to remove all disputed information.
    They threaten to sue the credit bureaus if they don't
    conclude their investigation in time and repair their
    credit. In practice, such thinking is delusional. Nobody
    forces the credit bureaus to do anything.

    However, if you manage to submit a
    valid dispute letter, and the credit bureau investigates
    your dispute, the chances of success are good - whether or
    not the negative listings are accurate! Accuracy actually
    has little to do with the deletion of negative items.

    If a credit bureau cannot verify an
    item before completing its investigation, that item will be
    removed. Many creditor grantors are simply reluctant to take
    the time to verify the data. While the credit bureaus may be
    in the business of reporting credit histories, creditor
    grantors are not.

    Back to top

    is the truth about credit repair companies? Can they really
    do what they say they can do?

    Many "credit repair"
    companies claim to remove negative credit with the flick of
    a wrist. Their advertisements make bold assertions and
    money'back guarantees; "Bankruptcy, tax liens,
    judgments, . . . no problem!! One hundred percent
    guaranteed!! Credit report 100% cleared in 30 days!!"

    Can they really make such sweeping guarantees?

    While some credit repair companies are
    outright frauds, others are not frauds and they use the
    dispute process to obtain impressive results. In fact, they
    delete thousands of negative credit listings every day -
    regardless of whether or not the listings are technically
    accurate. In truth, credit repair fraud is less common today
    then five years ago. Vigorous regulatory sweeps by state and
    federal regulators have cleared away most of the
    illegitimate (and some of the legitimate) credit repair

    Unfortunately, it's risky to trust
    anyone to help you repair your credit. It is estimated that
    credit repair companies have bilked Americans out of more
    than fifty million dollars. The majority of credit repair
    companies were started by entrepreneurs with a penchant for
    marketing. Consumers have flocked to these "credit
    doctors" only to discover that their advertisements
    proved far more impressive than their results. Hiring a
    credit repair company is like playing Russian roulette. Many
    of them are effective and legitimate, but it is difficult to
    tell a rip-off from the real article.

    Working within the credit bureau maze
    requires substantial background knowledge; knowledge it
    takes credit repair companies years to learn. In fact, U.S.
    District Court Judge J. Wexler entered the following legal
    opinion in the Federal Supplement. "Since allowing
    third parties to assist consumers will likely lead to the
    expedited correction of credit reports, it will further the
    purposes of the [Fair Credit Reporting] Acts."

    So, can credit repair companies really
    guarantee results?

    Not a chance! No credit repair company
    is so good that it can guarantee a specific outcome. It
    would be like a defense lawyer guaranteeing that the jury
    will find his client innocent. Guarantees are a sure sign of
    credit repair fraud. A warranty, where the credit repair
    company promises a refund if certain results don't occur, is
    a better, more realistic claim.

    Not surprisingly, the credit bureaus
    have declared war against the credit repair companies and
    those selling instruction on how to do-it-yourself. The
    bureaus lambaste credit repair companies in the media and
    send anti-credit repair literature to anyone whom they
    suspect of using credit repair services. The bureaus
    unflinchingly deny that accurate information can be removed
    from a credit report.

    Some time ago, a couple in the
    Northwestern United States, who were using the services of a
    legitimate credit repair company, received a scathing letter
    of reproach from their local credit bureau. The letter
    chastened them for relying on the "unethical"

    methods of credit repair, and pointed out how all their
    efforts had come to nothing. "As you can see," the
    letter chastened , "your credit reports remain
    unchanged." The couple was bewildered because almost
    all of their many negative credit listings, including a
    bankruptcy, had long since been deleted.

    The simple truth is that you don't
    have to endure bad credit for seven to ten years. It is
    possible to repair your credit within a much shorter time.

    However you decide to address your
    credit challenges, realize that regardless of what you may
    hear in the news media, thousands before you have sought
    help and repaired their credit. They can show you their
    homes, cars, and credit cards. Despite the newspaper
    articles, TV reports, and other credit bureau propaganda to
    the contrary, you can repair your credit.

    Back to top

    do you go about completely repairing your credit and getting
    new credit lines, mortgages, etc.?

    Any credit repair consists of two
    phases: removing the negative listings from your credit
    report and adding new, positive listings.

    Since just a couple of negative
    listings will earn a rejection from most creditors, repair
    of your negative credit should be the first priority. After
    bankruptcy, for example, the credit report will show many
    negative listings including the bankruptcy filing, discharge
    and numerous "included in bankruptcy" listings.
    While removing a bankruptcy from your credit report is no
    easy proposition, it is possible and definitely worth the
    effort. For more help, see repair
    Your credit.

    It is important to note that you may
    be able to obtain much of the credit you need even without
    repairing your credit report.

    Most home loan guidelines (including
    FHA guidelines) require that you have no negative credit
    appearing within the last two years. This means that you may
    have no late pays within the last two years and that any
    collection, lien or judgment has been paid more than two
    years ago. Even if you have some bad credit in the last two
    years, you can often find a mortgage amongst the
    "sub-prime" or "sub-A" lenders that will
    finance you even before you repair your credit. These loans
    will charge a higher interest rate and require more equity
    or a larger down payment before they will close. If you have
    good income and a reasonable debt to income ratio, a
    sub-prime loan may be the key to refinancing or getting a
    home while you repair your credit. In any case, if you are
    working on your credit repair, you may be able to refinance
    within a year at better terms.

    Automotive financing will typically
    allow some negative credit before credit repair, but with
    less than optimal terms. If you have a few late pays, you
    may pay a little more in interest (but it adds up fast, to
    be sure.) If you have truly awful credit, you may still get
    an auto loan, but at very high rates (but you should
    definately repair your credit in the meantime.)

    Standard rate credit cards seem to be
    the most difficult when it comes to credit that still needs
    credit repair. Most standard rate cards will reject you
    immediately for any negative credit whatsoever. Yet, there
    are many credit cards that work with bad credit and help you
    to repair your credit. Some require deposits and others
    require a significant annual fee. Most have low credit

    So, once your credit repair is
    underway, you can turn attention to adding positive credit.
    You may have to accept some of these less-than-standard
    credit options while you repair your credit. But, a word to
    the wise, there are many credit repair scams out there that
    prey upon the credit distressed. Even your local auto
    dealership may take advantage of your vulnerable position
    and your desire to repair your credit. Many phony credit
    card offers exist that allow you a card, but one that is
    only good for the company's limited line of merchandise.
    Mortgage brokers often hide exorbitant fees in loans to
    borrowers who need credit repair. It is not uncommon to
    charge credit repair customers four to eight
    "points" on a sub-prime mortgage loan. These
    points amount to tens of thousands of dollars that you must
    pay over the life of the loan. Make sure that you read the
    fine print and compare your mortgage, auto loan or credit
    card to the typical terms of regular financing if you are
    applying before your credit repair is complete.

    With that said, there are many good
    options for repairing and rebuilding credit that you can
    find on the internet or at your local credit union.

    Maybe you've recently finished
    repairing your credit or maybe you're young and haven't used
    credit yet. In either case, here are a few tricks to credit
    repair and building a positive credit history quickly and
    cheaply. Most times you start building some good credit in
    just a couple of weeks. But, beware, if you stack too many
    open accounts, or too many credit inquiries, you will be
    denied based on debt to income ratio and excessive credit

    If you know someone (like a good
    friend or parent) who has good credit, you can
    "borrow" their good credit listings and begin to
    repair your credit. This friend must have credit cards, and
    must trust you enough to allow you to become an
    "authorized user" on his or her credit cards. Just
    have your friend call the credit card company and request
    that you be placed on his card as an authorized user. A copy
    of the card will be sent and you may simply return it to
    your friend. Your credit file should soon show an open
    account with all of the positive history that your friend
    has created over the years with that credit card. A small
    footnote will sometimes show that you are an authorized user
    of that card. Remember, though, when a new credit grantor
    goes to review your file, he may insist that the balance on
    the card appear on your debt to income ratio. That shouldn't
    disqualify you for credit if your income is sufficient and
    you don't have an excess of debt on your file.

    There are a number of good secured and
    unsecured credit cards that advertise on the internet. These
    cards are designed to help you to repair your credit.
    Understand, however, that secured credit cards will appear
    on your credit report as "secured" and will not
    necessarily repair your credit history as much as an
    unsecured card.

    There are a number of creditors who
    are traditionally more accepting of those with little credit
    history or who are in credit repair. For example, many
    college credit unions will extend low limit credit cards to
    students without a credit history. Many department stores,
    such as Sears, will extend a credit line to encourage you to
    shop at that store, even if your credit repair isn't yet
    complete. Electronics stores, furniture stores and cosmetics
    shops are all usually open to extending credit to credit
    repair candidates.

    As with any line of credit, you must
    make sure that you handle these new accounts responsibly. It
    is a temptation to use a department store credit card
    frivolously. Just remember that you have to pay back every
    dime, with interest.

    Back to top

    you add good credit to your credit report by having another
    person add you as an authorized user to one of their credit

    When another person adds you to a
    credit card as an authorized user, the credit card company
    will typically place the account on your credit report as
    well, serving to help repair your credit. Often, the account
    will carry a note indicating that you are an authorized user
    rather than the primary cardholder. Even so, this serves to
    substantially improve your credit history.

    On the other hand, the account will
    not typically show up with the entire account history, but
    will show only from the time you were added as an authorized

    Beware: if the account goes
    delinquent, it may negatively effect your credit report and
    the credit card company may even attempt to recover payment
    from the authorized user. If this happens, your credit
    repair can slip even further behind. Click Here to Learn More about Credit Repair.

    Back to top

    Comments are closed.