About 20 years ago, there was a substantial increase in consumer complaints regarding credit reporting accuracy, and the credit agenciesâ€™ failure to respond. Individual states and the Federal Trade Commission took action against the three major bureaus to stop them from further violating the Fair Credit Reporting Actâ€™s requirement that they maintain reasonable procedures to ensure â€œmaximum possible accuracyâ€ of credit reports.
The following are important terms to understand when discussing credit repair:
The Fair Credit Reporting Act (FCRA) â€“ A federal law regulating how credit-reporting agencies use a personâ€™s information. Enacted in 1970 and substantially amended in the late 1990s and again in 2003, the FCRA restricts who has access to an individualâ€™s sensitive credit information and how that information can be used.
The Fair Debt Collection Practices Act (FDCPA) â€“ A US statute added in 1978 that created guidelines under which debt collectors may conduct business. Defines rights of consumers involved with debt collectors, and prescribes penalties and remedies for violations.
The Fair and Accurate Credit Transactions Act (FACTA) â€“ An amendment to the FCRA that allows consumers to:
1. Request and obtain a free credit report once a year from each of the three nationwide consumer credit reporting companies.
2. Place alerts on their credit histories if identity theft is suspected.
3. Receive a Credit Disclosure Notice from mortgage lenders that includes a personâ€™s credit scores, range of scores, credit bureaus, scoring models and other factors affecting his or her score.
These laws encourage consumers to look into their credit history and make sure the information is complete and accurate. The most important piece of legislature when it comes to credit repair is The Fair Credit Reporting Act.
This federal law requires that the three credit bureaus make reasonable efforts to ensure the information contained in their credit reports is accurate. There are six key provisions that ensure the consumersâ€™ right to contest negative information listed on a credit report.
The first provision allows an individual to dispute information in his or her credit report to a credit bureau, and then that bureau must promptly investigate and verify the information.
Provisions two and three set maximum time limits in favor of the consumer. The credit bureaus have 30 days to complete an investigation into a disputed item, and if they cannot verify it, they must delete it. The results of any completed investigation must be sent to the consumer within five days.
The fourth provision allows consumers to further dispute negative items. If a consumer believes that evidence supporting his or her dispute of information was disregarded, the credit bureaus must contact the creditor directly. That means the company claiming a negative item on a consumerâ€™s credit report must respond to that personâ€™s challenge of information.
The fifth provision deals with deleted information. Once an entry in the credit report is deleted, the entry cannot be reinstated unless the creditor certifies that the information is complete and accurate.
Finally, the sixth provision allows for a Consumer Statement to be added to an individualâ€™s credit report. If the consumer disputes the accuracy of certain information, and it is verified by the creditor as correct, then the credit bureaus must include the consumerâ€™s explanation of the dispute. This gives the individual the chance to have his explanation for inaccuracy listed directly under the negative item.
The legal lesson above makes it very clear that any individual can contest information and clean up his credit history by himself. However, the process requires relentless follow-up and must be completed in a timely matter. Thatâ€™s where CJS comes in. We can help consumers deal with the tedious aspects of disputing items on their credit reports, and on average, our clients see a credit score increase between 50 and 100 points within 75 days.
Douglas Muir, CEO
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