Removing Deragatory Items From the Credit Report

Credit restoration is the process of using strategic methods to legally require the three credit reporting agencies (CRAs) to verify the information they are currently reporting about any disputed accounts.

You may already know that questionable deragatory accounts that show up on a clean report will hurt your credit score. And the more negative accounts you have, the lower your score will be.

Credit restoration is a powerful tool because it uses a legal process provided to consumers in the Fair Credit Reporting Act (FCRA). The FCRA states that if a CRA is unable to verify an item with a creditor within 30 days of receiving a written dispute, they must delete or correct the item as requested. It's the law!

Improving Your Credit Worthiness

The purpose of credit restoration is to get questionable negative items removed or corrected and take advantage of everything that comes with great credit worthiness. A credit worthy consumer is rewarded with the best financing, insurance rates, employment opportunities, renting opportunities, and peace of mind. Take a look at just how much it can cost to have bad credit.

These figures are based on a $100,000 mortgage loan for 30 years. Bear in mind that when looking at this diagram, it is not meant to give an exact description of interest rates and mortgage loan programs. However, this chart shows the relative difference a better credit score will have on mortgage financing

 

 

With a better credit score, you will:

• Pay a lesser down payment
• Pay lower interest rates
• Pay lower monthly payments.

An Overview of the Nature, Function, and Problems of Credit Reporting Agencies

The three CRAs, also known as credit bureaus, are TransUnion, Equifax, and Experian. Each independent, these agencies are not funded by the government; however, they have close relationships with financial institutions. Lenders rely on the CRAs because they use credit reports provided by them to decide whether a potential borrower is high or low risk. Unfortunately, credit reporting is in favor of financial institutions, not consumers. The CRAs do not provide a fair assessment of your credit history. For example, your credit report only takes into account when your medical bills and phone bills are late, not when they are paid on time. Your credit reports also fails to consider your assets, income, or reserves; although it does penalize you for great amounts of unsecured debt.

Aside from being unfair, the CRAs have many problems handling, maintaining, and reporting accurate data. The CRAs make many errors mainly because they handle hundreds of millions of consumer records, each having dozens of accounts, and new accounts being added periodically.

In fact, 90% of all credit reports contain some type of error, whether it regards personal information or a positive account that has an inaccurate payment history. 30% of all reports have serious errors that affect a consumer's ability to attain financing, employment, insurance, or even an apartment. These errors include: paid collections that are still reporting unpaid; late payments on a deferred loan; a judgment or bankruptcy that belongs to someone else; etc.

Your Right to Dispute Items on Your Credit Report

The Fair Credit Reporting Act (FCRA), Public Law No. 91-508, was enacted in 1970 to promote accuracy, fairness, and the privacy of personal information assembled by Credit Reporting Agencies (CRAs). CRAs gather information on individuals and produce a credit report for businesses, including credit card companies, banks, employers, landlords, and others.

The FCRA is a complex statute that has been significantly altered since 1970 by Congress and the courts. The Act's primary protection requires that CRAs follow "reasonable procedures" to protect the confidentiality, accuracy, and relevance of credit information. To do so, the FCRA establishes a framework of Fair Information Practices for personal information that include rights of data quality (right to access and correct), data security, use limitations, requirements for data destruction, notice, user participation (consent), and accountability.

The FCRA was passed to address a growing credit reporting industry in the United States that compiled "consumer credit reports" and "investigative consumer reports" on individuals. The FCRA was the first federal law to regulate the use of personal information by private businesses - those businesses being the CRAs.

As credit reporting and regulations became more popular, credit reports and scores began to gain respect as they became integrated into society's financial qualification standards.

What to Expect From Credit Restoration

Having a successful experience with credit restoration depends on your expectations. For example, if you expect to get 100% of your items removed in the first month, prepare to be supremely disappointed. Credit restoration is a 6 month to a year process, so unless you consistently and diligently send out dispute letters, you won't see any results.

Keep in mind that even though the CRAs likely have automated systems and computers that receive dispute letters, conduct investigations, and respond to consumers, they don't get paid for any of the processing. Computers glitch; humans err; this is why credit restoration successfully removes questionable negative items. Read "What to Expect From Credit Restoration" and avoid the frustrations so many people experience with the CRAs.

Not only can you expect your credit score to immediately jump when an item is deleted, but you will notice your dating or marriage life increasingly flourish as well. (Credit Matters is not liable for any decrease or stagnancy in your love life due to an increased credit score).

Caveats of Credit Restoration

Although removing negative items from your credit report will ultimately increase your credit score, disputing negative accounts can have some side effects and is not an end-all solution. By reading "The Caveats of Credit Restoration" you will enhance your financial awareness and better understand what you can do to supplement the credit restoration process.

Do's and Don'ts of Credit Restoration

In this section you will learn everything you should and shouldn't do when performing credit restoration. It's important to always send your identification along with every dispute letter; this way, the CRAs always know the dispute is authorized by you. Don't become frustrated with the CRAs, and don't send any evidence proving a closed account belongs to you. Learn more about "The Do's & Don'ts of Credit Restoration"

Pro's and Con's of Credit Restoration

Credit restoration is a very powerful tool and has many advantages. It let's you properly challenge a questionable deragatory account. Using credit restoration will give you more opportunties in life and hopefully let you leave any bad habits or unfortunate life experiences in the past. Learn more about "The Pro's & Con's of Credit Restoration."

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA), Public Law No. 91-508, was enacted in 1970 to promote accuracy, fairness, and the privacy of personal information assembled by Credit Reporting Agencies (CRAs). The FCRA was last amended June 3rd, 2008.

Credit Repair Organizations Act

In 1996, the Credit Repair Organizations Act (CROA), 15 U.S.C. § 1679, et. seq., was signed into law to protect the public from unfair or deceptive advertising and business practices by credit repair organizations.

Sample Letters

Here you'll find the dispute letters and when it's proper to send your first dispute letter, a letter if they never send you results, and a letter when they start becoming stubborn.

Disclaimer: The information provided in this site is not legal advice. All information is general information, some of which pertains to legal issues involved in the subject matter. Credit Matters Inc. is not a law firm and is not a substitute for an attorney or law firm. Your access to and use of this site is subject to additional terms and conditions.

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