Everyone wishes to have good credit. Good credit is essential for everyone as it significantly influences all major financial decisions. Thus, credit scores and credit reports significantly impact people’s lives. Sometimes people can have poor credit scores, but they do not need to worry as there are many credit repair services available in the market which can help people with their credit scores.
Whether a person wants a competitive insurance premium, a loan with a tremendous interest rate, or even a job at any organization, they need an excellent credit score. All of these things are very much impacted by a credit score. It is always beneficial for individuals to maintain their credit score; if it is not, they work towards repairing it by clearing away all of the credit problems.
An insight into Credit Repair
A credit repair service can be defined as a service in which a credit repair organization, often known as a third party, gets some information removed from an individual’s credit reports in exchange for some amount. These credit service organizations market their services as services that will help individuals repair their credit and are also for-profit. Also, credit repair is a legal activity in almost all places at a federal level.
Most of these repair my credit services are designed in such a way that they help people to remove any unverifiable or inaccurate information which may be present in their credit reports. But in reality, the situations are different as these services remove information that is accurate but harmful from people’s credit reports before this information falls off a credit report naturally. People implement various methods to repair their credit scores even if there is some imprecise information on their credit history.
Credit Repair Organizations Act
The federal CROA, which is a synonym for the Credit Repair Organizations Act, is an act that manages these credit repair service providing organizations and also makes rules and regulations about the operation of these companies. This act came to work in 1996 and clearly states what the functions of credit repair organizations are and what do and don’ts of these organizations under federal law.
Some of the practices which are not allowed for these credit repair service under the CROA are:
- They cannot charge their customers any amount for the services that they have provided, but it has yet to be rendered for the customer’s credit repair.
- They shall not make any false declaration to promote their services for credit repair to the customers or any credit reporting agencies.
- They also should refrain from guaranteeing their customers that they can repair their credit of the customers by removing any information from the customer’s credit reports.
- They shall not advise their customer about changing their identity to avoid any credit charge associated with their credit information.
There are some facts that this credit repair service must also notify their customers under the CORA:
- The customers can sue the company if the company violates the CORA.
- Customers can get information about their credit reports without any charges.
- Credit repair companies always maintain their customers’ credit information accuracy through specific procedures and prevent mistakes.
These credit repair organizations must always keep the points mentioned above in their contracts within the language by choosing sure of words. The disclosure of these points and several other essential points must be done separately to the customers in a separate standalone form. All these services cannot force any of their customers to sign any waiver, so the customer gives up all or some of their rights, as mentioned earlier; any attempt to do such kind of activity by these services will result in their violating CROA.
The working of these credit repair service
The main operation of these services is to communicate with other companies which have reported their customer’s credit information to credit organizations or credit organizations on behalf of their customers. Most of these data reporting organizations are none other than financial service companies, credit card issuers, debt collectors, and banks. The vital task of a credit repair service is to make these specific organizations, such as debt collectors, either modify the credit information or altogether delete the credit card information, doing what works out best for their clients.
Communication between credit repair services and other organizations can occur through mail, the internet, or phone. Most of the time, various credit repair service have preferred communication through the mailfor various reasons. This communication method works out with how these rearing services operate, even though mailing letters to other credit organizations may sound unsophisticated to some people. Most of these services even go through a process known as “jamming” in this process, these organizations send letters which are often light-hearted, repeatedly to the other credit organizations.
The leading theory applied behind the process of jamming by these credit repairing services is that sending letters of dispute in large amounts and then challenging the same thing over and over will result in these credit organizations (debt collector, lender) may fail to process their dispute within the time duration of 30 days. This time duration is instructed by the FCRA (Fair Credit Reporting Act), which may result in the deletion of the account.
There are various credit repair services that may state that they have been successful in deleting millions of the entries of adverse credit of their customers. But one must still be very careful as there are still no statistics about the impact these credit repair services may have on the average credit score of their clients. Also, there are no statistics available on a dispute which these services may file for the deletion or the average price customers pay for credit repair.
Indeed, these services are essential and very helpful, but if a customer wants, they can also do the things to repair their credit which these services are doing for them in exchange for money. It is also much better for a customer to have accurate credit reports. The whole procedure is and always has been free.