Credit Repair is a general term often applied to the
controversial practice of improving or rehabilitating one's
financial reputation (credit worthiness) among creditors.
To improve a credit rating damaged by poor credit habits,
in the long run only one thing will work: changing those habits.
Making arrangements with the creditors to repay them is often
one of the steps in improving one's credit habits. Creditors
may accept slow payment schedules, as an alternative to writing
off the debt. In some cases, creditors may accept a less-than-full
repayment (pennies on the dollar). The key here is contact
with the creditor and taking action to retire the debt.
At the same time, reviving an old debt that is no longer
collectible can actually do additional damage to one's credit
reputation. It is best to be aware of the circumstances regarding
the debt's collectability, statute of limitations, and legal
and illegal collection practices, before contacting a creditor
on a very old debt.
In rare cases, bad credit is due solely to erroneous entries
being reported in one's credit history, collected and presented
in a credit report, though studies have found that up to 46%
of individual credit reports contain erroneous entries which
may impact one's credit rating. This can readily be handled
by taking advantage of the protections provided in law and
regulation, primarily the dispute process.
It is possible, for example, that a bad debt of a previous
tenant could be associated with a current tenant, merely because
of the common address.
A credit repair campaign is most likely to show results if
creditworthiness has been damaged due to incorrect or misleading
information in a credit report.
In summary, such a credit repair campaign involves obtaining
copies of one's credit reports and formally disputing erroneous
or misleading information there found.
The process in many countries (including the United States)
can be quite complex and time consuming, thus spawning the
credit repair industry. Both for-profit and not-for-profit
organizations have formed to assist individuals in the credit
repair process, always for a fee, though governments have
repeatedly increased oversight and regulation of this industry
because of predatory practices.
In addition, much self-help information on credit repair
has become available, providing the motivated individual the
tools and knowledge to proceed with their own credit repair
campaign. Just as an organization hired for this purpose,
the individual would initiate the credit repair process by
first obtaining copies of their credit report, reviewing the
credit report for errors, omissions, and misleading information,
and requesting corrections to such information by means of
a formal dispute.
To dispute an entry in your credit report because it contains
erroneous, misleading, or outdated information, as provided
by federal law, simply write a letter to the credit reporting
agency. As an example:
123 Your Street Address
Your City, ST 01234
Big Credit Bureau
Their Street Address
Some City, ST 56789
Dear Credit Bureau,
This letter is a formal complaint that you are reporting inaccurate
and incomplete credit information.
I am distressed that you have included the below information
credit profile and have failed to maintain reasonable procedures
your operations to assure maximum possible accuracy in the
reports you publish.
Credit reporting laws ensure that bureaus report only 100%
credit information. Every step must be taken to assure the
information reported is completely accurate and correct.
The following information therefore needs to be reinvestigated.
respectfully request to be provided proof of this alleged
specifically the contract, note or other instrument bearing
signature. Failing that, the item must be deleted from the
as soon as possible:
CREDITOR AGENCY, acct. 123-34567-ABC
The listed item is completely inaccurate and incomplete,
and is a
very serious error in reporting. Please delete this misleading
information, and supply a corrected credit profile to all
who have received a copy within the last 6 months, or the
years for employment purposes.
Additionally, please provide the name, address, and telephone
of each credit grantor or other subscriber.
Under federal law, you have 30 days to complete your re-
investigation. Be advised that the description of the procedure
to determine the accuracy and completeness of the information
hereby requested as well, to be provided within 15 days of
completion of your re-investigation.
Many companies offer fraudulent schemes for personal credit
repair, offering to wipe out legitimate records and give a
person a "clean slate". In almost all cases, these
are either fraudulent scams or schemes which may cause a person
attempting to use them to violate more serious laws. Such
schemes are primarily identified by unrealistic promises,
including the infamous "new credit file" scam. Legitimate
approaches which may correct erroneous, misleading, or outdated
entries on a credit file, negotiate with creditors, and teach
better debt habits, take months if not years to accomplish