The reason that credit repair companies have gotten a bad rap for being unethical or dishonest is largely due to the way that some credit repair companies have chosen to operate. Some of these unethical companies do credit repair by simply asserting that all negative items on their clients credit reports are due to identity theft and crossing their fingers that some will be removed. This is not credit repair it is fraud.
Many credit repair companies operate in a manner that is vague, and leaves the client confused about what type of service they are actually receiving!
Yes, the Fair Credit Reporting Act (FCRA) gives a consumer the right to dispute anything on a credit report. And yes, accurate items can be challenged and removed if they cannot be verified, but it all must be done in a correct, smart and legal way.
Credit repair companies that operate with integrity operate with patience and are honest with their clients. Ethical credit repair companies will pull the client’s reports and scores together and walk them through every detail to spot any information that may be false or incomplete. The credit repair company THEN takes that information to dispute the accounts accordingly using a method called, Factual Dispute Methodology.
We have found that more than 80% of credit reports in the United States have errors that need to be updated or removed. That’s crazy, right? We the professionals find those errors and create a plan of action to dispute them,
The first thing a professional reviews with the client are any derogatory accounts that are reporting on their credit- that include bankruptcy, judgments, inquiries, late payments, collections, foreclosures, repossessions, and charge-offs. First, we ask ourselves,
Is it Accurate?
Check that all account numbers, dates, account status, account types, and other information is correct based on the consumer’s personal records. Check that the credit reports you have accessed from all three bureaus contain the same exact information.
Is it Complete?
There should be no missing dates, account numbers, balances, or other information. We find this to be one of the most common errors you will find.
Is it Verifiable?
Creditors are required by law to have back up documentation for everything that is listed on a credit report. If the information does not exist then the item should be removed completely.
Once you have determined what items are inaccurate, incomplete, or unverifiable, we must determine what we will dispute first. We recommend starting with the accounts that weight the heaviest on your credit scores.
For this strategy, it is helpful to know how scores are created. Credit scores are reported based on the following approximate formula:
- 35% payment history
- 30% amounts owed
- 15% length of credit history
- 10% inquiries/recent credit decisions
- 10% types of credit used
Understanding this information, it would make sense to tackle the accounts related to payment history and amounts owed first before moving on to other’s like, say inquiries.
Understanding and adhering to the Factual Dispute Methodology can give you the peace of mind that you are truly cleaning up your credit the legal way.
The Bottom Line
Cleaning up your credit reports the smart and legal way is the best method towards having lasting credit repair results. There are over 20 ways to dispute an account on your credit reports that we outline in our Flawless Credit Guide, and you can start tapping into this information to start your journey to credit disputing success. Click here to grab your copy today.
To your success!