Consumer Credit Repair

consumer credit repair to improve your financial life

Your personal situation is different from someone else. The consumer credit repair service that works for someone may not be the best choice for someone else. You should take the time to understand all the consumer credit repair options available to you to find the best solution for your needs and goals.

What Is Consumer Credit Repair?

Consumer credit repair refers to the process of disputing mistakes and errors in your credit reports. Your creditors monthly report your credit activities (payments, credit applications, etc.) to the credit bureaus. Each credit bureau has their own proprietary version of your credit report.  The information in your credit report is accurate, based on what is received from your creditors. But your creditors and the credit bureaus commit errors in reporting.[/vc_column_text]

What Is A Credit Score?

Your credit score is your credit history expressed as a number. It is a three-digit number, typically between 300 and 850, designed to represent your credit risk, or the likelihood you will pay your bills on time. You can also think of it as a grade for how responsibly you have managed loans, lines of credit and other financial obligations over the years.

Credit scores are extremely important because they affect your ability to borrow money as well as the cost of doing so. Simply put, those with higher credit scores generally receive more favorable credit terms. This will translate into lower payments and less paid in interest over the life of any of your credit accounts. They also play a role in the car insurance premiums you pay. And, unfortunately, bad credit can even make it difficult to find a job or a place to live.

What Is IT? | What Affects It?

what is a credit score?

A credit score is a statistical summary of the information contained in a consumer’s credit report usually graded on a scale ranging from 300 to 850. Your credit score represents your financial reputation. It is used by lenders, landlords, employers and others to determine your level of credit risk, responsibility, and overall character.

Credit scores are calculated using information in your credit reports, including your payment history, the amount of debt you have, and the length of your credit history. Higher scores mean you have demonstrated responsible credit behavior in the past, which may make potential lenders and creditors more confident when evaluating a request for credit, like a loan or a credit card.

Here is a general look at credit score ranges:

  • Excellent – 800-850
  • Very good – 740-799
  • Good – 670-739
  • Fair – 580-669
  • Poor – 300-579

Credit scores may vary according to the scoring model used and which credit bureau furnishes the credit report used for the data. That is because not all creditors report to all three three nationwide credit bureaus (Equifax, Experian and TransUnion). Some may report to only two, one or none at all. Also, lenders may also use a blended credit score from the three major credit bureaus.

The types of credit scores used by lenders and creditors may vary based on their industry. For example, an auto lender might use a credit score that places more emphasis on your payment history when it comes to auto loans.

Since everyone’s financial and credit situation is different, lenders may also have different criteria when it comes to granting credit, for example, including your income as a factor.

FICO Score

Consumer Credit Report
Payment History
Amounts Owed
Length Of History
Credit Mix
New Credit

what affects credit score?

Credit scores are based on the information in our major credit reports. They represent a numerical weighting of different categories found in a credit report. There are two major providers of credit score reports in the US: FICO Score and VantageScore. While the credit scores may be calculated a bit differently, they will likely produce very similar results for you.

Your credit score is calculated only from the information in your credit report. However, lenders may look at many things when making a credit decision, such as your income, how long you have worked at your present job, and the kind of credit you are requesting.

If you have good marks in each of the following credit categories (using FICO Score as reference), your credit should be good no matter which credit score report is used. These percentages are based on the importance of the five categories for the general population. The importance of these categories may vary from one person to another.


Payment history is the most important part of any credit score. The first thing any lender wants to know is whether you have paid past credit accounts on time. This helps a lender figure out the amount of risk it will take on when extending credit.

Amounts owed (WEIGHT 30%)

Having credit accounts and owing money on them is the second most important category of a credit score. It is an indicator of whether your spending habits are sustainable and if you are likely to face serious financial problems in the future. If you are using a lot of your available credit, this may indicate that you are overextended-and banks can interpret this to mean that you are at a higher risk of defaulting.

length of credit history (WEIGHT 15%)

In general, a longer credit history will increase your credit report. The length of time using loans, credit cards and lines of credit is important in accurately forecasting a borrower’s future risk behavior. However, even people who haven’t been using credit long may have credit scores depending on how the rest of their credit report looks.

credit mix (WEIGHT 10%)

This category measures your mix of different types of credit accounts (credit cards, retail accounts, installment accounts, auto and mortgage loans) and how recently you have used them. The types of credit you have used shows how experienced a borrower you are. It is not necessary to have one of each.

new credit (WEIGHT 10%)

On a credit score, this category emphasizes your recent financial performance. This is one of the best predictors of your future financial activities. Research shows that opening several credit accounts in a short period of time represents a greater risk, particularly for people who do not have a long credit history. If you can avoid it, try not to open too many accounts too rapidly.

What Is The Consumer Repair Process?

Consumer credit repair is the process you use to correct reporting errors on your credit report (which adversely affect your credit score) by submitting a dispute to the credit bureau that issued that report. If the information cannot be verified within 30 days, the credit bureau must remove the item you disputed.

You or a third-party credit repair company can do this. There’s nothing a credit repair company can legally do for you, even removing wrong information, that you can not do for yourself for little or no expense

There is no quick repair fix to improve your credit score. Information that is negative but accurate (such as late payments and delinquencies) will remain on your credit report and affect you credit score for up to seven-years. However, there are steps you can take to repair and improve your credit scores over time.

Credit Repair | Dispute Process

consumer credit repair process

By law, information reported about you to credit bureaus must be fair, accurate, relevant, substantiated and verifiable. Consumer credit repair involves fixing inaccurate, misleading, unverifiable, untimely, biased or incomplete information listed on your credit report.

In order to fix these errors, the national credit reporting bureaus (Equifax, Experian and TransUnion) require you to work through a series of formal dispute letters and complicated online disputing systems. The importance of fixing errors on a credit report is that they will result in lowering your credit score. This can prohibit you from taking out loans, getting a credit card or securing any form of lending.

Basically, third-party credit repair services will examine your credit reports and help you with disputing items that are unfair, inaccurate, and unverified in order to help you improve have a fair and accurate credit report. The consumer credit repair process can take time.

There are four basic steps to improving the quality of your credit report and resulting credit score:

1 – Credit report analysis

Obtain your credit report from the three major credit bureaus; to collect information on your full credit history. Each credit bureau’s report is different and all need to go through analysis. You focus on the negative items that are affecting your credit score and you create a disputing plan.

2 – Credit disputing

If you choose to use a third-party credit repair service, their legal team assigned to your case reviews your negative items and drafts and sends the appropriate dispute correspondence to the creditors or credit bureaus. The disputes need to be done in writing and sent to the credit bureaus via certified mail for bureau accountability.

3 – Dispute escalating

If a negative item requires more care or correspondence to remove, the dispute is escalated to include legal representation (if you use a third-party credit repair service). The Fair Credit Reporting Act and other laws are used to ensure your credit rights are accurately represented.

4  Credit score analysis and mentoring

As disputes are processed, the credit bureaus need to be tracked to ensure compliance with the dispute resolutions. Additionally, you will need analyze and adjust your financial behavior to take steps to improve your credit score.



consumer credit repair dispute process

A credit dispute is an inquiry sent to a credit bureau about an error on your credit report.  Essentially, a dispute is a request sent to the credit bureaus for them to conduct an investigation of questionable information on your credit report.  Note that since there are three national credit bureaus, each with a different version of your credit report, you have three credit reports to review.

Once you have begun a credit dispute, a credit bureau will initiate an investigation of any credit information that you challenge. The Fair Credit Reporting Act (below)  statutes obligate the three major credit bureaus to investigate the items in question. They must also forward any data you provide about the error to the organization that provided the information to the credit bureau.

Here are the following steps that you should take if you find an error on your credit report.

1 – Send A Letter To The Credit Bureau

Each of the major credit bureaus have their process in place to dispute inaccurate information in a consumer credit report. While you can do this online, it is recommended to send a letter to ensure receipt and accountability.

The FTC has a sample dispute letter you can use for reference. It should cover:

  • Clearly identify each item that you challenge.
  • Explain why you challenge the information and go into detail.
  • Request that the negative item is removed or corrected

If you are challenging a credit inquiry (a hard inquiry that occurred without your approval), you should first notify the lender who issued the credit inquiry. Then you should notify the credit bureau.

2 – Contact The Data Furnisher

The data furnisher is the entity (lender or creditor) that provided the information to the credit bureaus. They are also obligated to follow the statutes in the FCRA. This means they are responsible for investigating consumer disputes about the accuracy of the information they provided.

If the furnisher has reported a late payment or incorrect debt amount, you could try contacting them directly.  In cases of incorrect personal information, it should primarily be reported to the credit bureaus.

3 – Wait For The Credit Bureau To Respond

Credit bureaus must investigate the items in dispute usually within 30 days. Once completed, they have five days to report the results back to you. You can expect the same time-frame for a response from a data furnisher.

After the investigation, the credit bureau must provide the results in writing and give you a free copy of your report if the dispute results in a change.

Credit bureaus are not obligated to investigate a claim they decide is “frivolous,” Examples of frivolous claims include:

  • Submit inaccurate or incomplete information on the dispute.
  • Try to contest the same item multiple times without new evidence.
  • Attempt to claim without proof  that everything on your credit report is inaccurate.

4 -Review The Results

If the information you challenge is verified as accurate by the data furnisher, the item will remain on your credit report. Otherwise the item will be updated or deleted. Review your credit report to verify.

5 – Review Changes On Your Credit Score

Filing a dispute has no impact on your score. Updates to personal information have no impact on your score. Your credit scores could change if information on your credit report is updated (removal of a late payment, change in account status, etc.) and is relavent in the calculation of your credit score.

What To Look For In Credit Repair

Credit is a very important tool in today’s society. Credit is what enables, for most people, to achieve the dream of owning a home, financial security, and a desirable lifestyle for their families. With the stakes being so high, people can become desperate when they learn their credit score is standing in the way of their goals.

Credit repair scams prey on those searching for a way to get their credit on track. They provide people with hope only to take their money, waste their time, and sometimes even put their good name at risk.

So given that there are legitimate credit repair companies as well as companies to be avoided, finding a legitimate company is the first step in getting the most from a consumer credit repair service.

Traits | Laws

traits of professional consumer credit repair

Here are some traits you can look for to help determine if a credit repair company is legitimate:

Will only charge for credit repair services AFTER they have been performed.

The Credit Repair Organizations Act specifically forbids any credit repair company from accepting payments in advance. According to the act, “no credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed.”

Will inform you of your right to repair your credit yourself.

Everyone has the right to order their credit reports and to dispute the questionable negative items in their reports without the assistance of a credit repair company. In fact, anything a credit repair company can legally do for you, you can do for yourself. To ensure that credit repair customers are informed of these rights, the Credit Repair Organizations Act also requires that a written statement titled “Consumer Credit File Rights Under State and Federal Law” be provided to all consumers “before any contract or agreement between the consumer and the credit repair organization is executed.”

Will NEVER advise you to create a “new” credit identity.

This is known as file segregation. Shady credit repair clinics claim to be able to create a new credit file and give people a fresh start. But in truth they are peddling an illegal “credit repair” solution that could end up causing legal problems for the customer. File segregation works by using an employer identification number or a new social security number to trick the credit bureaus into creating a new credit report for you. However, it is a federal crime to misrepresent your social security number and you could be charged with mail, wire, or civil fraud depending on how you attempt to use your “new” credit report.

Will NEVER promise to delete accurate information from your credit reports.

It is impossible for any credit repair company to guarantee that an item on your credit reports will be deleted. Ultimately, that depends on the credit bureaus and the creditor who reported it. Credit repair companies can employ a full arsenal of credit repair tactics and even go so far as to sue the parties involved, but there are no guarantees they will prevail. At best, a credit repair company can promise to work your case to their full capacity.

Laws governing consumer credit repair

There are three laws that govern the consumer credit repair industry.

Fair credit reporting act

The Fair Credit Reporting Act is where credit report repair begins. The FCRA regulates how the credit bureaus treat consumers.

  • Ensures that consumers can acquire their consumer credit reports at a reasonable price (or for free under certain circumstances), and severely restricts “investigative consumer reports”.
  • Regulates who has “permissible purpose” to acquire a consumer’s report.
  • Delineates the running reporting periods for information on credit reports — generally 7 years for most items except for bankruptcy related notations which can remain for 10 years. Keep in mind that these are MAXIMUM LIMITS.
  • Details how a credit bureau must handle consumer complaints. When a consumer disputes a credit file item, the bureau must note within the file that the item is disputed and begin an investigation which must be completed within a “reasonable” amount of time, universally held to be 30 days. The bureau must then inform the consumer of the action that was taken.
Fair debt collections practice act

The FDCPA was enacted to protect consumers civil rights and details credit collection business activities.

  • Provides standards for acceptable third-party collections behavior.  Collection agencies (CA) are prohibited from contacting consumers at “unusual” times, (9 PM – 8 AM next day). CA’s are prohibited from telephoning or writing to debtors at their place of employment if asked to cease such contacts.
  • Specifies that CAs must always include several legal caveats in their dealings with debtors.  IF a CA does not state their purpose right away when communicating with a debtor, whether written or verbal, they are violating that consumer’s Federal civil rights.
  • Prohibits collectors from screaming, threatening or actually employing violence, using profanity, misrepresenting their identity, or hinting at possible imprisonment.
  • Allows any consumer to formally request that the CA “cease and desist” from communicating with them. Then the CA is legally obligated to follow suit.
  • Obligates collectors to behave in a certain manner when communicating with others. Specifically, a collector must identify themselves by name but are prohibited from identifying their employer or the reason for their call.
  • Specifically details a consumer’s right to request further information regarding an alleged debt. Such procedures are termed debt validation. Every consumer has the right to challenge the veracity of any debt.  A collector must then respond in a certain way, otherwise the collection activity must CEASE and all related consumer reporting must be RESCINDED.

Fair credit reporting act

The Fair Credit Billing Act requires creditors to bill correctly and completely.  It is the FTC’s job to make sure that the statute is universally applied.

The FTC summarizes the statute’s prohibitions as follows: “unauthorized charges; charges that list the wrong date or amount; charges for goods and services you didn’t accept or weren’t delivered as agreed; math errors; failure to post payments and other credits, such as returns; failure to send bills to your current address — provided the creditor receives your change of address, in writing, at least 20 days before the billing period ends; and charges for which you ask for an explanation or written proof of purchase along with a claimed error or request for clarification.”

Thoughts On Consumer Credit Repair

To appreciate the importance of your credit standing you just have to look at what your credit impacts. Everything.  Not having ideal credit can cost you thousands of dollars over the course of a home or car loan. It can keep you from getting insurance coverage or even a job. It can make even everyday needs and decisions more difficult.

If you do not have ideal credit, consumer credit repair is worth it. Whether you decide to do this yourself or with a third-party credit repair company, when you compare this to the control of your credit situation and the opportunities that it brings, the value of credit repair should be obvious.

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