Credit bureaus have a tremendous amount of power. What is contained in a credit report can limit your employment prospects, determine where you live, and even hamper your ability to travel. Although credit bureaus would have us believe that the credit system is infallible, it isn't Credit bureaus are staffed by human beings, and humans make mistakes. Although credit bureaus claim that errors occur in only one half of one percent of all credit reports, according to many consumer advocates the error rate is really between 30 and 50 percent. Until 1970, credit bureaus were not required to do anything about errors appearing in credit reports. Up until that time consumers did not even have the right to see their credit report, let alone dispute anything on it. The Fair Credit Reporting Act, enacted in 1970, gave consumers some basic rights regarding their credit file. These rights include:
- The right to see your credit report for free if you've been denied credit in the last thirty days. If you haven't been denied credit, most credit bureaus will still send you a copy of your credit report but will charge a nominal fee.
- The right to dispute errors. The credit bureau must re-investigate any items you believe to be inaccurate.
- The right to file a consumer statement with your credit report explaining your side of the story.
These rights do not guarantee removal of errors from your credit file. If you dispute an error and the credit bureau believes your dispute to be "frivolous or irrelevant," it is not obligated to reinvestigate the matter. In practice, credit bureaus are reluctant to call a claim frivolous or irrelevant because their reasons for refusing to investigate must stand up in court in case the consumer should decide to take legal action. If the credit bureau requests that the creditor or "subscriber" correct the error, and the subscriber does not respond in a reasonable amount of time (usually thirty days, although by law up to ninety days), the item must be removed from the file. If the subscriber responds and confirms the item, even though it may be incorrect on the subscriber's own credit files, the item remains and the credit bureau's responsibility has ended.
As we will see in chapter 16, many "credit repair clinics" offer credit repair based on "little-known loopholes in the federal credit laws." The laws they refer to are primarily one law, the Fair Credit Reporting Act. Although some of the clinics' techniques do, in fact, work. They offer you nothing that you cannot do yourself. The Fair Credit Reporting Act is meant to be used to correct errors made in your credit report. Credit repair clinics often attempt to use it to correct legitimately negative items. Although this tactic can work, you would have to fi1is.
Represent yourself in order have these legitimate items removed, an undertaking that inevitably carries a certain amount of risk. If a credit bureau suspects that you are misrepresenting yourself or using a credit repair service, it may "tag" your account and refuse to act on future requests for re-investigation.
If you still owe money on accounts that are showing as negative credit items on your report, you would be well advised to skip over to Chapter 5 before attempting to implement any credit repair plan. Trying to improve your credit while you are still struggling with your debts is futile. Since most subscribers report almost every month, it would be of little use having negative items removed only to have them reappear in corrected form the following month. Wait until your overdue accounts are settled before implementing this program.
