In short, no one can legally remove accurate and timely negative information from a credit report, and everything that a credit repair clinic can legally do for you, you can do it yourself at low cost or at no cost. Unfortunately, none of those promises are true. Credit repair companies offer to “fix your credit by removing negative elements from your credit report.” They offer to file disputes about negative items on your behalf with credit bureaus and have them removed. What is the problem with this approach? The whole strategy is based on taking advantage of a legal loophole in the credit system.
When accurate items are removed, it is only temporary a few months at most. If you are tempted to hire a credit repair company to dispute late payments on your behalf, keep in mind that your fees can amount to hundreds or thousands of dollars. Credit repair companies are also not legally allowed to guarantee that they can delete information from your credit reports. And if the late payments are correct, neither the credit repair company nor anyone else will eliminate them.
If you answered yes to these questions, you are unlikely to be able to eliminate late payments, whether you hire a credit repair company or try to do it yourself. Credit scores are calculated based on information in the consumer's credit report, and sometimes that information is inaccurate. The goal of these companies is to build their credit by disputing outdated or incorrect information in their credit reports, tracking results, and monitoring to ensure that errors don't reappear. With a positive title like “credit repair”, it's no wonder people fall prey to fraudulent practices by credit repair companies.
Credit repair companies make sure you know when these items are removed, but they don't tell you when they reappear. They and you can contact creditors and credit bureaus to correct inaccurate information on your credit reports. Typically, these companies offer to review your credit reports and address any negative elements they can with credit bureaus on your behalf. By law, you are entitled to a free credit report every 12 months from each of the three major national credit bureaus: Equifax, Experian and TransUnion.
Keep in mind that there is nothing a credit repair company can do for you that you can't do on your own. Open accounts that are current and do not include late payments may remain on your credit report indefinitely, depending on the individual credit bureau's policy. Late payments may remain on your credit reports for up to seven years from the date of delinquency, according to the Fair Credit Reporting Act (FCRA). If you believe that your credit reports contain incorrect information, late payments or otherwise, you can file a dispute with each of the credit bureaus or contact the company that provided the allegedly incorrect information and ask them to delete the information.
While legitimate credit repair companies can do what they promise, the field is rife with scammers. When that happens, the credit repair company takes action, calling on the consumer to announce that the item was recalled and suggesting that the consumer pay more each month to “keep up the momentum and go after the rest.