Home Credit repair How Do I Repair My Own Credit?

How Do I Repair My Own Credit?

A business owner can dispute credit report errors for free. Here is the process, and how to spot a repair company that breaks the law.

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Business owners have personal credit reports like anyone else. The CFPB says lenders use credit reports to help decide whether they will loan you money and what interest rates they will offer. Here is the good news. You can dispute errors in your credit reports yourself, for free. The CFPB says the Fair Credit Reporting Act gives you that right.

What repairing your own credit means

Repairing your own credit means two things. Find mistakes on your reports. Then dispute them. It does not mean erasing bad history. The CFPB says no one can remove true, current bad marks from your report. What you can fix is wrong or incomplete data.

One more distinction. Your credit report is a summary of your credit history. Your credit score is a number. A formula turns the report into that number. Fixing errors in the report is the part you control.

Step 1: Get your reports for free and read them

The FTC says you can get a free report from each of the three bureaus every week. They are Equifax, Experian and TransUnion. The place to get them is AnnualCreditReport.com. That is the only site authorized to fill those orders. Requesting your reports will not hurt your score, the CFPB says.

Each bureau may get its facts from different places. So the reports may not match. Get all three. The CFPB says to check them at least once a year. Read every line.

Step 2: Identify errors worth disputing

Look for accounts that are not yours. Look for bills you paid on time but marked late. Look for wrong balances. If an account you never opened is there, that can be identity theft. The CFPB says to visit IdentityTheft.gov in that case.

Step 3: Dispute with the credit reporting company

The CFPB says to start by disputing the error with the credit reporting company that shows it. See the mistake on more than one report? The FTC says to dispute it with each bureau on its own.

Explain in writing what you think is wrong and why. Include copies of documents that support your dispute. The FTC says to send your dispute letter by certified mail and pay for a return receipt so you have a record. The bureaus also accept disputes online or by phone. For a fuller walkthrough, see our guide on how to dispute credit report errors.

The bureau must investigate and report the results back to you. It must do this free of charge, under the Fair Credit Reporting Act. One limit exists. A bureau need not investigate a dispute it reasonably determines is frivolous or irrelevant. It must tell you why.

Step 4: Dispute with the furnisher

The CFPB says fixing an error generally means contacting two places. One is the bureau. The other is the furnisher. That is the company that gave the bureau the information. That could be your bank, your landlord, or your credit card company.

Send that dispute in writing too, by certified mail. Use the furnisher's address on your consumer report, or an address it gives for disputes. Say what is wrong, why, and include copies of your documents. The furnisher must investigate and report the results to you. If it finds its information was wrong, it must tell all the credit reporting companies.

Step 5: What happens after the investigation

The bureau must send you written results. If information was wrong or could not be verified, it must be corrected or deleted. If deleted information gets put back, you must be notified in writing.

Still unresolved? You can file a brief statement of the dispute. The bureau adds it to your file and provides it to anyone who gets your report later. If a business keeps reporting the item, the bureau must note that you dispute it.

When a credit repair company is breaking the law

You can repair credit on your own, but some owners still hire a company. Know what the law requires of them. The Credit Repair Organizations Act forbids a credit repair organization from charging or receiving money before the service is fully performed. The CFPB says all forms of upfront payment before services are completed are illegal.

The law also requires a written, dated contract that you sign. It must state the payment terms. It must describe the services in full. It must carry a bold notice of your right to cancel. You can cancel a new contract for any reason within three business days at no charge. Any waiver of these rights is void.

Scam signs are easy to list. A company that asks you to pay before providing services is a warning sign. So is a promise to guarantee a specific score increase. The Credit Repair Organizations Act also forbids altering a consumer's identification to conceal accurate adverse information in a credit record.

Credit counseling as an alternative

A good credit counseling agency will send free facts about its services. It will not first ask for details about your money. The CFPB says to check on these agencies. Ask your State Attorney General's office. Check with your local consumer protection agency as well. If a service refuses to send free information, look for help somewhere else.

Where to complain

Trouble with a credit report can go to the CFPB as a complaint. Scams and fraud go to ReportFraud.ftc.gov. The CFPB says no one can remove accurate and current negative information from your credit report. For a negative item that is wrong, see our guide on how to dispute credit report errors.

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