Credit repair involves rectifying inaccurate information on your credit report to provide a comprehensive financial overview, enhancing your credit score, and committing to prevent future credit issues. You can undertake this process independently or enlist a specialized credit repair company’s services. However, both avenues carry the potential for errors, making it essential to understand your rights and steer clear of the 16 common mistakes outlined below.
Know Your Rights
Consumer protection laws safeguard individuals concerning credit matters, such as the Credit Repair Organizations Act (CROA), Fair Credit Reporting Act (FCRA), Fair and Accurate Credit Transactions Act (FACTA) of 2003, and Fair Debt Collections Practices Act (FDCPA) of 2010. These regulations ensure:
- Yearly free access to credit reports
- The right to dispute errors on your reports
- Notification when your credit report affects credit decisions
- Permission requirement for sharing your credit information
- Regulation of the duration negative information remains on reports
- Specifications for creditor communication regarding debts
- Prohibition of deceptive practices by credit repair agencies
- Mandatory provisions of a contract and cooling-off period by credit repair companies
Familiarizing yourself with your rights is fundamental, but it’s equally crucial to avoid missteps along the credit repair journey. Here are the pitfalls to be mindful of.
Mistake #1: Failing to Check Credit Reports
Initiating credit repair starts with reviewing your credit reports. If you haven’t done so, visit the Federal Trade Commission’s Free Credit Reports page to access reports governed by the FCRA. Thoroughly examine all reports to identify and dispute inaccurate information.
Mistake #2: Procrastinating
Address any erroneous negative information promptly to prevent prolonged inaccuracies impacting your credit report.
Mistake #3: Avoiding Credit Education
Enhance your credit repair journey by acquiring knowledge on disputing incorrect credit data and managing debt effectively.
Mistake #4: Not Keeping Documentation
Documenting debt details is pivotal for disputing inaccuracies and upholding your rights during the credit repair process.
The approximate number of “credit report” complaints reported to the Consumer Finance Protection Bureau in 2020 was 235,000.
Mistake #5: Disputing Too Much
Resist disputing information indiscriminately to prevent inadvertently harming your credit score. Only challenge data you genuinely believe to be inaccurate.
Mistake #6: Disputing Online
Opt for traditional dispute channels instead of online methods to ensure you retain full rights under the FCRA during the credit repair process.
The Bottom Line
To enhance your credit score effectively, understand and assert your rights within the framework of credit laws. Regularly monitor and dispute inaccurate information in credit reports, maintain thorough documentation, and avoid disreputable credit repair entities.
