My Thoughts on Credit Repair
Pennybags Malloy
The basic direction I want to go is that of an Adam Smith ideal. In
the realm of credit repair this means that I will definitely leave the
grunt work up to the professionals.
Credit repair is one of those things that is relatively new and is
largely misunderstood. As such, it is a hotbed for misinformation,
scams and scare tactics. This is unfortunate because it has led many
people who need to repair their credit to avoid the subject all
together. I read somewhere that something like 75 percent of credit
reports have errors in them. This does not mean that 75 percent of
reports have bad marks on them such as late payments or collections, it
means that 75 percent of reports have information on them that is
completely inaccurate. Look around you. Find three other people and
do the math. Only one of you has an accurate credit report.
Returning to my point, there are tons of people out there who would
benefit from repairing their credit but only a small portion of them
are actively working to repair their credit. And why is this?
Because credit repair is not easy. Sure, people will tell you that all
you have to do is send in some letters to the credit bureaus and voila,
problem solved. The FTC even has a page on their site devoted to
self-repair that describes in only 2,500 words how easy it is to repair
credit. What people don't tell you, however, is that the credit
bureaus don't want to repair your credit. In fact, pretty much no
one other than yourself wants to repair your credit.
And why is this? Simple economics. For starters credit bureaus are
for profit businesses. They make money by collecting and selling your
personal information and lately from selling consumers their credit
reports (That's right, they profit by selling you information about
yourself). Credit bureaus do not make money from repairing credit
reports since they have to hire people to deal with disputes, invest
resources in verifying information, etc. They lose money from these
activities so naturally, credit bureaus do not want anything to do with
repairing your credit report.
Since credit bureaus don't really want to work on fixing errors in
your credit report, they aren't particularly inclined to make the
process easy for you. Self help advocates say that it is simply a
matter of sending them a letter but they don't make light of the fact
that the credit bureaus don't have to act on every letter they
receive. Credit bureaus have gatekeepers who are tasked with looking
through each dispute letter they receive. If they find your dispute to
be "frivolous or irrelevant" (exact wording from the Fair Credit
Reporting Act), they don't have to act on the dispute. They simply
send you a letter indicating that your request for an investigation was
denied.
So there is more to it than simply writing a letter and sending it in.
You have to get past the gatekeepers who may reject your dispute based
on the information you provided in your letters, the timing of your
letters, how many letters you send, etc. What started out as a few
hours spend drafting a letter can turn into many hours of writing and
sending letters, waiting for rejection notices and writing new letters.
Coming full circle, and back to my Adam Smith reference, we live in a
society of specialization. We no longer live in a medieval system
where everyone provides everything they need for themselves. Instead
of growing out own food, building our own houses and producing our own
clothing, we have professionals who produce each of these things for
us. The rationale being that each person can only truly excel at a
select few things so they exchange their services in this narrow area
of expertise for services in the other areas. While it is possible to
make your own shoes, it is much cheaper and easier to have someone do
it for you and you get better quality out of it.
The same is true of credit repair. You absolutely can do it yourself.
Nothing is stopping you. But unless you already have the expertise or
don't mind investing the time required to become an expert, it makes
more sense to let others do it for you. Just make sure to use a
reputable company, preferably one that has a good record with the BBB.
Seri@l McLeet
to do credit repair. Creditors who rely on your credit score like for
there to be errors on credit reports. Errors on credit reports
artificially deflate credit scores making it so creditors can demand a
higher interest rate for loans even though the debtor is in all
actuality not a greater credit risk. They earn more money off of
interest without any additional risk. Pretty sweet deal.