This article is written by Peters and Associates.
I need to get my credit score up so I can buy a house in the next few years. Does credit repair really work?
— Bekah B., North Las Vegas
Believe it or not, Bekah, this is a loaded question, difficult to answer with a simple yes or no.
If there are errors or inaccuracies on your credit reports, then yes, fixing those problems — aka credit “repair” — may increase your credit scores enough to help you buy a home. This type of repair (fixing incorrect information) usually can be done on your own with little effort, via what’s commonly referred to as “the dispute process.”
If after you’ve disputed a legitimate error, the credit reporting agency refuses to remove or fix the problem, you may have a claim under the Fair Credit Reporting Act, or FCRA.
The FCRA states that inaccurate information on your credit report is to be corrected or removed. If a credit bureau refuses to correct a problem, you may be entitled to damages. In addition, attorneys’ fees are covered under the FCRA when you have a valid claim, which means you shouldn’t have to pay upfront or monthly fees if you need help.
On the other hand, if you’re trying to remove valid or accurate information — for example, a foreclosure, past-due credit card account or valid medical collection — then no, credit repair usually doesn’t work.
From the Federal Trade Commission’s website on credit repair: “No one can legally remove accurate and timely negative information from a credit report.”
Yes, some companies may make claims they can remove valid and accurate information, but those claims will never be in writing, nor will they be backed up by anything other than a shifty smile.
Sadly, thousands of people each month fall for such credit-repair scams because they want to believe there’s a quick fix that can undo legitimate problems with a credit report. Hope blinds us into believing these lies because we so desperately want them to be true. They aren’t.
It bears repeating: “No one can legally remove accurate and timely negative information from a credit report.”
The simple truth is, if your scores are low because of high credit-card balances, past-due accounts or even collections, it’s best to get out of debt before you work on rebuilding your credit. You’d be surprised how fast your scores go up when you don’t have high balances or collections.
Most of our clients achieve 660 to 680 credit scores within about six months of getting out of debt. Even our bankruptcy clients can reach the 700s about 24 months after discharge.
In your question, you said you’d like to buy a house “in the next few years,” which means you’ve got quite a bit of time to get that score up.
If you do have a lot of debt or delinquent accounts, I’d recommend working to become debt free before you focus on your credit scores.
If you’re plagued by old, but valid, errors in judgment, I’d focus on rebuilding your credit, not “repairing” it.
And if you have inaccuracies on your report, I’d try to resolve them on your own and/or reach out to an FCRA attorney for some free legal assistance about the errors.
Please note: The information in this column is intended for general purposes only and is not to be considered legal or professional advice of any kind. You should seek advice that is specific to your problem before taking or refraining from any action and should not rely on the information in this column.