Consumer Comeback Blog

A Consumer Guide to Credit Score Repair

A credit score is a three-digit number that a number of entities use to form a judgment about you. This score reflects your ability to meet your financial obligations on time, and to do so consistently. Your credit score comes into play when you need to finance a large purchase such as a home or a vehicle, fund home improvements using the equity in your house, establish a line of credit with a bank or retailer or even apply for a new job. Unfortunately, a bad credit score can be established quickly and then haunt you for years.

Such a credit score indicates that you are not considered a good financial risk. Lenders can and will charge you higher interest rates to borrow money, if they agree to lend you money at all. This holds true for credit cards, auto loans, home mortgages and any other credit-based loan transaction. If you have a sloppy or inconsistent history of repaying loans, the only remedy is to consistently pay your bills on time for long enough to assure lenders you have mended your ways.

Sometimes the information that is reported to credit bureaus is incorrect or incomplete. If you discover that your credit report contains inaccuracies, you are not without resources. Legally, you have the right to dispute incomplete or inaccurate entries on your credit report and have them permanently removed. Because this process can be time-consuming, you may be tempted by companies that offer to clean up your credit report for you.

The Fair Credit Reporting Act (FCRA), established by the Federal Trade Commission (FTC), clearly identifies your rights, as well as how credit counselors can help you while staying within the law. Unfortunately, there are shady companies who do not deliver on their promises and in fact operate illegally. If you participate in these illegal activities, even without your knowledge, you could be committing a felony that is punishable by prison; it pays to be aware of the proper procedures for repairing your credit score.

Know Your Rights

Under the FRCA, three entities monitor credit scores: Equifax, Experian and TransUnion. While these companies operate similarly, not all lenders report to all three bureaus, so it is possible that your credit report may differ from one agency to another. The actions of these three entities are enforced by the FTC. Under the FRCA, your rights are as follows:

  • You are entitled to one free credit report every 12 months from each agency.
  • You are entitled to request a free copy of your credit report within 60 days of any negative action due to poor credit history, such as denial of credit.
  • You are entitled to a free credit report if you are unemployed and plan to job-hunt within 60 days.
  • You are entitled to a free credit report per year if you receive welfare.
  • You are entitled to a free credit report if you have been a victim of fraud, including identity theft.
  • You may open an inquiry free of charge to dispute a notation on your credit report at any time.

Inaccuracies must be removed when proof is properly established to the credit bureau. If negative data is accurate, no one may legally remove that information. Only good behavior over time can correct a true pattern of non-payment.

Generally seven years of history is reported on your credit report, though bankruptcy filings may be listed for 10 years. If your nonpayment resulted in a lawsuit, this information may be reported for seven years or until the applicable statute of limitations expires. If you were convicted of a crime, applied for a job with a salary exceeding $75,000, or applied for life insurance or a credit line in excess of $150,000, this information remains on your credit report for life.

How Do I Spot a Credit Repair Scam?

An old business adage applies here: if it seems too good to be true, it probably is. Accurate items may never be removed from your credit history. Incorrect items may be removed, but any business offering to do the legwork for you should be scrutinized. Some companies bombard the credit bureaus with paperwork so that an account in dispute is “removed;” what often happens is that after your money is collected, that black mark is found to be legitimate and reappears on your credit history a month later.

Be especially wary of any company that promises to remove negative items from your credit history regardless of their veracity. These companies may tell you not to contact the credit bureau directly; they may ask for a large payment in advance, advise you to dispute factual history or suggest you use false information when applying for credit. These are all red flags for improper business practices.

However tempting a clean slate or new credit identity may sound, it is fraudulent. If you are provided with a nine-digit number that looks suspiciously like a Social Security number, it likely is – and you are engaging in identity theft if you use this number to apply for credit. Scammers may disguise the number as a credit profile number or account number, but in reality it is a stolen Social Security number.

Scammers may also direct you to apply for an Employer Identification Number (EIN) from the IRS. While an EIN is perfectly legal, it is a federal crime to request one under false pretenses. It is also illegal to use an EIN and a Social Security number simultaneously when applying for loans. Another way scammers operate is by hiding fees within a program that is otherwise advertised as an avenue to free credit reports – something you are already legally entitled to; the scammers usually direct you to pay-for-service schemes that offer no real value.

Legitimate credit counselors do exist. In return, you receive counseling and advice on managing your money. Credit counselors examine your finances as a whole and help you find ways to reduce spending and manage your debt. Some assist you with budgeting and some offer free seminars on debt reduction and do-it-yourself credit repair. Some will act as third-party agents and negotiate better interest rates while you pay down your debt. However, credit counselors will never offer to alter your credit report.

How Do I Dispute an Inaccuracy Myself?

Inaccuracies do happen. For example, you may have paid off a credit card and closed the account with a zero balance, but your report states that the credit provider closed the account for nonpayment. You may have noticed accounts in your ex-spouse’s name that appeared on your credit report after your divorce. In a worst-case scenario, you may discover that you are a victim of identity theft and that accounts opened in your name are unpaid.

  1. Fortunately, the FTC has a process in place for disputing items that are inaccurate. When disputing anything on your credit report, persistence and paperwork are your best friends. Document every step of the way, make copies of everything for your personal files and monitor the progress of your dispute regularly until the negative items have been removed.
  2. Write to the credit bureau in question, or all three if necessary. Detail which historical item is inaccurate, and include supporting documentation that backs your claim. Send paper copies of bills that show balances paid, copies of divorce agreements if necessary or copies of bank statements that reflect withdrawals. Make a copy of everything in your initial inquiry, and send it certified mail with return receipt requested. If you have difficulty resolving the dispute, a paper trail will be helpful.
  3. The credit bureau must respond to your inquiry within 30 days of receipt. Any corresponding changes to your credit report must be made, and you may request that an updated report be sent to any entity that requested your credit history within six months prior. If the bureau cannot verify the information, it may reject your request. You may write a statement of up to 100 words that explains your version of your history; this document must be supplied to every entity that requests your credit report thereafter.
  4. The FRCA allows you to appeal by opening a new inquiry. At this point, the involvement of the original creditor may be helpful, and they may even be persuaded to intervene on your behalf to have a negative item removed. Write to the original creditor, provide them with your supporting documentation and a copy of your credit report with the inaccuracy highlighted, and request that they provide corrected information to the credit bureau. Make copies of everything and send via certified mail with return receipt requested. When you have new documentation in hand, repeat the process with the credit bureau and follow the same steps. Rinse, lather and repeat until the inaccuracies have been removed.

Depending on the scope of the inaccuracies in your credit file, this process may be burdensome and time-consuming. It’s also frustrating to rely on snail mail in today’s world of instant, online gratification. However, credit report scammers are relying on your impulses when they offer to do the work “for” you. It’s much wiser in the end to avoid potentially illegal activity via a scammer and do the legwork yourself. It is also good practice to regularly monitor your report to avoid nasty surprises; take advantage of your annual free credit report and carefully review it for inaccuracies.

For reference, here’s the FTC-approved template for a dispute letter. This is the appropriate way to initiate a discussion surrounding just about any credit dispute:


Your Name

Your Address

Your City, State, Zip Code

Complaint Department

Name of Company


City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.

This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.


Your name

Enclosures: (List what you are enclosing)