Credit Report and Repair Laws

Credit Report/Repair Laws
Credit report is the credit file or credit history of an individual. It contains all information related to an individual’s credit status. This is a consumer friendly report and usually contains four kinds of information:

Public record information – this includes any data relating to bankruptcy, unpaid tax components and other public record information.

Credit information – this category includes specific credit information like the amount of loans taken, credit limit, monthly payments and the pattern of payment. It also contains information of whether it is a joint account or a single one and who is responsible (besides you) for making the payment.

Requests by other individuals or organizations to view your report – details of all the people who have requested or inspected your credit report are furnished in this category. The Fair Credit Reporting Act or FCRA clearly states that all the credit lenders with a permissible purpose can make inquiries about your credit report without prior consent. This section will also mention the date of the inquiry and till what duration will the enquiry remain in the report.

Personal information – the personal information segment

contains personal details like your name, contact addresses, contact telephone numbers, SSN or Social Security Number, date of birth and details of all the previous employers.

According to the FCRA or the Fair Credit Reporting Act, each of the consumer reporting agencies in the United States – TransUnion, Equifax and Experian- must provide you with a free copy of your credit report (if requested) once in every twelve months. FCRA also endorses accuracy and confidentiality of the data stored in the files of the consumer reporting companies.
Every citizen of the United States of America, according to the federal and state laws, must review their credit reports regularly and check for any inaccuracies.

Bad credit is a negative term that is given by the credit rating agencies. It is used if you have missed or defaulted on a payment over an extended time period; you are then considered as a bad credit risk by the financial companies. Once you get a label for bad credit, it is difficult for you to arrange for loans and other finances and usually means more rate of interest on any loan tat you have taken. Whether the non payment is done purposely or due to some financial crunch, the result is the same – a negative rating.

Credit repair is a procedure which consists of three steps. The first is getting and then rectifying the credit report; the second is organizing for finances and clearing the debt; finally building up the credit to the point where one is entitled to another loan or mortgage.

The Credit Repair Organizations Act (CROA) is a federal law which governs how credit repair companies may do business, and prohibits certain practices. Congress passed this law with the understanding that consumers who have had credit problems may look for help from credit repair agencies which offer to improve their credit standing. Understanding what a credit repair organization may legally do for you will help you weed out those companies who make promises they can’t keep, and who will disappear with your hard earned cash.

Policies governing Credit Repair Companies
There are federal and state laws to monitor the services of credit repair companies so that they do not manipulate their services. According to the California law, a credit service company has to attain a $100,000 bond and keep the asset as long as they are in business and two years after they get out of the same. Besides, they need to register themselves with the Department of Justice and obtain a registration certificate that should be made available to the clients if asked for. A credit repair company cannot accept payment unless they have completed the services that they had promised and these services must be completed within 6 months. They must also advise you of your rights under the Fair Credit Reporting Act and furnish you with a written contract specifying all the services that need to be performed and also allowing you to cancel the contract without any penalty within 5 business days.

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