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How can credit repair affect a debtor?

By Derek Brown
Published: Sunday, September 20th, 2009

Credit repair means that a credit repair company contacts three prominent credit bureaus Experian, TransUnion and Equifax for its customer for taking off all the embarrassing debt default items from his credit report.

Credit repair agencies work on a major tenant of the law Fair Credit Reporting Act which declares that a consumer has the authority to argue for any default item which he feels has been wrongly mentioned on the credit report. The objective of the credit bureaus is to report rightly the credit history of a borrower to the prospective lenders

If credit default has been actually committed by a debtor in the listed default items, then these items cannot be deleted from the report for a period of a seven years. If the customer has been declared bankrupt, then 10 years is the time period for the removal of these default items.

The controversial debt item is presented to the lender who has to be corroborate the default within 30 days from the time the dispute was registered by the credit agency on behalf of the debtor. If the merchant is not able to prove the accuracy of the default debt item within this time period, then the debt item is no more on the credit report of the debtor. The process of any default item verification by the lender can take up to 60 days and 6 months also.

The merchant may not be able to substantiate the default of the debt item in the Christmas season when they cannot contact the credit repair agency within 30 days. This gives an opportunity to the agency to wipe off the debt item from the lost. Sometimes, merchants may also have stopped lending debts and changed businesses, so the item can be removed from the list without waiting for an entire period of 7 years. 

The task of a credit repair company involves writing a letter to the lender who loaned the default debt along with updating the credit reports. The charges of any credit repair money should be incurred monthly. The charges of the initial month involve a minimal set up fee along with the monthly fee.

Since any debtor is not into a contract with such company, he can leave the services in any month he desires. He can use the services till his credit scores show a substantial improvement. Some credit repair companies also charge huge up front fees from the delinquent debtors.

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