Category: Credit Bureaus

Credit Repair – Beyond the Credit Bureaus; Why Creditors Matter

creditors and credit bureaus

Consumers should expect the highest level of personalization when choosing a credit repair service provider. In fact, credit repair services should guarantee individualized support since the purpose of credit repair is to advocate on the behalf of the consumer’s interest. However, most providers fail in this aspect because they leave out a huge piece of the credit repair puzzle – the creditors.

Know your consumer rights

The Fair Credit Reporting Act (FCRA) is the centerpiece of all credit repair strategy. This piece of federal legislation protects the accuracy, fairness, and privacy of consumer information held by the credit bureaus. Many credit repair services exercise the rights ensured by the FCRA on a consumer’s behalf and stop there — much to the consumer’s detriment.

You might be surprised to know that credit repair is much more than disputing just the credit bureaus. Other federal statutes, such as the Fair Credit Billing Act (FCBA) and the Fair Debt Collections Practices Act (FDCPA), can tip the scales of credit repair in favor of the consumer even more. Credit repair services that integrate these additional federal statutes offer a more thorough solution by addressing credit issues from several angles in a much more effective, holistic approach.

Ask creditors the tough questions

There is a misconception that the credit bureaus are the ultimate authority over consumer reports, but this is not the case. Credit bureaus are privately owned and compile your credit information from various reporting sources, such as creditors and public records. Then they use the compiled information to assign a credit score — in other words, credit bureaus report credit information, they do not create it. Therefore, if you only target credit bureaus to repair credit, you do not get to the root of the problem. Any serious credit repair initiative must start at the source: the creditors.

Credit information can technically be accurate, but still unfairly reported by creditors. Whether its usury APRs, exploitative late fees, inexplicable surcharges, unethical debt collection practices, etc., consumers have a right to challenge creditors. Look for credit repair services with legal expertise that offer creditor interventions, which ask creditors tough questions about their practices. This process offers consumers the best chance of restoring their credit reports and increasing chances of approval for future credit.

Factors for approaching creditor interventions

Credit repair service providers will approach creditor interventions differently depending on several factors. These factors may include:

  • Type — what type of credit accounts are on the report? A thorough snapshot of the accounts will help uncover discrepancies.
    • Examples: auto loans, mortgages, credit cards, bank loans, etc.
  • Severity — what negative items are bringing your credit score down; is the degree to which these items affect your score fair?
  • Identity theft — this is a leading cause of credit report errors. Over 17 million Americans are affected by identity theft each year, but fraudulent activity can be removed. The process may be expedited with the help of legal credit repair professionals.
  • Life situation — life circumstances can negatively impact credit, and it’s not always your fault. Major or unexpected life changes can cause late or missed payments. While these things cannot always be removed from a credit report, they should be part of the conversation when it comes to repairing your credit.
    • Examples: Divorce, military service, illness, etc.
  • Mishandled student loansStudent loan servicers have recently received criticism for fraud, filing mistakes, flawed processing, and other activities that have caused consumer credit scores to tank. In some cases, these lender errors can be remedied by a credit repair service.

How to pick the right credit repair service

The credit reporting industry is very complex. So while consumers can dispute credit discrepancies on their own, professional credit repair services are designed to offer a high level of expertise to ensure credit reports are fair, accurate and substantiated. A reputable credit repair service will offer the most personalized solution possible and will help you approach the credit bureaus as well as your creditors.

Lexington Law Firm is a leading credit repair service provider that asks creditors the tough questions and approaches every case with a level of expertise unparalleled by any other provider. Lexington understands how to leverage consumer protection statutes effectively, legally, and ethically. On average, clients see 10.2 negative items (24%) removed from their reports within four months (results vary). The attorneys at Lexington Law believe creditors should prove the items on consumers’ credit reports are not only accurate, but fair and fully substantiated. Explore Lexington’s service levels to find the right credit repair solution to fit your needs, and leave the rest to the legal experts at Lexington Law Firm. You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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Does the Government Control the Credit Bureaus?

Government and Credit Bureaus

Many consumers believe that credit bureaus like Equifax, TransUnion, and Experian are somehow owned, managed or otherwise controlled by the federal government, but, in fact, they aren’t.

At a fundamental level, all credit bureaus operate as private, for-profit companies. While steps have been taken by the government to closely regulate credit bureaus — such as the creation of the Consumer Financial Protection Bureau or the Fair Credit Reporting Act — none of the bureaus are in any way government mandated. In reality, they are private businesses.

Credit bureaus are private businesses

The primary business model of credit bureaus is to collect consumer credit information and then sell it to businesses. Banks, credit card companies and other businesses that require financial screenings will purchase credit reports to determine risk. That is, the likelihood you will successfully manage a large expense or pay back a loan. In addition to account information, credit bureaus also pull bankruptcy, tax lien and other information available from public records to help businesses make informed decisions about a consumer’s credit.

Credit bureaus also work directly with consumers. The bureaus are tasked with responding to and resolving any credit disputes you may have due to mistakes or missing information on your credit report and offer access to credit scores. They place fraud alerts or credit freezes on your credit report in the event of fraudulent activity.

Like most for-profit companies, credit bureaus work independently of one another. However, some consumer account information may be shared among multiple credit bureaus due to the fact that businesses often have relationships with more than one credit bureau. This is why you can usually find your credit information available in a few different places.

Credit bureaus are subject to laws and regulation

The Fair Credit Reporting Act (FCRA) dates all the way back to 1970 in its original form, and exists to protect consumer rights when it comes to “accuracy, fairness, and privacy” of credit information. According to the FCRA, as a consumer, you have the right to:

  • Be told if information in your credit report has been used against you
  • Know what’s in your credit report
  • Access your credit score
  • Dispute incorrect or incomplete information
  • Have incorrect or incomplete information resolved by the credit bureaus
  • Have outdated, negative information withheld from your report
  • Limit who can access your file
  • Give consent to your report being given to employers
  • Limit pre-screened credit and insurance offers sent to you
  • Seek damages from violators
  • Be given additional protections if you’re the victim of identity theft or are on active military duty.

States may have additional consumer reporting laws that extend beyond what the FCRA provides.

Fair credit laws are designed to protect the consumer side of credit reporting from any negligent actions or overreach by the credit reporting agencies. But, what regulates how bureaus conduct business?

In 2012, the Consumer Financial Protection Bureau (CFPB) began supervising the larger credit bureaus, specifically those which had more than $7 million in annual receipts (around 30 companies, or about 94 percent of the market) as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. What had previously been the domain of the bureaus to self-regulate and federal law enforcement to enforce now became the responsibility of the CFPB. The agency would oversee the industry — at least from the standpoint of the larger bureaus — as well as write the rules and enforce the laws.

In short, it’s now the job of the CFPB to:

  • Review the compliance systems and procedures of the larger credit bureaus.
  • Publish and deliver on-site examinations to the bureaus as part of their monitoring process.
  • Seek relevant reports from the bureaus.

Because the CFPB supports the consumer side as well, they seek to educate consumers about how to monitor their credit, what to look for in their credit reports, how to dispute anything that’s incorrect and how to protect against identity theft and/or request fraud alerts if they are a victim of identity theft.

It’s easy to mistake “credit bureau” for a government entity

Even though we’ve established that credit bureaus are private businesses subject to laws and regulations as in other industries, where has the confusion developed in linking credit bureaus with government run entities?

One simple reason may lie with the terms “bureau” and “agency.” Both terms regularly apply to government entities. You’ve heard it all the time: the Environmental Protection Agency, the Bureau of Land Management, and so on. The CFPB itself uses the word “bureau” in their name and defines themselves as a government agency. So it’s easy to see how consumers mistake “credit bureau” or “credit reporting agency” as being part of the government.

On top of that, legislation and information coming out of the credit reporting industry are not often well understood by consumers. Without knowing who is who and responsible for what, consumers have to navigate a murky world in which their financial information could very well belong to, or be managed by, anyone — including the government.

It’s important to keep in mind that, in reality, your credit history and report are generated and maintained by for-profit businesses who make money from it. This is why it’s important that there are laws surrounding credit reporting: in order to prevent your credit from being hurt or misused. Also, to curtail potentially harmful practices by the bureaus against consumers, such as misrepresenting “free” credit scores, the fees charged to obtain scores and the type of information given to consumers.

Are you currently going through a credit bureau dispute, or do you have general concerns about your credit? Contact Lexington Law to learn how lawyers can address your credit concerns and help you repair your credit.

Learn how you can start repairing your credit here, and carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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