Credit repair companies have been around for almost two decades. These companies are going to work under the Fair Credit Reporting Act which entitles every United States citizen to dispute any item on their credit report. The company will file the disputes and go through the dispute process on your behalf.
The Tedious Dispute Process
This is how the dispute process works. You first write a dispute letter to each one of the credit bureaus in which you include the reason the item on your credit report is incorrect and request that the bureau investigate the item.
Frequently this dispute letter is responded to by the bureau with another letter requesting more information about your dispute. The credit bureau doesn’t necessarily need this information instead this is a stall tactic.
The credit bureaus do not generate any income when they investigate and correct consumer disputes. Therefore they try to avoid these disputes because it means more profits. The reason the bureaus do conduct investigations into consumer disputes is to follow the Fair Credit Reporting Act a federal law passed by Congress which requires the bureaus to investigate your dispute.
Once you get this letter from the bureau requesting more information you then need to comply with their request and provide it. However the other two bureaus may have contacted you requesting different additional information and you are going to need to keep your communications with each bureau organized.
One of the most common ways the credit bureaus will blacklist a consumer and ignore their dispute requests is if a consumer files a dispute for an item that is not reported on that particular bureaus report. For example let’s say you have a charged off credit card on your credit reports. However this charge off is only reported on your Trans Union and Equifax report but you decide to dispute the charge off mark with Experian.
As a result of Experian not showing a charge off on your credit report and you filing a dispute, they are going to view that as a frivolous dispute and frequently will blacklist the consumer. For these individuals the credit bureaus will ignore all future dispute requests.
How Can The Bureaus Do This?
They can’t legally do it and the FTC has fined the credit bureaus over and over and over again. The most egregious of these fines was when the bureaus were required to set up a toll-free hotline where consumers could call in and file their dispute instead of writing a letter.
However the bureaus were not required to hire staff to answer these phones and as a result consumers waited on hold for reported times of 40 hours and more. The FTC did fine all 3 credit bureaus as a consequence and combined they paid over $ 1 million.
This FTC fine had critics outraged as the credit bureaus annually report hundreds of millions of dollars in revenue. The $ 330,000 fine that the credit bureau paid as a result of their violation of federal regulation was well worth the expense they saved by avoiding investigating consumer disputes for the months that this phone number was taking calls.
As you can see the credit dispute process is a very tedious and time-consuming process. Additionally dealing with the credit bureau bureaus bureaucracy and profit motive will add another layer of difficulty to your credit repair efforts. This is why many individuals turn to credit repair companies to clean their credit on their behalf.
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