When it comes to credit repair, the Fair Credit Reposrting Act outlines the process credit bureaus must follow:
Credit reporting agencies (CRAs) must accept disputes from consumers free of charge.
They must respond within 30 days, but if there is any follow up then they have an additional 15 days to respond.
The bureau must contact the lender or original provider of the information to verify it within 5 business days.
The agency has a right to terminate a dispute if it’s deemed frivolous or irrelevant. If they do, they must inform you of the termination within 5 business days.
If a disputed item cannot be verified, it must be removed.
The CRA must then provide you with a free copy of your credit report so you can confirm the item is gone.
If the item can be verified, the dispute gets rejected.
If this happens, the consumer has a right to include a 100-word statement in their credit report. This explains your dispute to lenders reviewing your report. However, the negative information would still affect your credit score.
Rights Guaranteed Under the FCRA
The FCRA did more than just create the credit repair process, though. It also provided the following protections for consumers:
It limits who can view your credit report. So, not just any private citizen can request a copy of another consumer’s report. Your report can only be reviewed for:
a. Loan and credit application
b. Insurance purposes
c. Court cases
e. Bank closures
In most cases, you must authorize a company to review your report. So, even when you apply for a loan you must give them permission to pull your report.
It also limits what can be said in your credit report. This part of the law limits what information gets listed in your report and for how long it gets listed.
It guarantees the right to accuracy. This basically means that credit reporting agencies (credit bureaus) must take every action possible to ensure the information is accurate.
This part of the law creates the credit repair process, which states that a consumer has the right to submit a dispute to question the accuracy of a reported item; the bureau has 30 days to verify the item or it must be removed.
It also guarantees consumers the right to know what their report says. This is the part of the law that gives people a free annual credit report from each bureau.
Finally, it creates the fraud alert process, which gives consumers a way to prevent fraud if their identity has been compromised.