Credit Repair: Beyond the Fair Credit Reporting Act

Bad credit can happen to good people. On a day-to-day basis, you can't control all the factors that influence your credit score. What's more, credit reports often contain errors.

So if your credit has been crossed, what do you do? You may think a passing familiarity with the Fair Credit Reporting Act (FCRA) is weapon enough to resolve your credit report woes. Think again. Your arsenal also includes rights guaranteed you by the Fair Credit Billing Act (FCBA) and the Fair Debt Collections Practices Act (FDCPA).

"Understanding - and even better, exercising and enforcing - these federally guaranteed protections is the absolute best way to transform a poor credit score into a really good one," says Dr. Randy Padawer, a clinical psychologist who has consulted for Lexington Law, a company that helps consumers clean up their credit reports. Padawer's research into consumer credit has been featured in Smart Money Magazine and the bestselling FICO 850 seminar for The Motley Fool. "Any solid credit repair campaign should pay tribute to all three federal statutes," he says

Quiz yourself to see if you know which federal statute may help in the following common credit problem scenarios:

Scenario 1 - Five years ago, you were 60 days late making a car payment. You've long since paid off the loan, but the late payment still appears on your credit report, and it's dragging down your score. You contact the credit bureaus to ask them to remove the item and are told federal law dictates the item must remain on your credit report for seven years.

Your Defense - The FCRA actually says seven years (10 for bankruptcies) is the maximum length of time a negative item may stay on your report - not the minimum. You are well within your legal rights to ask for something to be removed before the seven year limitation has expired.

Scenario 2 - A collection agency calls your place of work looking for you. The collector identifies himself as such to the receptionist. Further, he tells her exactly how much you owe. When he doesn't reach you at work, he calls your home at 11:30 p.m. and tells you he will have you thrown in jail if you don't pay up.

Your Defense - The Fair Debt Collections Practices Act mandates standards of behavior for all collection agencies. In this case, the debt collector has crossed the line multiple times. Under the FDCPA, collection agencies may call you at work unless you tell them not to. However, they may only identify themselves by name - not as a collection agent - and may not tell anyone but you the purpose of their call. They are also prohibited from threatening you with imprisonment or any other legal sanction, or even hinting about such consequences.

Scenario 3 - You receive a collection agency notice alleging you owe money to a company you have never heard of. You contact the agency asking for more details on the alleged debt, but the representative tells you it may take a while to come up with more information. Meanwhile, you are getting deeper and deeper into delinquency, the collector says, advising you to pay the bill now to protect your credit rating.

Your Defense - The FDCPA gives you the right to demand that a collection agency prove that you actually owe a debt. "Every consumer has the right to challenge the veracity of any debt," Padawer says. "A collector must then respond in a certain way, otherwise the collection activity must cease and all related consumer reporting must be rescinded."

Scenario 4 - Your credit card issuer claims that you were late 17 different times, but you contend you were only late a couple of times. Moreover, they claim that you owe for a magazine subscription you never ordered.

Your Defense - The Fair Credit Billing Act (FCBA) requires that creditors maintain careful records and can substantiate your billing history upon request. "If it weren't for the FCBA, your creditors could pretty much make any claim without worrying about proof," Padawer says.

While Padawer advocates learning about the credit laws that protect your consumer rights, he acknowledges that it's not always possible or practical for consumers to become legal experts on their own.

"If that's your position as well, then consider calling the attorneys and paralegals of a competent consumer law firm like Lexington Law," Padawer suggests. "Perhaps the largest such firm focusing upon credit report issues, Lexington elects not to ignore any of the relevant consumer protection statutes in their work with consumers."

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