Protect yourself from credit repair scams

While the economy has been showing some signs of improvement, your good name and reputation are becoming more important within the community. Creditors have tightened their guidelines, effectively barring millions of Americans from borrowing money.

Mortgage lenders, auto finance companies, credit card issuers and banks have all raised the bar. Borrowers with low FICO scores can expect to be denied or to pay significantly higher interest rates than those with excellent histories.

Long gone are the days of obtaining credit, goods, benefits, services and/or employment with a 620 score. In most instances, a consumer will be denied if they maintain a credit score lower than 740. Even those with high credit scores have experienced closed credit card accounts and equity lines. When an account has not been closed, credit limits have been reduced to the current balance due.

The terms credit repair, credit restoration or credit rehabilitation are somewhat synonymous. Those with bad histories cannot afford to ignore the potential benefits of credit repair. In today's economy, a strong FICO score is more important than ever.

Approximately 78 percent of credit profiles in the United States contain some sort of error or omission materially impacting credit worthiness. Absent self-help and the "do-it-yourself" approach, a consumer may hire a credit service organization in the restoration of their good name and reputation within the community.

Most — but not all — CSO's specialize in the restoration of consumer credit worthiness as well as identity theft issues. Assuming that the credit repair company is performing within the law, they utilize laws enacted by congress to dispute negative, erroneous, obsolete and fraudulent information contained within your consumer credit profile.

Utilizing the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Fair Credit Billing Act and the Fair and Accurate Credit Transactions Act, a reputable CSO will assist in the submission of disputes electronically, verbally and in writing to the Equifax, Experian and TransUnion consumer reporting agencies. Disputes are also submitted to creditors, collection agencies, third-party record providers and state, federal, local and private regulatory authorities.

Unlike most credit repair clinics that submit the same written dispute letters monthly, a reputable CSO will have devised a strategy whereby disputes are submitted electronically, verbally and in writing over a long period of time to the credit reporting agencies, creditors, collectors and third-party record providers reporting negative, inaccurate, obsolete and erroneous information.