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Efficacy of Laws governing Credit Repair

Efficacy of Laws governing Credit Repair

As per a report by the Federal Trade Commission, one out of every five Americans has a problem or error in their credit report. It seems like hampering their credit score and interesting them to pay exorbitantly high- interest rates. 5.2% of the respondent group confirmed that the errors present in their credit report were not minor errors with marginal negative impact. But grave errors that substantially brought down their credit score. They conduct these scores through credit repair specialists. However, much of the respondent pool confirmed that their credit score witnessed an insignificant change because of the credit report errors. 

Online credit card in California

One cannot undermine the grave threat these credit report errors pose to individuals applying for credit. Someone might apply for an online credit card in California and be shocked by the acute interest they have to pay for it. On scrutiny, they would find that their credit report has grave errors which have worsened their credit position. Sometimes, these errors might be easy to fix, but in others, the credit repair process might not be so straight-forward. Professional credit repair specialists might also face challenges in removing the errors or credit report inaccuracies. Thus, given the importance of evaluating credit-related information and coming up with credit reports. The question arises that why are there so many errors present in them.

The answer has three parts:

The size of the data, speed associated with evaluating the data, and economic incentives for the entire process.

Credit-related data is humungous, and the credit bureaus have to test it and present their findings in a short time. Thus, errors are inevitable. There are no incentives for credit bureaus to provide accurate credit reports. Once they publish the credit reports and consumers find errors in it. It is then that they check with the lenders or debt collectors.

Although the laws governing credit repair like the FCRA have mandates for the credit bureaus and other agencies to provide accurate information, there are many loopholes here. There should be more economic incentives driving the credit bureaus to ensure the authenticity of data before publishing the credit reports.

The other rights under the FCRA are much in use owing to the rising number of credit report errors. Under FCRA, customers may ask for their credit reports and remove inaccurate information from their reports. 

The Credit Repair Organization Act (CROA), a consumer protection law, safeguards customers from potential frauds by credit repair companies. The CROA regulates the practices of credit repair companies related to misleading advertising (exaggerating the extent of credit score improvement they provide).

Thus, while seeking credit report repair in Fullerton in California, customers should know these laws and make calculated decisions.

Efficacy of Laws governing Credit Repair