And it’s no wonder – with so many scam artists out there, it can seem as though credit repair is nothing more than wishful thinking.

Fortunately, that’s not the case. Credit repair is perfectly legal and more than that, it is your right as a U.S. consumer. Anyone, no matter their income, no matter their current debts or other issues, is legally entitled to a fair, accurate representation of the information on their credit report.

Is Credit Repair Legal? Here are the Facts:

The first step to repairing your credit is to see what is on the credit report. Fortunately, your credit report is easily accessible:

• You have the right to get a free credit report from each of the credit bureaus at least once every 12 months.
• You may be entitled to more than one free credit report every 12 months depending upon the state you live in.

You can also receive a free copy of your credit report if ANY of the following apply:

• You have been denied an application for credit. This means any type of credit, whether it is a credit card, loan, or some other type of financial instrument.
• You have been denied insurance – including homeowner’s insurance, renter’s insurance, car insurance, or health insurance.
• You have been denied employment – if a potential employer pulls your credit report and decides not to hire you on the basis of what is found, you are entitled to a copy of your credit report.
• You are currently unemployed and plan to look for a job – you can request a copy of your credit report if you are planning to look for work within the next 60 days.
• You are on welfare – no other requirements here, if you are on welfare, you qualify for an additional free report
• You are a victim of identity theft – as long as you file a report with the police to alert them of the fraud, you are entitled to a free credit report to help assist with your credit repair efforts

Once you have your credit report – or you’ve supplied your credit report to a reputable credit repair agency, the next step is identifying the kinds of information that can be removed. You have the right to have any inaccurate or outdated information removed from your credit report, safely and legally.

A professional credit repair agency will help you to understand the next steps, and what you can do to effectively dispute the errors and improve your credit scores. One thing to keep in mind – while you can easily get copies of your credit report for free, getting copies of your credit scores will almost always require that you pay a fee.

Is Credit Repair Legal? Why Credit Repair can be Difficult

Despite the fact that credit repair is legal and free (except for the time it takes you to do all the research and write all the letters) many people get confused or intimidated when it comes to exercising their rights.

One of the main reasons credit repair can be difficult, even though it is perfectly legal, is that the credit bureaus and creditors may not uphold the spirit of the law. Credit bureaus and creditors are required to investigate your disputes unless they decide it is a frivolous dispute.

Because the ultimate decision rests with the credit bureaus and the collection agencies themselves, they will often look for any reason to ignore the dispute. Reputable credit repair companies make it more difficult for the bureaus and collection agencies to ignore you because they know the rules to follow and the information to include in every dispute.

Is Credit Repair Legal? Recognizing the Scams

While ethical credit repair is perfectly legal, there is one tactic that will get you in trouble with the law:

Attempting to “Segregate” Your Credit Files –

You cannot legally start over with a “new” credit file. When credit repair companies claim that they can get you a new credit file, they will tell you to apply for an EIN – Employer Identification Number – and use that number when you apply for credit.

An EIN can only legally be used by a business entity, and trying to use one for your own personal credit is illegal and constitutes fraud. Even if you were only following the advice of a credit repair company, you will be the one held liable.

Is Credit Repair Legal? Final Thoughts

Once you’ve taken the time to explore your legal rights when it comes to credit repair, it’s easy to see that not only is credit repair legal, it’s an essential way to help manage your finances. By ensuring that only accurate and timely information remains on your credit report, you give yourself the best chance at qualifying for the credit terms that you deserve.

Don’t wait to get started with credit repair – the sooner you begin, the better your credit scores will be in both the short term and the long term.

Myth #1: Credit repair is illegal.

The Truth: Credit repair is not only legal, but protected by federal laws such as the FCRA and FDCPA. However, creating a new credit file and/or new identity is illegal.

Myth #2: Credit repair doesn’t work.

The Truth: The credit repair agency that I regularly refer clients to has helped over 400,000 clients improve their credit since 1991. That’s just one company. Thousands more have gotten great results by doing it on their own.

Myth #3: You can only dispute negative items on your credit report if you think they are not yours.

The Truth: You can dispute any negative account on your credit report that you want. Whether the account is “really” yours or not has no bearing on the consumer reporting agencies responsibility to verify it. Under the Fair Credit Reporting Act, the only information that can remain on your credit report is not what is accurate, but what can be proven as accurate. If it can’t be proven and verified then it must be removed.

Myth #4: The consumer reporting agencies are non-profit, government agencies.

The Truth: CRAs are privately owned, for-profit corporations.

Myth #5: Credit repair agencies are all scams.

The Truth: The FTC has been coming down hard on all credit repair agencies that don’t abide by the Credit Repair Organizations Act. Most of the scam artists are gone and most of the credit repair companies that exist nowadays are not scams.

Myth #6: A credit counseling service can help me restore my credit rating.

The Truth: Whoa is this one ever a lie! Credit counselors work with your creditors, to help them get their money from you destroying your credit in the process.

Myth #7: After a major financial plunge like bankruptcy, foreclosure or repossession, I won’t be able to get credit for 7-10 years.

The Truth: You can start enjoying good credit almost immediately after such an event if you start repairing and rebuilding your credit right away.

Myth #8: Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost.

The Truth: Ok, this one isn’t really a myth. It’s true…kind of. You see, the credit bureaus will try to make it as hard as possible for you to repair your credit. They have many tactics that they use to discourage consumers from contacting them. Most consumers get frustrated and give up because of the obstacles put before them by the credit bureaus.

The credit bureaus consistently violate consumer’s federal rights and constantly get sued for doing so. Credit repair agencies have been dealing with them for years and they know how to play the game. They know what works and they know when your federal rights have been violated. Many of them will help you seek litigation or refer you to an attorney if and when it comes down to that.

Myth #9: You have to hire a credit repair agency or lawyer to fix your credit.

The Truth: As mentioned above, there are benefits to hiring a credit repair agency. However, if you are willing to put in the time to learn how to do it on your own, you don’t need to hire anyone. There are many credit repair communities online that are willing to help you out and share methods with you for free.

Myth #10: Pulling your own credit report will count as an inquiry and hurt your credit scores.

The Truth: You can pull your own credit as many times as you want – if you are not applying for a loan. It’s considered a soft pull and does not count as an inquiry towards your scores. However, if you have a lender pull it for you, that does count as a hard inquiry and will make your scores drop.