FICO scores are created to be as objective as possible.  According to the Equal Credit Opportunity Act, lenders cannot use this type of information when issuing credit.  The scores do not consider your race, color, religion, national origin, sex or marital status. Other factors not considered are your age, your salary, occupation, title, employer, date employed or employment history.

According to Fair Isaac Corporation, “independent research has shown that credit scoring is not unfair to minorities or people with little credit history. Scoring has proven to be an accurate and consistent measure of repayment for all people who have some credit history. In other words, at a given score, non-minority and minority applicants are equally likely to pay as agreed.”

These situations make it nearly impossible for credit repair to help someone needing results within six months to a year. Please keep in mind even when you can’t be helped in the short term, the advice that can be given now, if coming from a professional, can prevent you from making a mistake in the near future that may worsen your situation.

Here are examples of situations where not much can be done with-in a six to twelve month period.

1. If more than 50% of the negative accounts showing on the credit report appear as unpaid collections, charge-offs, repossessions, or foreclosures and you do not have the money to either pay the accounts in full or settle them. Due to the negative accounts remaining unpaid, these items will simply reappear on your report once removed. Any negatives, even unpaid accounts, can be removed-but, unless the negative account is current, paid or settled, it will simply reappear in 10-90 days.

2. Credit repair is nearly impossible if you can’t pay your minimum monthly payments and you keep adding new late payments to your report. This is a “spinning wheels” scenario that rarely yields much improvement to your credit score.

If you’re working with a credit repair company that is taking your business and disregarding the above criterea, YOU’RE WASTING YOUR MONEY! Contact the pro’s at Wellness Credit where these 2 rules are the first things we ask!  Schedule your FREE consultation today.

The two limiting factors are:

(1) your financial situation, and

(2) the time frame within you need to reach your results.

It is possible to remove anything from a credit report, even accurate items, if the creditor does not adhere to the law that outlines what needs to be done and by when. Just because you have a certain type of account removed at one time does not mean that other, similar items are going to be able to be removed, even with the same circumstances. A hit-or-miss aspect exists in credit repair, because credit repair relies not only on the strategies of the person attempting to repair the credit, but also on the effectiveness or ineffectiveness of the creditors and credit bureaus in adhering to the laws.

The reason credit repair has received such a bad name is due to the abundance of scam artists who flock to the easy money made available by people desperate for this type of service. This unfortunate reality leads the credit bureaus and the FTC to make blanket, untrue statements such as, “Credit repair does not work ever and there is nothing a credit repair company can do for you that you can’t do for yourself.” Given that more than 90% of credit repair companies are scam artists, promising the world and then disappearing when you pay, the credit bureaus and the FTC are forced to make such bold statements. It would be impossible for them to explain the truth to consumers without causing them to make a bad choice that would result in the getting scammed. As a result, the credit bureaus and the FTC must adhere to the “credit repair does not work” position.

As I have stated, credit repair does work, but…don’t let anyone tell you that credit repair is effective every time. Its success varies with the number of players in the game, some of whom never perform consistently.

Even if you have a true master of credit repair on your side, you have to take into account that sometimes the other players perform in a way that throws your master of his game.  Sometimes the opposing side shows up strong, other times they don’t. Even if you follow the same approach with every situation that arises when doing credit repair, your results will still vary due to the other players involved.

So the next time someone tells you they can get everything repaired on your credit, run the other way, because, at best, the pendulum will swing widely both ways for the same situation!

Imagine this scenario… You discover errors on your credit reports by one or more of your lenders. You challenge them and ask the credit bureaus to correct or remove them. Thirty days later the credit bureaus send you a reply confirming that what they have on file is accurate and it will not be removed or changed. They also direct you to contact your lender if you have any further questions regarding that allegedly incorrect credit reporting. You take the same course of action with the lenders reporting the incorrect information and, again, you are unsuccessful in getting the items corrected.

The scenario just described happens thousands of times every week. And while the Fair Credit Reporting Act is designed to protect consumers from credit bureau and lender negligence, the number of valid challenges to credit report data is not decreasing. Unfortunately, the number of challenges that result in credit reporting data being amended in favor of the consumer pale in comparison to the number that remain the same.

At this point the consumer has two very simple options; they can either live with the erroneous information until the state or Federal credit reporting statute of limitations expires, normally seven years, or they can escalate their efforts to have their credit reports corrected by filing a lawsuit.

Many experts are predicting that 2009 will yield an increase in consumer credit lawsuits due, in part, to consumers feeling the sting of increasingly difficult access to credit because of the credit crunch and a willingness to incur the costs of litigation to restore their good credit standing. “To some people it’s an investment, do the math. If it costs you $20,000 in legal costs to force a lender or credit bureau to remove an inaccurate collection and the removal allows you to qualify for a mortgage interest rate that saves you $100,000, you tell me, was that a wise investment?

In fact, it’s possible that you’ll recover all of your legal costs as part of a settlement if your case is strong. It seems logical that the credit bureaus would not prefer a jury determine punitive damages in a case where they have sold credit reports to a lender that contained inaccurate information, but there is also a risk that the judge will grant only a portion or none of your Attorneys fees and then you’re out that part of the money. The trade off for the credit reporting industry is legal fees and a controlled settlement amount, versus the unknown of taking the case to trial where the odds are not certain that at least one of the members of the jury has not had a similar experience with a credit bureau or lender.

The credit bureaus are sued hundreds of times each year with the majority of those lawsuits being filed in Georgia, California and Illinois. “It’s not a coincidence that the filings are disproportionate to those states given that’s where the three national credit reporting agencies are based”, says John Ulzheimer, President of Consumer Education at Credit.com and the Owner of www.CreditExpertWitness.com, a consumer credit expert witness referral service. The credit bureaus also maintain insurance against such lawsuits so the costs can be limited to premiums and deductibles in many cases. Having said that, it’s certainly not a comfortable feeling knowing that you’re about to go to war with a company large enough to easily absorb the cost of litigation. “It’s a rounding error to them and you better be prepared”, states Ulzheimer.

So how do you know if you’re prepared to sue your lender or one of the credit bureaus? Here’s a checklist. If you can’t answer yes to each of these then litigation may not be for you.

1. Have you documented all of your calls with the lender and credit bureau? This means every conversation you’ve had with them since you started your attempts to have the errors corrected. This can be as simple as a handwritten summary of the conversation with dates and names.

2. Have you attempted to have the item corrected using the standard protocols? You can’t simply file a lawsuit against the credit bureau without giving them the opportunity to correct their error. Be sure that you’ve exhausted your rights to challenge credit report items as defined in the Fair Credit Reporting Act.

3. Have you suffered any damages due to the incorrect item? If not, then think twice about filing a lawsuit. Damages can be credit declinations, credit approvals with disadvantaged rates, higher insurance premiums, or the loss of a job due to credit report pre-employment screening. Can you document these things?

4. Can you tie the damages to the incorrect item? Are there other seriously negative items on your credit reports that are completely accurate that can be blamed for your damages?

5. Do you have copies of your credit reports and FICO scores and can you put together a chronology of credit reports and scores? If you can’t, then you can subpoena the credit bureaus for archived credit reports and scores, although they will object profusely.

6. Are you absolutely certain that what’s being reported is incorrect? Before you file a lawsuit you need to do a reality check. If the items are accurate but simply not to your liking, save your money.

7. Does your case have a chance? An expert witness can assess this for you before you spend a dime on a lawyer and can give you an honest assessment of your chances for success and ways to better prepare for litigation.