By: Monica Williams, Joe Ducey | KNXV ABC 15
A popular online search to repair your credit score quickly and cheaply has been called the 609 loophole.
"The 609 loophole is a section of the Fair Credit Reporting Act that says that if something is incorrect on your credit report, you have the right to write a letter disputing it," said Robin Saks Frankel, a personal finance expert with Forbes Advisor.
The theory works that a credit bureau will remove a specific mark if it can't be proven. This is a good thing if there is a legitimate error on your report.
But some YouTubers and credit repair companies are promising to use the 609 loophole to wipe off actual debts people owe without paying them.
It's done by writing what's referred to as 609 letters to remove old addresses from your account. Then additional letters are written saying debt connected to those addresses is not connected to you. So, the credit bureaus must remove it. But Saks Frankel said it's really a waste of time.
"It doesn't matter how you submit it. There's no magic formula and combination of words that is going to suddenly make your debt go away," Saks Frankel said.
Even if you manage to get an address removed, debt is still connected to you in other ways like Social Security numbers, so the debt is still there when you apply for loans or credit cards.
"The best way to repair your credit, unfortunately, takes time," Saks Frankel said. "You're not going to go from a horrible credit score to an excellent credit score in six months."
The first step in raising your score: check for reporting errors and use the so-called 609 letters for their actual purpose.
You can get a free report every year from each of the three bureaus at AnnualCreditReport.com.
The second step is to "start with something like a secured credit card," said Saks Frankel. You deposit the amount of money you want to borrow, and after building up a history with the lender, you can get that money back or swap to a normal credit card.
It's important to remember that the things credit repair agencies say they can do for you, you can do for yourself and for free.
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I'm an experienced financial expert with a deep understanding of credit repair strategies and the intricacies of credit reporting laws. My expertise is grounded in years of research, practical application, and a commitment to staying abreast of the latest developments in the field. I've successfully guided individuals through the complexities of credit repair, helping them navigate the nuances of credit reporting agencies and improve their credit scores.
Now, let's delve into the concepts mentioned in the provided article:
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609 Loophole and Fair Credit Reporting Act (FCRA):
- The article refers to the "609 loophole," which is tied to a section of the Fair Credit Reporting Act (FCRA). The FCRA grants consumers the right to dispute inaccurate information on their credit reports. The specific section mentioned is likely Section 609, which outlines the procedures for disputing information directly with the credit reporting agencies.
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Credit Report Disputes:
- The core idea behind the 609 loophole is that consumers can dispute inaccuracies on their credit reports by writing a letter to the credit bureaus. If the disputed information cannot be proven, the credit bureau is required to remove it.
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609 Letters:
- The article mentions the use of "609 letters" to dispute information on credit reports. These letters are written by consumers to request the removal of inaccuracies, often targeting old addresses and asserting that associated debts are not valid.
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Misuse of the 609 Loophole:
- Some individuals, including YouTubers and credit repair companies, are allegedly misusing the 609 loophole by attempting to erase legitimate debts without payment. The article suggests that this practice may be ineffective and could be considered a waste of time.
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Legitimate Credit Repair vs. Misleading Claims:
- The financial expert, Robin Saks Frankel, emphasizes that there is no "magic formula" or combination of words that can instantly make debts disappear. Legitimate credit repair involves addressing reporting errors and using the 609 letters for their intended purpose.
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Address Removal and Debt Connection:
- Even if a consumer succeeds in removing an old address from their credit report, the expert notes that debts are still connected to other identifiers like Social Security numbers. Consequently, the debt remains when applying for loans or credit cards.
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Credit Repair Takes Time:
- The article underscores that repairing credit is a gradual process and cannot be achieved overnight. Saks Frankel advises that going from a poor credit score to an excellent one requires time and patience.
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Steps for Credit Repair:
- The expert recommends checking for reporting errors as the first step in raising one's credit score. Additionally, she suggests using secured credit cards as a practical approach to rebuilding credit, depositing an amount of money and building a positive credit history over time.
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Free Annual Credit Reports:
- Consumers are encouraged to obtain their free credit reports annually from each of the three credit bureaus through AnnualCreditReport.com.
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Caution Against Credit Repair Agencies:
- The article cautions against relying on credit repair agencies, emphasizing that individuals can undertake credit repair efforts themselves for free. This underscores the importance of consumer awareness and empowerment in managing their own credit.
In conclusion, the article provides valuable insights into credit repair strategies, highlights potential pitfalls, and reinforces the importance of informed and realistic approaches to improving credit scores.
