There’s a myth that credit repair companies aren’t legal or don’t follow legal practices. It’s important to note that credit repair is legal in all 50 states. There’s a federal law – Fair Credit Reporting Act (FCRA), that guarantees consumers the right to dispute information in their credit report to have it corrected. There’s also a federal law – Credit Repair Organizations Act (CROA), that outlines how credit repair companies can provide services to consumers. These two laws basically set the foundation for how credit repair works in the USA.
In this “Do It Yourself” era, almost anyone can do or make anything with the help of YouTube. However, in many situations involving a credit dispute, challenge, or repair, you may not wish to chance the risks of going it alone without the advice of an experienced professional who can help you out.
ARE YOU WONDERING HOW TO FIX CREDIT?
If you’re in debt and need help, a reputable credit counseling organization might be able to help. Good credit counselors spend time discussing your entire financial situation with you before coming up with a personalized plan to solve your money problems. They won’t promise to fix all your problems or ask you to pay a lot of money before doing anything.
WHAT IS A CREDIT REPAIR COMPANY?
A credit repair company goes over your credit reports from each credit reporting bureau, reviews negative items and looks for errors. The company can then request errors be removed and negotiate with your creditors to resolve disputes.
HOW DO I KNOW IF I’M DEALING WITH A CREDIT REPAIR SCAM?
It’s illegal for credit repair companies to lie about what they can do for you, or charge you before they help you.
You know you’re dealing with a Credit Repair Scam if a company:
- Demand an upfront payment. The law is clear: No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed. (Pub. L. 90–321, title IV, §404, as added Pub. L. 104–208, div. A, title II, §2451, Sept. 30, 1996, 110 Stat. 3009–456.)
- Doesn’t explain your legal rights.
- Promise a quick and simple fix. REMEMBER, a simple correction on your credit report could take only a month or two, while reports with multiple errors requiring negotiations and significant documentation could take a year or longer.
- Suggest they can remove legitimate negative information.
- Ask you to lie.
- Have complaints against Credit Repair Organization. FixCredit suggests reading reviews and checking the CFPB complaint online database HERE
- Suggest you create a parallel identity. If a company promises to create a new credit identity or hide your bad credit history or bankruptcy, it’s also a scam. These companies often use stolen Social Security numbers or get people to apply for Employer Identifications Numbers from the IRS under false pretenses to create new credit reports. If you use a number other than your own to apply for credit, you won’t get it, and you could face fines or prison.
A GOOD CREDIT REPAIR COMPANY SHOULD:
- Offer a free consultation. A good credit repair organization will review your report and tell you what it can and can’t do.
- Explain your options.
- Offer a free cancellation. Accept three day right to cancel without any charge.
- Fix the credit first, then bill the client. FixCredit suggests “Pay for Performance”, also called “Pay for Delete” program. The process entails charging clients only after the credit repair company is successful removing or correcting the information on a client’s credit reports.
One more note of caution for consumers: don’t set up an auto-deduct payment plan, better to pay PayPal, Cash.me, or to provide postdated checks so you have more control over your money.
If you become a victim of a credit repair scam, Contact Us and we will help to refund your money.
If you need help with other consumer rights issues, contact us: