Credit Repair Services – How To Recognize The Dishonest Ones

by | business cash flow management

Credit report repair is more in demand than ever since the economy is on a long-term roller coaster ride, but finding the right credit repair service can be tricky. There are unscrupulous services out there that will take your money and deliver nothing in return.

As recently as a few months ago, the Federal Trade Commission (FTC) has been cracking down and charging criminal operations with accepting advance payments, which violates the Credit Repair Organizations Act (CROA), and deceiving consumers by promising to remove legitimately reported information from credit reports.

A good place to start your credit repair journey is to understand your rights under the CROA Credit Repair Organizations Act.

Pertinent Sections of the Credit Repair Organizations Act can be found in:

Section 404.4B – Prohibited Practices – Advance Payment – 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.

Section 405.a – Disclosures – You have a right to dispute inaccurate information in your credit report by contacting the credit bureau directly. However, neither you nor any ”credit repair” company or credit repair organization has the right to have accurate, current, and verifiable information removed from your credit report. The credit bureau must remove accurate, negative information from your report only if it is over 7 years old. Bankruptcy information can be reported for 10 years.

Any person or business who takes money in exchange for improving your credit must operate under the CROA. You must sign a contract for services and you have 3 business days from the contract signing date to change your mind and rescind the contract. In addition, the credit repair organization not ask you to sign any kind of form which waives your rights under the CROA. Any such waiver you sign is considered void and cannot be enforced by federal or state laws.

Organizations that violate the law can be sued for actual damages, punitive damages, and attorney’s fees. You can report violations to the FTC, your state attorney general, and file suit in your state within five years from the date the violation occurred (or the date you learned of the violation) to take legal action against the organization.

The charges brought by the FTC on dozens of credit repair services serve as a reminder that credit repair companies are often dishonest and the dishonest ones seldom produce any results. In the end, you’re out of your money and your credit still needs repairing.

If you are a consumer who has hired a credit repair company and had positive results, leave a comment about it so others can benefit.

Here are some additional helpful links: Credit Repair:

How to Help Yourself http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm

How to Recognize a Credit Repair Scam http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm

Free Annual Credit Reports http://www.ftc.gov/freereports

How To Dispute Credit Report Errors http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm