That is why to have bad credit is to find oneself in a vicious circle – high interest rates, rejected loans, and lost opportunities follow a person with bad credit. At some point, you might have asked yourself whether it is possible to hire someone to repair your credit. Therefore, this article will detail the truth behind credit repair services.
The Credit Repair Industry
Credit repair companies claim to assist clients in reviewing their credit files, assessing the credit reports, finding mistakes or problems, and fixing them or having them erased. This can aid in increasing the credit score status. There are many companies today offering credit repair services and the initial cost to fix a bad credit may cost anywhere between $100-$400 while monthly costs are between $60-$120.
There is a difference between those organizations that are involved in credit repair scams and those that operate legally and are willing to assist customers in decoding reports and filing complaints. However, it has been for a long time associated with scams and frauds within the industry or from outsiders.
The proposed bill of the Federal Credit Repair Organizations Act
The Federal Credit Repair Organizations Act (CROA) regulates the credit repair industry in the U.S. Under CROA, credit repair organizations:
- It cannot charge upfront fees before it has offered the services in question.
- Has to include the written contract of services to be provided, duration of the contract and total cost to be incurred
- Cannot give you a list of things that they will do for you to attain a favorable credit score
- I cannot advise you to give the wrong information about your credit or loan applications
- Cannot charge to modify or delete accurate negative information from your credit reports
CROA further states that if a credit repair company has violated the law, the consumer is allowed to sue to recover the monies lost together with the attorney fees.
Legitimate Credit Repair Tactics
Reputable credit repair companies use legal techniques like:
Dealing With Inaccuracies - If the credit reports contain wrong personal information, someone else’s payments on a credit card, or other wrong information, it is possible to dispute these on behalf of companies. If you make errors, these have to be deleted from your credit reports if proven to be true.
Goodwill Letters –Some of the affairs that credit repair companies may write goodwill letters to your creditors demanding the removal of negative items citing other challenges. That is why creditors do not have to make changes but some may do it as a courtesy to their customers.
Debt Validation Letters – As a consumer, you have the right under FDCPA to send debt validation letters to the collectors and credit bureaus contesting the debts and asking for proof. This may lead to dismissal if collectors are not in a position to substantiate the debts adequately.
In some cases, the best ways to “repair” your credit involves positive credit behavior (on-time payment, low credit utilization), as well as the ability to gain free access to your credit reports and dispute any errors found on those reports through the credit bureaus instead of paying for such services.
When Credit Repair Might Be a Scam
Still, some of the methods used by legal credit repair companies are legitimate, whereas many of the companies use unscrupulous or even fraudulent means. Watch out for credit repair offers that:
Promise to ensure that all forms of negative information are reported to the credit bureaus – legally unattainable.
Tell you to apply for an EIN, with which you will establish a new credit profile – against the law.
Tell you to dispute all debt information which is a blanket approach to credit repair – ends up causing more harm.
Tell you to apply for an EIN and open new credit accounts under that - the last of credit fraud.
Want things that are free or cost little money to get, but which you would have to pay a fee for.
Asking you to deposit certain amounts before they can proceed to fulfill their services.
Instruct you to provide false information when applying for a credit card or a loan.
Reporting Credit Repair Scams
Just in case you come across dishonest practices from a credit repair firm, be quick to report the firm to prevent such malpractices from being perpetrated on other people.
You can file complaints with:
- The Federal Trade Commission or the FTC for short is a regulatory organization in the United States.
- A Consumer Bureau of Protection commonly referred to as the CFPB.
- The executive branch of your state attorney general
- Local Consumer Protection Bureau
Checking Disciplinary Actions
Use these free resources to research any credit repair company before engaging their services:
- Better Business Bureau (BBB) – Complaints
- CFPB Consumer Complaint Database - Browse the complaint data which is currently active.
- State licensing agencies – Where a license is permitted check with the relevant authorities.
The Bottom Line
Sometimes we hear actual credit report mistakes and unethical use of collection practices. It will be to your advantage to engage a lawful credit repair service to contest those. However, many scams offer ways how to alter credits illegitimately or they allow you to pay them, yet they fail to deliver.
If you know your credit standings, avoid falling prey to scammers, and employ free tools alongside reasonable fiscal practices, you can sometimes “fix” your credit yourself without extortionate services or dangerous cons. Finally, maintaining good credit reports for credit facilities is more a product of the right behaviors over time rather than quick tricks. Do not pay anyone without properly considering all the factors since many outfits out there will gladly take your money and do nothing for you.
Call now for expert credit repair services: (888) 803-7889
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