It is not as if every credit repair company is a crooked organization that tries to take advantage of debtors looking to rebuild after financial disaster. Some credit repair companies do follow Federal statutes and FTC guidelines, and are genuinely vested in the welfare of their clients. Unfortunately, however, the majority of the businesses are anything but, and are only selfishly motivated by profit.
Many Americans have either solicited the help of a credit repair company or have expressed the desire to do so, possessing little knowledge of how credit works and no real knowledge of how to fix it. Numerous analysts would suggest that credit repair companies can do no more for debtors than they can do for themselves. Still, some are convinced they need the aid of a credit repair company or a comparable service.
For those who are resolute in their plan to consult with credit repair companies despite being highly advised not to, here are some things to consider:
Oftentimes, unassuming consumers will get off easy with having to pay extra for legal operations they have the capacity to perform. One of the key components to credit repair is access to a copy of one’s credit report, so that it can be assessed for accuracy and amended accordingly.
Credit repair companies will frequently expect remuneration for taking entries out of a credit history—whether or not they are wrong. Debtors, meanwhile, do have the ability to perform the task of removing misinformation from their files themselves via the Fair Credit Reporting Act. Through the same piece of legislation, credit reporting agencies are protected from the underhanded tactics of these repair companies.
At worst, a credit repair company may not just employ unethical practices, but blatantly illegal ones. One common charge of credit repair companies is that they defraud creditors by swapping the information of the legitimate debtor with a low credit rating of that of a stranger.
In some extreme cases, repair companies have commingled details of a living American debtor with a deceased person or a resident in an overseas territory like the Virgin Islands. In other instances of unlawfulness, shady credit repair businesses have deliberately hijacked the records of creditors using computer technology, and have later been exposed for their crimes, but not before taking debtors’ money in the process.
Indeed, it may be rather difficult to separate a meritorious credit repair company from a sham enterprise. The best resources prospective clients have in this regard come from nationally recognized institutions and federally-binding legislation. The Better Business Bureau, for one, may be able to shed some light on whether or not a particular company is worth the investment or is to be avoided at all costs.
The Credit Repair Organizations Act (CROA) also brings a set of standards on how credit repair companies operate. Any repair company who abides by the CROA should do the following: inform customers of their rights upfront and outline a full list of fees and a payment schedule.