Is Credit Repair a Rip Off?

Credit repair has an extremely negative connotation. It is open to lots of scams and is among the most investigated financial businesses. As a consequence of these problems a law was passed governing credit improvement entities, the Credit-Repair-Organizations-Act (CROA). In part the law states:

The Congress makes the following findings:

* Consumers have a very important interest in establishing and maintaining their credit worthiness and credit standing in order to gain and use credit. Because of this, consumers who have experienced credit problems may seek help from credit-repair organizations which offer to enhance the credit standing of such consumers.

* Certain advertising and business practices of some companies engaged in the business of credit-repair services have worked a financial hardship upon consumers, especially those of limited economic means and who are inexperienced in credit matters.

* The goals of the title are:

(1) to Make Sure that potential buyers of the services of credit-repair organizations (CROs) are supplied with the information Required to Generate an Educated decision regarding the purchase of these services; and

(2) to protect the public from unfair or deceptive advertising and business practices by credit-repair organizations.

In spite of this legislation there still are lots of credit-repair organizations that aren’t following the law. Ensure any credit-repair organization that you decide to use is in fact legally providing credit-repair services that fulfill the CROA.

* No Credit-Repair Organization can charge upfront fees or prepayment for services. They could only charge for services and collect money for services after the services have been rendered. By way of example, they can alter a”setup” fee but only after any installation procedures have been completed.

* No Credit-Repair Organization can market or state that it can”guarantee” to eliminate negative items or any item from your credit report. Having items removed in the credit report is very similar to submitting a lawsuit. The Credit-Repair Organization is hard inaccurate and negative items on your credit report for your benefit. As with a lawsuit, no one actually knows exactly what the result will be. Thus a Credit-Repair Organization is prohibited from stating they are able to guarantee to find these items eliminated.

* No Credit-Repair Organization can charge a monthly fee until after the monthly services have been rendered. This resembles the upfront setup fee discussed above.

1 way to tell if a credit-repair organization is not is to check to find out if they’re a member of the National Association of Credit Services Organizations ( NACSO ).

From their site:”National Association of Credit Services Organizations’ members go through a really strict and rigorous application and enrollment process to help in preventing fraudulent activity throughout the charge services sector.”

“NACSO’s Standards of Excellence will go further than the Credit-Repair Organizations Act and signature on things essential to the honest development of this business.”

Boy, it seems like it sometimes. The result was late payments or perhaps a foreclosure or bankruptcy.

* Higher interest rates on mortgages, car loans, personal loans, and credit cards. * Higher insurance rates. * Inability to get a job. * Trouble renting an apartment without a cosigner.

However, there are things that you can do now to help rebuild your credit. You can legally repair your credit, without resorting to illegal tactics such as getting a new identity (clearly a fraud), by legally challenging the credit bureaus to remove any and all inaccurate, outdated and unvalidated negative items from your credit reports.

How do you do this?

* Well, you could hire an attorney who is highly experienced in credit law. They challenge the credit bureaus and your creditors to”validate” each and every negative item on your credit report. They do their best to back the credit reporting agencies into a legal corner where the agencies have no choice but to remove the so-challenged negative items.

If an item can’t be validated (not just verified) and some aspect of the reported item is inaccurate, the law requires the credit reporting agencies to remove such inaccurate, outdated and unvalidated items including bankruptcies, liens, judgments, late pays, repossessions, and foreclosures. The downside? Most attorneys will charge you thousands of dollars.

* You could hire a credit repair organization who consults with you, writes dispute letters on your behalf, and who knows the best and most effective ways to challenge negative information and improve credit scores.

As discussed above, many of these are scams and some can be very costly charging upfront and monthly fees that total hundreds if not thousands of dollars to do the same thing you can do.

However, many are reputable and professional. As noted above, make sure anyone offering credit repair services meet all aspects of the CROA (Credit Repair Organizations Act).

Also, many states have special regulations for Credit Repair Organizations. Check them out for your state, and also contact the Better Business Bureau for your area to see if there are any complaints against the CRO you are considering.

* Or, you could DIY, “Do It Yourself”. With the ideal training and knowledge you are able to do a very good job yourself. You do this by investing in credit repair classes and eBooks. Learn all that you can then start the procedure for hard inaccurate, outdated and unvalidated unwanted products. This isn’t an overnight job. It requires time and perseverance.