About Credit Repair
What is Credit Repair?
The term Credit Repair is used to refer to identifying and correcting inaccurate information being presented on a consumer credit report across the three major credit bureaus. This involves disputing the identified items in the form of letters mailed to the bureaus in order to correct or remove the information that is reflected. This also includes a strategic approach to optimize credit scores in order to assist in accomplishing any short or long-term financial goals the customer may have.
What Do Credit Repair Companies Do?
Almost every credit repair company is different, not necessarily in the practice of repairing consumer credit reports but in the way they conduct business. Although operational practices may differ, credit repair companies do:
- Identify inaccurate and erroneous information reflected on a consumer credit report
- Handle the dispute process.
- Advise strategic credit management and development plan designed to raise and maintain credit scores.
- Provide results to customers.
What Are Credit Repair Companies Not Allowed To Do?
Credit repair companies must operate under strict guidelines instilled by the Credit Repair Organizations Act (CROA). This is a federal law created by the government to ensure that credit repair companies are using correct practices that protect the consumer and prohibits these companies from:
- Accept pre-payments for services not yet rendered. A service-based company can only accept payment after the service has been rendered, meaning that a company cannot charge a customer the full price in one lump sum for a six, twelve, or even twenty-four-month membership.
- Make promises or guarantees about results. Credit repair companies cannot guarantee results or certain score increases will occur when hiring them as the ultimate decision is not up to the customer or the company. Terms like “we can delete anything” or “we can increase your score by 100 points” are prohibited.
- Make deceptive representations of guarantees offered by the companies. It is illegal to offer money-back guarantees without clearly stating the terms to qualify for the refund.
Structure contracts that do not contain cancellation rights. It is illegal for credit repair companies to bind a customer to a contract without having the right to cancel services.
Is Credit Repair Legit?
There has been a negative connotation to credit repair companies recently due to companies not abiding by CROA regulations and offering this service for personal gain at the expense of the customer. This is the main reason why most people associate credit repair companies with a scam, although there are plenty of companies who do offer services that abide by federal laws and are legitimately assisting their customers in obtaining better credit scores.
To answer the question, yes. There are plenty of reputable credit repair companies who assist in providing customers with real results in the form of corrections, deletions, and credit-related advice that can change the course of credit situations for the better. By doing diligent research and asking the correct questions, finding the best credit repair company is not as difficult as it may seem. Just remember that results that seem too good to be true may not be true. Protect your identity, credit, and your finances.
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