Credit Repair Organizations – Beware!
Did you know that companies who promise to fix your credit for money are called Credit Repair Organizations (“CROs”) and are mainly governed by the Fair Credit Reporting Act (FCRA – 15 U.S.C. S 1681) and the Credit Repair Organizations Act (15 U.S.C. S 1679)? There is also a variety of other state and federal laws and regulations.
Theoretically, anyone can provide a service which assists consumers in exercising their rights to correct inaccurate credit information on their consumer credit reports, so long as they comply to the letter with every single provision of every single state and federal law which regulates credit repair. That is where they get stuck. It is hard to comply and they don’t do anything you can’t do yourself.
Affordable and meaningful credit repair from a CRO is highly improbable. It means consumer beware. If it sounds too good to be true, it probably is.
Frankly, in our firm’s opinion most credit repair organizations are rip-offs and scams. They are a waste of money and a waste of time. Oftentimes, these organizations are set up as 501(c)(3) charities, which are not covered by most laws governing credit repair. There is nothing that a Credit Repair Organization can legally do that a consumer can’t do themselves, just as easily, and for free.
The truth of the matter is that credit repair can only best be done by a consumer challenging inaccurate information in writing, using certified mail, waiting to see if it is remedied by the consumer reporting agencies (Experian, TransUnion, CSC/Equifax), and then bringing suit if the information is not fixed. Even if the information is yours and derogatory, by law it still must be accurate.
Many consumers, though, want to remove accurate negative information from their credit reports; that is why they turn to a CRO. That can happen, but often times it is reinserted. It is like using a band aide when you really need surgery. Legally removing accurate information is not an option for consumers, but there is still hope of improving your credit. Accurate negative information will generally remain on a consumer’s credit report for 7 years, 10 years for bankruptcies and judgments. That’s the law, but as time passes, the impact on your credit score is less severe.
Depending on how you see it, negative information is as useful to creditors as it is detrimental to consumers. The best way to repair credit is to build it over time, handle it responsibly, and work hard to keep it in good shape. Click here to learn more about how you can challenge inaccurate information.