Four Tips for Identifying a Legitimate Credit Repair Company
\The Federal Trade Commission (FTC) enforces consumer protection law and is responsible for protecting consumers from companies that steal our business through false claims, illegal services, and improper disclosure. With regards to credit repair scams, practices like these became so common that Congress passed a federal law to outline how credit repair companies can operate. The Credit Repair Organization Act (CROA) was passed to protect consumers and provide them with recourse if they are victimized by a dishonest credit repair provider.
When researching credit repair companies, there are some glaring red flags that should alert you to steer clear. According to the FTC, avoid services that:
Request Payment in Advance – Credit repair companies should not require payment prior to services being rendered. Under the CROA, these credit repair companies cannot require payment until they have completed the services promised. This is to protect consumers from companies that charge large upfront payments and then do not perform the agreed upon work.
Fail to Disclose Your Rights – Trustworthy credit repair providers will let you know that you have a right to order one free copy of your credit reports each year from the credit bureaus, and that you can dispute inaccurate or questionable items on your own. If you are not alerted to this information, specifically in the form of a CROA required disclosure titled “Consumer Credit File Rights Under State and Federal Law”, take your business elsewhere.
Advocate Using a New Credit Identity – Some shady credit repair companies will actually advise you to create a new credit identity by using an Employer Identification Number (EIN) in place of your Social Security number. This is a serious crime and if anyone suggests this as an option, run the other way.
Misrepresent the Services They Can Provide – Beware of credit repair providers that promise to remove negative and accurate items, such as liens and foreclosures, from your credit file. No one can guarantee that items will be removed, especially if the items are true.
