Credit repair companies are not always what they seem
If you’re considering using a credit repair company to improve your credit score, you might want to think twice. While these companies often promise to help consumer’s improve their credit scores, the reality is that they can often do more harm than good. That’s the take away in a recent article written by Andy Spears called “Are Credit Repair Companies Help or Hype?”. Spears is a well respected consumer advocate who writes on a number of consumer protection issues in his blog called Advocate Andy. He shares that “consumers should be wary of claims of “credit repair” and for good reason.
There are a number of ways that credit repair companies can damage consumer’s credit scores. One of the most common is by promising to remove or delete negative items from consumer’s credit reports, even if those items are accurate. Another way is by steering consumers into debt management plans that can have a negative impact on their credit scores.
This week at the request of the Federal Trade Commission and the Justice Department, a federal judge issued an injunction against a Texas based credit repair company and it’s owner. In the lawsuit, the FTC says that since 2018, the company scammed people out of more than $10.1 million through their fraudulent credit repair scheme. Other false claims in the complaint included that the consumers’ credit scores would be boosted by 50-200 points, a violation of the Credit Repair Organizations Act (CROA) and the Telemarketing Sales Rule (TSR).
The use of such inducements, like promising to raise a consumer’s credit score, is against the law and a good way to identify a company that you should avoid. You can also check with the Better Business Bureau to see if there have been any complaints filed against a company. Spears and other advocates around the country have been sounding the alarm on social media about “advanced fee” credit repair companies. He says, “You should never pay an upfront fee for so-called credit repair. In fact, these types of fees paid in advance are illegal. If a company asks you to pay in advance for their credit repair service, they are breaking the law and you should steer clear”. The Justice Department is also putting the message out to those who are targeting consumers with similar schemes.
“Credit repair scams affect consumers who already are suffering from low credit scores,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Department of Justice will use all tools at its disposal to stop credit repair agencies from engaging in unlawful conduct targeting financially vulnerable consumers.”
The lesson here is that if you’re thinking of using a credit repair company, do your research first. There are a lot of shady companies out there that are only looking to take advantage of people. Consumers who are struggling with their credit should attempt to fix any credit issues themselves first before paying someone else to do it.
Steps you can take to repair your credit:
1. Check your credit report for errors and file a dispute if you find any.
2. Try to negotiate with your creditors to have negative items removed from your report.
3. Make all of your payments on time, and consider paying off debt that is high interest first.
4. Use a credit monitoring service to keep an eye on your credit score and credit report.
5. Stay focused on the results and don’t fall for any quick fix scams.
While credit repair can be time consuming, following these simple steps can improve your credit score. If you do decide to use a credit repair company, make sure you’re using one that is licensed and has a good reputation. Don’t be fooled by the wolf in sheep’s clothing. If a credit repair company’s services sounds too good to be true, it probably is.
Led by attorneys Michael D. Finn and J. Andrew Meyer, the Finn Law Group is a consumer protection law firm based in St. Petersburg, Florida.