As consumers we have rights provided to us by Federal law. It is important to know these rights in order to protect ourselves and families from fraud and scams in the marketplace. To help, we here at Being Broke Isn’t Cute are starting a new monthly series called “Know Your Rights!” It is all about informing you of your consumer rights.
This month…Credit Repair Services
There are plenty of credit repair companies out there. They promise to “fix” your credit so you can get a mortgage, car loan or some other kind of credit. They do not do this out of the goodness of their hearts. It is a business, so a fee (or fees) will be charged, which is usually based on the amount of work needed.
How does it work?
Generally, the service, with your permission, will pull a copy of your credit report, review it for incomplete or inaccurate information, and then contact the credit bureaus or creditors on your behalf. They will request the item(s) in question to be removed or corrected. How long the process takes is dependent on the status of your credit. The more work needed, the more time it may take.
Please note! Under no circumstances can a credit repair company legally remove accurate information from your file. If you have a bankruptcy on your credit report, they cannot make it magically disappear. What they can do is reach out to a creditor and ask for it to be removed. However, this is completely at the creditor’s discretion.
Before you do business with a credit repair company DO YOUR RESEARCH and familiarize yourself with your consumer rights. Remember, there a fraudsters and scammers in the marketplace. So beware!
Here are your rights under the law when dealing with credit repair companies.
They cannot make false statements about your credit score or creditworthiness to the credit bureaus or any creditor or lender (or to you) and they cannot recommend you to make false or misleading statements.
They cannot change your identity (or tell your to) in order to hide negative information and/or create a new credit identity.
They cannot make untrue or misleading claims about their services or the results of their services.
They cannot commit any form of fraud, according to the law.
They cannot charge fees in advance. Services must performed in full before payment is due
In addition, according to the Consumer Financial Protection Bureau, under federal law, when a company uses telemarketing to sell credit repair services, they have to meet certain requirements before they can charge for their services. First, the company must achieve the results it promised you within the time frame they stated. Second, the company must give you a consumer report showing the results, and the report must be generated more than six months after the results were claimed to have been achieved. Only then can the company charge you fees or accept your payment. So they have to do what they said and provide you with proof.
One more thing, the Federal Trade Commission’s Credit Repair Organizations Act states credit repair companies cannot use “untrue or misleading representations”, bars them from demanding advance payment, requires all contracts be in writing, plus grants consumers the right to cancel the contract before midnight of the 3rd business day which begins after the date on which the contract or agreement between the consumer and the credit repair organization is executed. So they can’t lie about what they can do, must provide a written contract and allow you to cancel the service within 3 business days.
To be clear, the credit repair companies do not have a “secret sauce” for fixing credit. They are doing work you could do yourself for free. The CFPB has sample letters and videos to help you do it. However, if you are overwhelmed, busy or just don’t want to deal with it, getting help from a legitimate and credible credit repair professional can help take the stress off you.
Until Next Time♥…
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