What Credit Repair Clients Need to Know

If you plan to enroll in a credit repair service, read these credit report tips designed especially for you here. Learn how to recognize a credit repair scam and what to look for in a good credit repair service.

How to Spot a Credit Repair Scam

Disreputable credit repair services will target consumers with poor credit histories by promising them free credit reports, credit report tips, and/or instantly improved credit scores. In reality, the service will charge for the services they claim are free, and they never live up to the promises they make vis-a-vis credit scores. The bottom line is that no credit repair service can remove accurate negative items from your credit report; only the passage of time can remove such items. Here are some other signs that you're dealing with a dishonest credit repair company:

• The service wants full payment up front. Federal law prohibits credit repair companies from demanding payment before services have been rendered.
• The service does not inform you of your rights or explain what aspects of credit repair you can do on your own.
• The service tells you not to get in touch with the credit bureaus directly.
• The service promises to eliminate negative items from your credit report, even if those items are accurate.
• The service encourages you to create a new identity and a new credit report. This is illegal and a scam.
• The service recommends that you dispute every item on your credit report, irrespective of accuracy.

About The Credit Repair Organizations Act

The Credit Repair Organizations Act is a federal law that compels credit repair services to adhere to certain standards and guidelines. For example, the law requires your credit repair company to provide you with a copy of "Consumer Credit File Rights Under State and Federal Law" before any contacts are signed. Additionally, the credit repair company must provide you with a written contract that specifies your obligations and rights. Here are some credit report tips you should follow before you sign any contracts with a credit repair agency:

• Make sure that payment is not due until the promised services have been delivered

• The credit repair company cannot begin services until you have signed a written contract and they have waited at least three days following the receipt of the signature. During the three-day interim, you have the right to cancel your contract without having to pay anything.
• Verify that your contract contains the following:
• Total cost of services
• Description of services to be rendered
• Description of company's guarantees, if they offer any
• The name of the company and their physical business address