Avoiding Credit Repair Scams

Credit repair is sort of a loaded term these days. First, it implies that your credit is “broken” and in need of a “fix.” Second, it implies that getting good credit is simply a matter of “cleaning things up a bit.” Unfortunately, this is very misleading. And too many of these credit repair companies are essentially scams.

Consider this: a credit score is generally good for one thing – getting you more debt. If you’re on this site, you probably already have debt problems so it may not be a good idea to get too hung up on your credit score.

Also consider this: if your credit report is accurate, it cannot be “repaired.” Creditors are generally entitled to report your credit history as long as it is accurate. If it’s accurate, even though you may not like the report, it is probably permissible. Of course, there are always exceptions. But the point is that you should not assume that everything on your report can be “repaired.”

With those considerations in mind, there are two dangers to look out for when dealing with “credit repair” companies that are not law firms. And I don’t mean they claim to “know” an attorney or be loosely affiliated with one. I mean a traditional law firm.

Danger 1: Waste of Money and Time.

In my experience, clients are often dissatisfied with the services provided, which could accomplish nothing. The client could end up paying hundreds or even thousands of dollars with no real results. The frustration this can cause, especially if the client is planning on making a purchase with their “newly repaired credit” can be significant.

Danger 2: Stirring the Pot

This second danger can be far worse than the first in my experience. Too often, I have seen credit repair agencies “do their thing” which entails sending out form letters disputing all or nearly all of the derogatory items on your credit report. The result is that these old debts get stirred up. The proverbial bear gets poked. Now, a debt that the creditor may have otherwise let expire under the statute of limitations is going to be sent to active collections.

This can have tremendous ramifications for the client. And most of the time the credit repair agencies are unaware or simply don’t care about the consequences of their actions. So when you get sued for one of these old (previously dormant) debts, they will just say: geez, you better find an attorney, good luck.

What You Should Do

The best thing to do is to get a free copy of your credit report (annualcreditreport.com) and go through it in detail. Determine if there are truly any inaccuracies. If it is accurate but just bad, then there is probably little you can do about it. Time will have to heal it.
But if there are inaccuracies, by all means, there are things that can be done. There is a formal process you can follow to dispute it. If that is unsuccessful, hiring an attorney to press the matter may yield results. An attorney knowledgeable about the Fair Credit Reporting Act and others can put pressure on the credit bureaus or creditors themselves to correct the issue or even take legal action if necessary.