Credit Repair
With credit scores controlling more and more of our lives, the importance of great credit is becoming critical to maintaining financial health and build wealth. Many turn to credit repair companies for the assistance they need in correcting outdated, unverifiable, and inaccurate information on their credit reports. Credit repair companies provide credit education, information on how to build new credit and strengthen current credit profiles. They provide a vital resource for most Americans. Unfortunately, like in all industries, the bad actors sometimes get more publicity than the good advocates in the industry. Credit repair is not a scam.
The credit repair industry is one of the more highly regulated industries in America. Under Federal law, the Credit Repair Organizations Act (CROA) governs how credit repair companies conduct themselves from not taking any money upfront to what promises they can make to their clients. Most states have their own licensing requirements and bond requirements. In states that have bond requirements, if you sue the credit repair company that you hired, there is money you can win to pay for your damages. It is up to the consumer to find a compliant credit repair company that can assist them
What to look for in a Credit Repair Company
Credit repair companies come in all shapes and sizes. Most have less than 25 employees. Some have corporate offices and some operate out of their home. Some are very experienced and some are newer to the industry. No matter the situation those that choose to follow the laws and educate themselves regularly often produce better results for their clients. Regardless of who you choose to help achieve better credit, there are some commonalities among good credit repair companies.
- They do not accept payment upfront for any service.
- They are licensed in the state YOU live in. Check for licensing The credit repair company should not only have a license in the state that they are located in physically but have a license in the state you live in. This way if they do not live up to their promises, you can contact state authorities as well as possibly make a claim against their CROA bond.
- They are members of trade associations like the National Association of Credit Service Organizations (NACSO)
Becoming a member of an industry trade association usually signifies that the credit repair company owners are taking an active role in supporting their industry. Membership is usually a good indication that the owners value the industry they are in, seek continuous education, and are proactive in the issues that affect their industry.
- They demonstrate competency in educating on credit and how to build and not ruin your credit.
- Do they refer to a consumer credit attorney? By telling you that they refer to a consumer credit attorney they are demonstrating their professionalism and their desire to have the best outcome for you. Credit repair companies can not do everything. They can not file FDCPA / FCRA / TCPA lawsuits, answer lawsuits, settle debts (unless licensed and bonded to do so), represent your legal needs. Be sure to check out the referral attorney’s website and information as well.
A Note about the Better Business Bureau (BBB): The BBB is a franchised company that the franchisees purchase a territory. They make their money by going to local businesses asking for them to signup. Most BBB franchise owners either will not accept credit repair companies or give them a default F rating. Credit repair companies that have a higher rating may have paid for the higher rating. See the history of the BBB
Comparing credit repair companies
We encourage you to shop around to at least 3 credit repair companies. To assist you in your search we have put together a questionnaire that you can ask a credit repair company. It may show signs of future problems is they refuse or are hesitant to answer any of these questions. We hope that this will help you make a decision among your options.
Use the form to assist you in your search for a credit repair company. You can download the PDF and fill in your Name, Phone (if desired), Email, and the State of Residence and hit save. You can then email or fax the PDF to prospective credit repair companies Allow them 48 hours to respond to your request. Then you can compare answers to those that meet your criteria and seem like the best fit for you.
Questions to ask before hiring a credit repair company
About the Credit Repair Company
- What is the name of your company?
- What is your address? Can I come to visit you in person?
- What year was the company founded?
- Who is the owner of the company?
- Are you licensed and bonded in my state?
- Are you members of any industry trade association?
About their Credit Repair Process
- Does your company process all your own disputes or do you outsource the dispute process?
- If you outsource, who is the company that is handling that? What are their digital and paper security protocols?
- What are your company’s security protocols to protect my data?
- Do you lease your software? Do you own my data?
- How long does it normally take for the credit repair process?
- Are you sending letters in my name or is your company representing me?
- Can I see the letters before they go out? Do I mail them myself?
- Do I have to send mail back to you?
- Do you dispute with the credit reporting agencies only?
- If an account is removed from my credit report can it come back on?
- Do I owe a creditor if the account was removed from my credit report?
- Will I have to settle with any of my creditors?
- Do you refer to a consumer credit attorney? Who are they? At what point do they get involved.
- Do you have a guarantee?
How do they charge for their credit services
- What pricing model do you use? (Monthly, Delete then Pay, or a Flat Fee)
- If you use a monthly model, what is the monthly fee? When do I pay for it? Is there a first work / Analysis fee? Are there any other fees? Do you require your credit monitoring? What is the monthly fee?
- If you use a Delete then Pay model, What are the deletion fees for collection, auto repo, foreclosure, public record, inquiries / late payments? When do I pay for it? Is there a first work / Analysis fee? Are there any other fees? Do you require your credit monitoring? What is the monthly fee?
- If you use a flat fee model, What is the flat fee? When do I pay for it? Is there a first work / Analysis fee? Are there any other fees? Do you require your credit monitoring? What is the monthly fee?
Anything else
- Is there anything else I should know about your company?
Credit Repair Attorneys
In the last 15 years, many attorneys have entered the credit repair industry to add to the value of credit repair companies. A consumer credit attorney can give legal advice, file FDCPA / FCRA / TCPA lawsuits, answer debt lawsuits, offer debt settlement, and represent consumers in many issues.
Fair Debt Collection Practices Act (FDCPA) Lawsuits
When a debt collector violates your rights under FDCPA (15 USC 1692k(a)(1)) you may be entitled to $1,000 plus attorney’s fees plus court costs. Often a consumer credit attorney will charge you nothing out of pocket to file an FDCPA lawsuit against a debt collector.
FDCPA violations can include:
- Claiming to be a lawyer;
- Falsely representing the character, amount and status of a debt;
- Implying they are employed by a credit reporting agency;
- Threatening legal action when none is intended;
- Communicating false information about a consumer’s credit.
- Collecting on an incorrect amount
- Not properly responding to a validation request
- Not responding with a correct response
Fair Credit Reporting Act (FCRA) Lawsuits
When a debt collector or creditor violates your rights under FCRA (15 USC 1692k(a)(1)) you may be entitled to $1,000 plus attorney’s fees plus court costs. Often a consumer credit attorney will charge you nothing out of pocket to file an FDCPA lawsuit against a debt collector.
You have rights under FCRA
- You have the right to be notified when an entity reports a negative item to the credit bureaus. You should be notified before the report is ever made, and afterward as well.
- You have the right to be informed about the reason you were turned down for credit, including the name, address and telephone number of the source of negative information.
- You have the right to have the information corrected or deleted within 30 to 45 days after you show that it is inaccurate, inconsistent or unverifiable.
- You have the right to have outdated information removed from your credit report, including accurate yet old information. Missed payments, late payments, judgments against you and other negative material should be removed once the information is seven years old. A Chapter 7 bankruptcy should be removed after ten years.
- You have a right to one free credit report per year from each of the three major credit reporting agencies – Experian, TransUnion, and Equifax. You have the right to purchase your credit report at any time for a reasonable fee.
- You have the right to the privacy of your credit report. Credit bureaus should restrict access only to persons or entities who have a valid, legal need to see it. Current or prospective employers should not be given your credit report unless you consent in writing first.
- You have the right to bring a lawsuit and recover money damages for harm done to you by credit errors. This includes actual damages such as the higher cost of a loan or being turned down for a loan, job or another lost opportunity. Other damages that may be available include $1,000 in statutory damages, noneconomic damages for emotional harm such as anxiety or stress, and even punitive damages for willful misconduct. You can also recover your attorney’s fees and the costs of pursuing your case in court if you are successful in your suit.
The Telephone Consumer Protection Act (TCPA) Lawsuits
TCPA allows consumers a reprieve by barring companies from making unwanted calls and slapping violators with fines of anywhere from $500 to $1,500 per call. State statutes may allow for more compensation with a TCPA lawsuit is filed.
Debt Lawsuits
Creditors and Debt Buyers are filing lawsuits more aggressively to recover debt they are allegedly owed. While a consumer has the right to defend themself most are apprehensive of the process and lack the industry knowledge to secure a better outcome for themselves. A consumer credit attorney has the experience with the legal system and the Plaintiffs in the cases to help guide the consumer to possibly the best outcome.
Debt Settlement
Consumer Credit Attorneys are uniquely qualified to help consumers settle a debt. Their experience with the creditors, negotiation, and their non-emotional state can help guide a consumer to a possibly better outcome.
Legal Representation
Most consumer credit attorneys handle more than consumer issues. They can give legal advice and potential representation. If they can not represent you, they may be able to refer to a qualified attorney or State Bar Lawyer Referral.
Credit Repair Laws Across the United States
The Credit Repair Organizations Act (CROA) governs credit repair across the United States. Many states have additional credit repair laws that add to the CROA extending additional protections to their consumers. Choose the state below to see their applicable state credit repair laws.
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming