One of the issues found within the credit repair industry are companies using illegal tactics to boost scores or get debts removed from credit reports. It’s important to know how to spot these scams because they can cause you more issues than you’re dealing with right now. Some of these scams are blatant, while others promise instant improvements to your score or overnight improvements.
Credit repair itself is legal and when done correctly it’s not only legal, but also very helpful. However, if you fall for one of the scams, you may find yourself out a few hundred dollars and in need of a lawyer to deal with even more issues. Certain things must be present for the credit repair company to claim they use legal credit repair strategies.
Legal Credit Repair
The Credit Repair Organizations Act of 1996 or CROA governs organizations within this industry. The law limited the type of advertising and the claims these companies can make to protect the consumer from unethical behavior. For example, a credit repair company cannot collect money for any services they don’t intend to render. Here are some of the other things they cannot do.
Credit Repair Companies cannot:
- misrepresent their services
- make false statements about their services
- give you advice about taking a new identity
- advise you to get a false social security number or employee identification number
Credit Repair Companies must:
- give you a written contract detailing their services and the costs of their services
- give you three copies of written notice of the right for you to cancel your contract within three days
- provide notice informing you that you can dispute inaccuracies on your own
All of these requirements are found in the CROA. Make sure you understand this act, so that you don’t become a victim of one of the many credit repair scams on the market.