Repairing your credit when it’s not where it needs to be is a difficult task, which is why so many consumers to the help of credit repair companies. They mistakenly believe that all credit repair companies are created equal, and that all of them work hard for consumers to get their credit back on track using legal tactics and their own intelligence. The truth is many credit repair agencies use means that are both illegal and immoral to fix the scores of consumers in their care, and many consumers are unaware they’re engaging in illegal means. It’s troubling for many to realize they’ve enlisted the help of a company not looking out for their best interests. This is where the Credit Repair Organizations Act comes into play.
The Credit Repair Organizations Act and What it Means
If you’ve never heard of this, it’s a federal law. It was created to protect consumers from crooked, illegal, and dishonest companies working on their credit repair situation. The law works to protect consumers who want to repair their credit using legal means. These are consumers who want to fix mistakes on their credit report the legal way, but who have no luck changing their report on their own. Since many consumers do need legal work done for them to remove bad items, mistakes, and misinformation from their credit report, the government wants companies to help.
This law helps consumers learn their rights, what they should expect from a company of this nature, and how they can work to ensure the credit repair company with whom they work is working legally and without immoral and unethical practices at play. To provide you with a fair example of a credit repair agency working for the good of a consumer, take a consumer who has bad credit from not paying their credit card bills in more than 7 years. When this happens, credit card companies report negatively to the credit bureaus. Federal law requires these negative items are removed from the credit report of consumers following 7 years. If companies don’t remove these items, the consumer can dispute them. If their own disputes are going unanswered, they might seek the help of a credit repair company to do the work on their behalf.
As long as the credit repair company works to remove the bad items from the consumer’s credit report, there is nothing wrong and no damage done. It’s when the company decides to then dispute accurate items in the hopes creditors won’t respond to the dispute the credit bureau sends as a way of removing other items from someone’s credit report. This helps raise their score, but it’s not legal.
What to Expect from the Law
This law requires all credit repair companies follow the same set of laws when working with consumers. These laws promote honesty, and they do not permit credit repair companies tell their customers specific things or ask specific things of them:
- They cannot ask for payment until services are rendered
- They cannot lie about a client’s credit score making them think it began lower than it did to make it seem they did a good job with their work
- They cannot change a client’s identity or alter a new credit history
- They cannot lie about their services
These laws are designed to keep consumers aware of what is happening with their credit, and to keep your identity safe. If anyone fails to adhere to these terms and conditions, you as a consumer have the right to sue them for misrepresentation. No credit repair company may lie or make changes to their work behind your back.
What Happens If You’re Violated?
With an act such as this one, many consumers fear they will end up with their identities stolen or their information inaccurately changed. If you find this did happen to you, you do have rights. You have five years from the date of the violation to file charges. You can do this by hiring an attorney, by contacting the state attorney general in the state where the violation occurred, or by reporting the illegal practices to the Consumer Financial Protection Bureau.
You’ll want to gather as much evidence as you can, and you’ll want to note your suspicions. No information is too frivolous in a situation like this, and it is worth reporting. Your credit might be positively impacted by the illegal acts of a company like this, but it might not be positively impacted as you were told. Your right to sue only lasts for five years, so reporting the information right away is the best thing you can do.
Saving Your Credit
Disputing negative items that are old and should have been removed or false is legal. Do this if you want to save your credit score. However, the best way to save your credit and improve it is to pay your bills on time, pay down your debts, and stay on top of your finances. You can make a small change disputing inaccurate information, but using your credit wisely is the best chance you have of creating a positive credit score. Knowing the laws in your state helps you stay on track and protected from criminals looking to gain financially from your credit score and history.