Shopping for a Legitimate Credit Repair Service

The Federal Trade Commission (FTC) enforces consumer protection law and has the responsibility of protecting consumers against unscrupulous companies that unfairly garner our business through false claims and, quite simply, by breaking the law. With regards to shady credit repair clinics, practices like these became so pervasive that a federal law was passed to clearly outline how credit repair organizations can operate. The Credit Repair Organization Act (CROA) was passed to protect consumers and provide them with recourse if they are victimized by a dishonest credit repair provider.

When researching credit repair companies, there are some key indicators alerting you to steer clear. According to the Federal Trade Commission, avoid services that:

Accept Payment Before Credit Repair Services are Performed - Credit repair companies should not request payment prior to services being rendered. Under the CROA, these credit repair companies cannot require payment until after they have completed the services promised. This is to protect people from companies that take large upfront payments and then do not perform the agreed upon work.

Do Not Disclose Your Rights - Legitimate credit repair companies will inform you that you have a right to order one free copy of your credit reports every 12 months from the credit bureaus, and that you can dispute inaccurate or questionable items on your own. If you are not provided with this information, specifically in the form of a CROA required disclosure titled "Consumer Credit File Rights Under State and Federal Law", take your business elsewhere.

Endorse Using a New Identity - Some sketchy credit repair companies will actually go so far as to advise you to create a new credit identity by using an Employer Identification Number (EIN) in place of your Social Security number. This is a serious crime and if anyone suggests this as an option, run the other way.

Misrepresent the Services They Provide - Be wary of credit repair companies that guarantee to remove negative and accurate items, such as liens and foreclosures, from your credit reports. No one can guarantee that items will be removed, particularly if the items are true.