Consumers Should Avoid Credit Repair Organizations

Consumers Should Avoid Credit Repair Organizations

Consumers are being bombarded with ads by credit repair organizations (CROs). Consumers are well advised to not contract for their services. Consumers who have inaccurate information on their credit reports should send their own disputes by letter or online to the credit bureaus. Consumers’ own disputes are far more likely to induce the bureaus to correct the inaccurate information than dispute letters generated by a CRO. CROs’ dispute letters are typically computer generated and in one-size fits all in form. Some I’ve seen are not comprehensible. Many CROs do not even send the consumer copies of what they submit to the bureaus probably because the consumer will see how worthless they are.

CROs advertise they will clean up, improve , or rebuild your credit score and to raise your credit score. They usually fail to accomplish anything.

To curb abuses by the CROs, in 1996, Congress enacted the Credit Repair Organizations Act (CROA). Under the CROA, it is illegal for any CRO to do any of the following:

  • Advertise it can legally and permanently get negative information removed from consumers’ credit reports even if the information is accurate and not obsolete (over 7 years since the date of first delinquency)
  • Advertise it can remove negative information from consumers’ credit reports to enable them to get loans
  • Promise to improve a persons’ credit score but then merely refer the person to a third person
  • Provide customized advice but then only providing a general computer generated assessment
  • Accept payment in advance of fully performing the promised services
  • Accept money without entering into a contract with certain disclosures on a separate piece of paper, including the following:
  • letting the consumer know he or she has a three-day right to cancel the contract,
  • describing the payment terms and services to be provided
  • the name and address of the CRO
  • a statement of the consumer’s rights under the FCRA.
  • CROs that violated the federal law may be sued for damages, cancellation of the contract, and attorney’s fees. If you have paid money to a CRO that may have violated the law, please contact us for a consultation.

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