Beware of “Credit Repair” Companies

Last month, the federal government took action against “credit repair” companies for falsely promising to improve credit scores and for charging illegal fees. The Columbus Dispatch – an Ohio newspaper – published the following story:

“You’ve almost certainly seen or heard pitches for “credit repair” services promising to clean up your credit report problems, reduce your debt or even raise your credit score by 100 points. But experts warn that these services can do far more harm than good…

In fact, the Consumer Financial Protection Bureau has won two new legal settlements worth more than $2 million in penalties against credit-repair companies. The CFPB alleged that Prime Credit, IMC Capital, Commercial Credit Consultants and Park View Law charged clients illegal advance fees and misled customers about what could be done for them.”

According to the story, for typical clients the credit-repair companies would merely submit letters to the national credit reporting agencies challenging negative information on their credit reports. The companies did not subsequently follow up to determine whether a customer’s score improved as a result.

If your credit report contains erroneous negative information, there is no need to hire a credit-repair company to fix this. In fact, it is best to dispute those errors directly with the credit reporting bureaus. The process is quicker and there are no fees involved, and you can submit these disputes online. Here are the relevant websites for the nation’s three major credit reporting bureaus:

http://www.experian.com/disputes/main.html

https://www.equifax.com/personal/disputes

https://www.transunion.com/credit-disputes/dispute-your-credit

We hope you are finding our consumer alerts useful. And, as always, if you know someone who is struggling with overdue debts, please have them call us for a bankruptcy consultation at 212-315-3755.