Credit repair companies are popping up
like whack a moles claiming they can raise your credit score and
remove bad credit. As a good skeptic, you wonder whether these
companies and their practices are legitimate. And you also may
wonder, whether credit repair is something you can do yourself. Good
questions. I'm happiest when consumers are well informed and
inquisitive.
With interest rates at historic lows –
less than 4% for a 30 year fixed mortgage – the allure of
refinancing is strong indeed. The catch. Excellent credit is
required. And nowadays good credit carries a score of at least 720.
And since we are just barely crawling out of the Great Recession,
many people took a financial beating and are happy to hang onto their
property at all let alone maintain a decent credit score.
According to CreditScoreResource.com:
“One important thing to know about
credit scores is that these scores are not permanent. In a few years
they may change by a huge amount. A perfect example is how the good
credit rating for mortgages has changed since the recent recession.
Two years ago, many mortgage lenders considered borrowers with a
credit score of 650 to be prime borrowers. This means that these
borrowers were allowed to get prime mortgage loans which had low
interest. Amazingly, in a time span of just two years, what they
considered to be a credit score for prime loans jumped to 750. The
same can be said about the generally accepted good credit score.”
You didn't imagine it – they
definitely moved the goal posts.
However, as consumers, there is nothing
we can do about it. If you want the peace of mind and buying power
that a good credit score will bring, you have to play by the lenders
rules. Back to our questions:
How to tell if a credit repair
company is legitimate:
The Federal Trade Commission posts the
following on their site – www.ftc.gov -
“Do yourself a favor and save some money, too. Don’t believe
these claims: they’re very likely signs of a scam. Indeed,
attorneys at the Federal Trade Commission, the nation’s consumer
protection agency, say they’ve never seen a legitimate credit
repair operation making those claims.
'Credit problems? No problem!'
'We can remove bankruptcies,
judgments, liens, and bad loans from your credit file forever!'
'We can erase your bad credit — 100%
guaranteed.'
'Create a new credit identity —
legally.'”
So be careful of overblown unrealistic promises. And beware of
upfront fees. Under the Credit Repair Organization Act (CROA), credit
repair companies are required to explain:
your legal rights in a written
contract that also details the services they'll perform
your three day right to cancel
without any charge
how long it will take to get
results
the total cost you will pay
- any guarantees
- Can you do it yourself? Is DIY credit repair possible or a
good option?
Do it yourself credit repair is possible, and it is your right to
do so. I am an advocate for pro se rights, the people's right to
legal access, and the right to do it yourself. However, it depends on
you – your comfortable level; the time you have available; and
whether you are the type of person who will be diligent and
persistent in a detail driven process.
The Federal Trade Commission's site explains step by step how to
repair your own credit, along with other valuable information about
how to protect yourself in the marketplace. If you're not the type of person to do it yourself, or just don't
have the time, you can turn to a credit repair company. The
Florida Association of Legal Document Preparers has recently partnered with a
credit repair company. We are using one of our
associates as a test case and we'll chronicle his/ her progress on
this blog. Our associate shall remain nameless for his/ her privacy,
and we'll refer to him/ her as Nameless 800 – 800 being the credit
score goal.
So yesterday, Nameless 800 signed up. No
upfront fees were requested except for a $15.00 credit monitoring
fee. Nameless 800's initial credit score is around 570. There are no sign up fees except the $15. credit monitoring fee. After 30 days you'll be billed $99. processing fees IF credit repair progress has been made. As low as $25. per item removed.
We have seen many credit repair offers and this is the best offer we've seen so far. If you're interested in having your credit repaired sign up here:
Update March 20, 2013 -
We were completely disappointed in the company that we had hoped to recommend. All references to that company have been removed.
