Is it legal to charge for credit repair?

No credit repair organization may charge or receive money or other valuable consideration for the provision of any service that the credit repair organization has agreed to provide to any consumer before such service has been provided in full. The FTC says BMS promised that people's credit scores would increase from 100 to 120 points in two to six weeks, a result they couldn't guarantee or offer reliably. The FTC also says that BMS charged upfront fees for the credit repair services they offered, which is illegal. The Credit Repair Organization Act (CROA) makes it illegal for credit repair companies to lie about what they can do for you and to charge you before they have provided their services.

The first step in repairing your credit is to find out what has damaged it and how serious the damage is. By law, a credit repair company must provide you with a contract that describes the services it will perform on your behalf. The CFPB has now expanded its human search not only to credit repair companies that do not follow the TSRs, but to companies that also provided “substantial support to those companies.” While credit repair is a legal industry, there are specific federal guidelines that regulate what businesses can and can't do. If the investigation determines that you are right, the original creditor must notify all credit reporting agencies to which you reported the misinformation so that they can correct their credit reports.

It only takes a few negative moves to damage your credit rating, making it difficult to approve credit cards, car loans, and other credit-related services. Contrary to what you may have heard, there's nothing a credit repair company can do for you that you can't do on your own. So if, in fact, you're interested in hiring a credit repair company, choosing one of these top five is probably your best bet. Since credit repair companies are prohibited from charging upfront fees for work that has not yet been performed, the fee you will be charged each month will be for work completed the previous month.

By law, you are entitled to receive a free credit report from each of the three major credit bureaus Equifax, Experian and TransUnion once every 12 months. Essentially, this means you can hire someone to do the work for you, reducing the time and hassle of repairing your credit. Credit plays a huge role in your life; you may not realize how important credit is until you reach adulthood. As the Federal Trade Commission explains, there's nothing a credit repair company can do for you that you can't do for yourself.

The main objective of CROA is to define which companies or organizations have the legal right to provide credit repair services. There is also a federal law that describes how credit repair companies can provide services to consumers. If you decide that the do-it-yourself process described above isn't for you, you might consider hiring a professional credit repair company.

Ada Porrini
Ada Porrini

Friendly beer advocate. Incurable coffee geek. General pop culture scholar. Incurable music lover. Wannabe beer nerd.

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