Credit repair services are they a scam? I find it interesting on how the Big 3 (Experian, Equifax and Transunion) claim that credit repair services are a scam. Lets dissect this a bit shall we….Now first of all I think its important to point out that the Big 3 are not disputing the fact that the credit repair process in itself is not a valid need. They are saying hiring a credit repair company to do something you can do yourself is a scam. I don’t know about you but I hire people to perform services for me all the time and guess what? I can do them myself if I chose too. As you will discover here shortly though there is more to the credit repair process then meets the eye.
If you have ever had a credit monitoring service you may have noticed that there are options to validate the accuracy of information by simply clicking a button. The fact that this tool is available tells us that the bureaus know that credit reports contain errors and credit reports containing errors is so common that you have the option to dispute those errors with ease.
Now the part of this online disputing tool this is not explained to you as a consumer is that you actually waive several of your rights under federal law when you dispute online. There is a proper process to follow when wanting to dispute or validate an account. Read about “How to properly validate accounts” or checkout the part of my article that shows the exact rulings under the FCRA.
The Fair Credit Reporting Act (FCRA) section 611a (8) changes the standard requirements and protections afforded to the consumer by the FCRA. In the “Expeditious Dispute Resolution” section:
The agency shall not be required to comply with paragraphs 2, 6, and 7 with respect to that dispute if they delete the trade line within 3 days.
Paragraph 2 requires the CRA to forward your dispute and all related documentation you provide to the creditor. They rarely forward the documentation.
If credit reporting agencies delete an item without forwarding your dispute to the data furnisher, the data furnisher will re-report this item in the next reporting cycle. The data furnisher will most likely not be aware of your dispute therefore they may simply re-insert the item. There is a standard notice that is required to be sent prior to any reinsertion of a deleted item.
Paragraph 6 requires the CRA to provide you with written results.
Paragraph 7 requires the CRA to provide you with the method of verification on request from the consumer.
You also do not dispute online for the following reasons:
- Paper Trail: With online disputes there is no paper trail to evidence the details of the dispute.
- Limited Dispute Reasons: With the limitation of dispute reasons, an accurate description of the dispute is difficult in most cases.
What do you think?
After me pointing out a couple items about you repairing your credit on your own do you see value in hiring a professional to help you repair your credit?
Does it seem a bit more complicated then what you thought or what the bureaus have led you to think?
I only quoted a paragraph of the FCRA. This is a couple hundred page government act written to protect you the consumer. The problem is its up to you to know your rights and utilize them. There is another act as well called the FDCPA (Fair Debt Collections Practice Act. This act regulates the way creditors and collectors are to act when collecting debts, etc. You can read more about properly paying collections and dealing with creditors by reading my article on paying collections.
The credit repair industry has had a bad reputation for many years but recent publications by the FTC and others show that the credit repair industry has worked hard to overcome the bad information spread about them and that consumer complaints about credit repair companies as at an all time low. See below:
the Federal Trade Commission (FTC) issued a report indicating consumer complaints about credit repair services have plummeted to lowest level in recent years to 1,848 or 0.09% of the total 2 million complaints in 2013. Conversely there were 30,000 complaints related to credit reporting and 20,000 complaints in mortgage related issues.”
Read more about the credit repair industry and its recent presence in the news, you will be shocked at what you discover.