Millions of consumers have fallen into a history of bad credit, whether it’s been an ongoing problem or something recent due to the economic crisis. Many people with bad credit seek out assistance through a credit repair company only to find that they have been swindled in one way or another. These shady companies not only harm the individuals with whom they do business, but they also cause damage to the reputation of legitimate credit repair companies which can actually provide legal and liberating credit repair services.
The Credit Repair Organizations Act was created to protect consumers seeking legitimate credit repair services from those preying on them. The Act provides consumers with their rights under law when it comes to dealing with credit repair agencies so that informed decisions can be made and acted upon.
Identifying Illegal Activity
According to the Credit Repair Organizations Act, companies seeking to improve the credit of consumers are forbidden to participate in certain activities which are considered illegal under the Act. You can use these items as guidelines for researching and choosing a legitimate credit repair company.
Credit repair organizations are forbidden to:
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Advise you to lie, or lie themselves, about your credit history
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Misrepresent the services which they provide
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Alter your identity in any way, or advise you to get a new identity in order to acquire a new credit history
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Require payment for services prior to their being performed
Disclosure of Rights and Contract
Any credit repair organization which you approach is required to provide you with a disclosure document entitled “Consumer Credit File Rights Under State and Federal Law”. This document advises you of your right to acquire credit reports and dispute any incorrect information which they contain on your own. It also makes you aware of your right to sue an organization which violates the Credit Repair Organizations Act.
Credit repair companies are also required to provide you with a contract before any services are rendered. You are required to sign the contract after which you have a cancellation period of 3 business days in which to cancel the contract without penalty.
The contract should contain the following information:
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Required payment amount
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A description of services to be performed by the company
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An estimated time or date of service completion
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A statement informing you that the contract can be cancelled within 3 business days
You should also receive along with the contract a Notice of Cancellation form which you can use should you desire to cancel within the approved time frame. You can still cancel the contract after the 3 day period. However, the company can charge a cancellation fee at this point.
Violations
Should you feel that a credit repair organization has violated any of these legalities, you can file a report with the Federal Trade Commission and your state Attorney General as well as file a lawsuit within your state.