Many credit repair companies advertise their services as "legal credit repair." Why is there a distinction? What things should you look out for?
Credit Repair Scams
There are a lot of credit repair companies that use dishonest and unscrupulous methods of repairing credit. These companies are criminals because they are breaking the Credit Repair Organizations Act - the CROA - a Federal law that dictates what credit repair companies are allowed to do. Quite a few of these companies say they offer legal credit repair. That's really an advertising tactic to convince desperate consumers to pay money for services that may not help their credit at all.
What's Legal Credit Repair?
Legitimate, legal credit repair companies will operate within the bounds of the CROA. They won't charge you for services they haven't yet completed. They'll let you know about your rights to obtain a credit report and dispute inaccurate information on your own. Legal credit repair means you'll receive a copy of your contract before you agree to the services. You'll be allowed to cancel your contract three days after signing it if you change your mind.
Legal credit repair companies won't do certain things as prohibited by the CROA. This includes asking you to create a new identity, lying about the legal credit repair services they can provide, and asking you to waive your CROA rights. A company that does any of these things doesn't provide legal credit repair.
Reporting Credit Repair Companies
You can report a credit repair company that has broken the law. The Federal Trade Commission is the Federal agency that governs credit repair companies and has a history of going after illegal credit repair companies.
