Credit Repair Lawyers
What Does “Credit Repair” Mean?
In light of the recent financial crises, the “credit repair” industry has arisen as consumers seek ways to address issues like bad credit. Various credit repair organizations have developed, often making promises to help people regain good credit scores.
While there are many bona fide credit companies that offer financial counseling, some of the newer credit repair organizations make sensational or impossible promises, such as “erasing bad credit” or completely eliminating credit debt. As a result, many consumers have fallen victim to credit repair scams.
Are Credit Repair Organizations Legitimate?
In general, credit laws allow for the existence and operation of credit repair organizations. However, they are subject to many different limitations and regulations. For example, credit repair groups cannot:
- Engage in misrepresentation or deceit to obtain a person’s credit history or score
- Obtain identification information without the consumer’s authorization
- Engage in otherwise unlawful business practices such as fraud
- Make misrepresentations regarding the types of services they offer
- Collect payment for services that haven’t been rendered yet
One of the main problems with credit repair organizations is the licensing and certification. That is, it may be difficult to identify a valid credit repair organization as opposed to a sham organization, since licensing requirements may vary by jurisdiction.
What is a Credit Repair Scam?
Credit repair scams are methods that bogus credit repair companies use to obtain profit or information from vulnerable consumers. There are many different types of credit repair scams, such as:
- Misrepresentation: The organization may misinform a potential client by stating something like, “You can’t get credit for 10 years if you’ve filed for bankruptcy; therefore you need to enroll with our services”. Such bankruptcy information may be misleading or completely untrue
- Misuse of EIN’s: A common scam is where the credit repair organization instructs a private citizen to obtain an employment identification number (EIN) as if they were a business, in order to set up a new credit record. It’s against the law to use an EIN for the purpose of establishing a fake identity
- Social Security Number Abuse: Some credit repair agencies actually offer no services, but attempt to get vital information from consumers like their social security number. They will then use the person’s SSN to access other important information or records
There are many other forms of credit repair scams. You should be wary of any organization that makes outlandish promises, or that asks for your information without clearly explaining their intentions.
What are Some Tips When Dealing With Credit Repair Companies?
While credit assistance may be necessary for some people, there are many steps you can take to avoid fraudulent credit repair practices. Some considerations to follow are:
- DON’T deal with any “credit repair organization” that forbids you from contacting major credit bureaus
- DON’T work with any repair organization that disregards industry regulations
- DON’T be enticed by offers to “wipe out debt”, remove negative credit records, or provide credit “regardless of your history
- DON’T deal with credit repair companies that claim to exploit loopholes or “secrets” of the industry or credit system
- DO ask for a written disclosure of your rights
- DO review any contract thoroughly before signing it. You may wish to have a lawyer review any agreements you are asked to sign
- DO inquire about your right to cancel contracts or agreements
Do I Need a Lawyer for Help With Credit Repair Issues?
Credit repair can work for some people who need financial assistance. However, you need to make sure that you are dealing with a legitimate, trustworthy organization in order to protect yourself from fraud. It’s in your best interest to contact an experienced lawyer before forming a relationship with a credit repair group. If you have any legal issues, disputes, or concerns, a lawyer can represent you throughout the course of a lawsuit.
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Last Modified: 06-20-2012 02:13 PM PDT
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