You may have seen television advertisements for these types of organizations. Credit repair organizations are for-profit businesses that promise to consolidate any debts you have, help you find a way to pay off your debt, and repair your low credit rating. However, when you sign on with one of these organizations, you should be aware that there a few practices that the e Credit Repair Organizations Act prohibits these organizations from engaging in:
- The credit repair organization cannot make any false representations, or encourage you to lie about your credit history or current credit rating to a potential creditor.
- The organization cannot attempt to lie, or make you lie, about your identity to a creditor so that the creditor will not be able to access your credit history or current credit rating.
- The organization cannot lie about or misrepresent any services they offer to their customers or say or do anything else that would constitute business fraud or deceit.
- A credit repair organization is not allowed to collect payment for any services that have not been performed yet. Instead, the organization can only collect payment after they have performed their end of the deal.
Are Credit Repair Organizations Obliged to Disclose Any Information?
Under the Credit Repair Organizations Act, credit repair organizations are required to tell you certain pieces of information before you sign a contract with them, including:
- Although you do have a right to dispute what you feel is an error on your credit report by contacting the credit bureau, your credit repair organization cannot remove current, truthful information from your credit report. The credit repair company can only remove information that is older than 7 years, except for bankruptcy because bankruptcy stays on your credit report for 10 years.
- You have the right to obtain a free credit report from the organization if you are unemployed, on welfare, or have been turned down for a job, insurance, or a rental in the past 60 days. The organization is required to help you understand your credit report.
- You can cancel your contract with the organization within 3 days after you sign it.
The credit repair organization must also supply you with a written contract that must be signed and dated by you before they can begin to do business with you and charge you for any services. The contract should specify what services they are supplying you, as well as how long those services will last.
Can I Cancel a Contract with the Credit Repair Organization Once I Have Signed It?
You may cancel a contract with this organization up to a certain point. As mentioned above, after you have signed a contract with a credit repair organization, you have until three business days afterwards to sign a cancellation form to get out of the contract.
Seeking Legal Help
First, you will probably want to contact the Federal Trade Commission (FTC) and file a complaint with them. The FTC regulates the business practices of these types of organizations. In addition, you might want to contact a business attorney who has experience in credit matters. Your attorney will be able to advise you of your rights and let you know if you are entitled to compensation in a lawsuit against the organization for services you have already paid for.