Credit Repair and Rehabilitation
It is important to know your rights and the laws that govern the companies that are selling you their services. In the matter of credit repair services, the Credit Repair Organizations Act (CROA) is the law that governs these companies. The TSR Amendment (Telephone Sales Rule) also applies, which prohibits the collection of a fee before the services are delivered. We have provided links to both the CROA and the TSR for your reference:
Credit Repair Organizations Act (Link)
Telemarketing Sales Rule Amendment Pertaining to Credit Repair (Link)
It is always best to familiarize yourself with the service being offered to you so you can identify potential risks of deception. OCCAM Members can help you.
Many companies will charge you a “First Work Fee”, or similar terminology, in which they collect a fee as soon as their “dispute letters” are uploaded or sent to you. These are generally form letters that are customized in an automated fashion using their software or CRM (Customer Relationship Manager). These fees can range from $49.00 to hundreds of dollars for the boiler plate dispute letter(s). Many companies operate as a “Document Preparation and Financial Education Service Provider”, meaning they will likely charge this “First Work Fee”, then begin a monthly payment process that will go on for a series of months. Each month’s fees are supposed to cover work performed the previous month. It would be wise to inquire as to what work has been performed each month and make sure the fees you have/are paying are fair for the service they are providing.
The primary risk to you as a consumer is deceptive practices. Reputable credit repair companies will walk you through the process of their service, the fees they will charge and the results to be expected. Every consumer’s situation is unique and every scenario is different. Be wary of any company that promises a specific increase in your credit score. Be wary of any company that doesn’t disclose their fees and the timing of the collection of those fees. Be wary of any company that cannot clearly disclose the service they will provide and the cost of that service. It is best to work with an OCCAM Certified Company to ensure that you receive honest, fair services for the money you are spending for it.
Click the link to download and read the Advisory on Credit Repair Services from the CFPB (Consumer Financial Protection Bureau).
CFPB Advisory on Credit Repair Firms (PDF Document from CFPB Site- SAFE)
Many times, it is a matter of preference on whether or not to utilize a professional debt relief or credit repair provider. It can be much simpler to pay a company to provide services you could do on your own for free. Paying for a service that simplifies your life isn’t always a bad thing. Some people prefer to change their own oil in their car. It isn’t difficult, but will require a little research, a trip to the store and bit of labor. If something goes wrong in that process, you are left to sort out the challenge on your own. Some people really like this. Others, however, do not. It requires knowledge they don’t feel they need to acquire and the time and effort it would take is better spent doing something more meaningful to them. Those people would much rather pay a fee to have the service provided for them by experts that do this type of work every single day. There is absolutely nothing wrong with that. However, it is extremely important that you know what you are paying for, what services are being performed and receive some form of guarantee that the service you are paying for is actually completed to your satisfaction or the service provider’s promises.