Credit Repair Agent
If you’re interested in credit repair services, you need to be able to identify who might be more or less trustworthy to work with. Credit repair specialists can be a significant asset, but not all credit repair specialists are created equal. Keep reading for a complete breakdown of what a credit repair specialist does, the regulations they must abide by and how to pick the right specialist for you.
Who can be a credit repair specialist?
Technically, anyone can say they’re a credit repair specialist and offer their services because there aren’t any industry certifications you’re required to get. Unfortunately, this can result in unqualified people trying to pass themselves off as specialists. Fixing your credit is a serious situation, and you should only work with a professional who knows what they’re doing.
There are certain rules and regulations that have to be followed by any credit repair organization. It’s important that you understand these regulations so you can protect yourself. If you start working with a credit repair specialist and notice they seem to be breaking the industry rules and regulations, it’s a red flag, and you should stop working with them.
What laws do credit repair specialists have to follow?
Credit repair specialists have to follow the Credit Repair Organizations Act (CROA). The CROA was created to protect consumers, and it states that credit repair companies (and their employees) can’t lie about their services or the results. Some of the most important rules are that credit repair companies cannot:
- Promise specific credit repair results (such as results in 30 days, a specific bump in your credit score or a guarantee of removing specific negative items on your report)
- Exaggerate or misrepresent their services
- Lie to the credit bureaus or other financial institutions when trying to fix a consumer’s credit
- Offer or suggest that the customer create a false identity to “start over” on their credit
- Collect up-front fees for work not being performed
- Forget to explain that the consumer can take the same actions as the credit repair company on their own
What credit repair specialists do
A credit repair specialist will do what they can to improve your credit. The first step in the process is together, review all your credit reports and look for inaccurate or misleading info that could be challenged. Under the Fair Credit Reporting Act (FCRA), all consumers have a right to a fair, accurate and substantiated report. If you find something you want to challenge, the credit bureaus will examine your proposed dispute and may move forward with an investigation.
Once you and your credit specialist find an inaccurate or misleading item on your credit report, the next step is to prepare a challenge letter (also known as a dispute letter). Either the consumer or the credit repair specialist will send the dispute letter to the credit bureaus and debt collection agencies in the hopes of opening an investigation.
Examples of common credit report errors include accounts that don’t belong to you, accounts listed multiple times and inaccurate account amounts, payments details or dates.
Unfortunately, dealing with the credit bureaus to handle mistakes on your credit report can sometimes be challenging. Some people choose to try to go around the credit bureau and communicate directly with the creditor. Ultimately, anything listed on your credit report was supplied by a creditor, so they’re the source of the inaccurate data.
You can try to send a goodwill letter to a creditor or financial institution asking that they remove inaccurate data from your credit report. This action is known as a goodwill adjustment and will require the creditor to reach out to the bureaus to fix the mistake.
Note that while the credit bureaus legally have to—at the least—review your dispute request, the same is not true for a creditor. They may receive your goodwill letter and choose to ignore it.
Sometimes consumers will come in for credit repair services but all the information on their credit report is accurate. While this means filing a dispute letter isn’t an option, there are other approaches available. A pay-for-delete letter is an offer to pay a debt in its entirety if the creditor removes it from your credit report. If your creditor is open to this arrangement, make sure to get everything in writing.
After your credit is repaired, it’s crucial to stay on top of your credit. Negative items on your credit report are most easily addressed when they’re new and haven’t had months (or years) to drag your credit score down. All consumers have the right to one free credit report per year from each of the three major credit bureaus (Equifax, Experian and TransUnion). Make sure to take advantage of this and review your information annually for mistakes.
What to look for in a credit repair service
Whether it’s an individual or a larger company, you should look for these things:
- Knowledge of state credit repair laws and the FTC and CFPB: Each state has specific credit repair laws. You want to work with someone who knows and is abiding by the state laws. Research these laws beforehand and ask your potential credit repair specialist about the rules to test their knowledge.
- Adherence to the CROA: Under the CROA, a credit repair organization always has to give you a written contract and explain your rights before taking you on as a client. If your credit repair specialist fails to do this, they might ignore other parts of the CROA, which can put you at risk.
- Credit education services: Often, credit repair specialists also offer credit education services. This isn’t a necessity, but it’s a nice bonus. This type of education can help ensure you don’t end up in a situation where you need to fix your credit again. Credit repair education will teach you the five credit factors that apply to your score, how you can improve your credit even more and common credit mistakes to avoid.