In the above video, FTC Chairman Jon Leibowitz, offers consumers two tips for how to choose a credit repair company. The tips are generally pretty good but continue reading for a few of my own tips on how to choose a credit repair company or credit attorney.
First of all, I agree with the FTC recommendations that if you hire a company for credit correction always look for two red flags to weed out many of the scams from legitimate credit repair. The first is to avoid a credit correction company that requires any payment before fully performing the services. Under the Credit Repair Organizations Act (CROA) it is illegal to accept payment before fully performing the services so you know if a company requires an upfront payment they are a scam. The second warning sign of a scam credit repair company is when the company guarantees they will get a specific result. Credit repair is uncertain. Even the creditors themselves occasionally have difficulty removing information that they reported so how could an independent company promise to do better? The simple fact is that no company can legitimately guarantee a specific result.
Required CROA Disclosures
In addition to these two tips from the FTC, consumers seeking to hire a credit repair company or credit attorney should also avoid any company that refuses to provide consumers with the legally required disclosure statements and cancellation forms. Under the Credit Repair Organizations Act (CROA) both are required and even attorneys are not exempt from the CROA requirements.
Credit Repair Company Registration
You should also avoid hiring a credit repair company if it is not properly registered and bonded in your state. Many states require credit repair companies to register but some states do not require attorneys to register as long as the credit repair services are an incidental part of their legal practice. Check your state consumer protection and corporations websites to determine what registration is required and whether or not the particular company has those registrations. If not, go elsewhere.
If you need to hire someone to help you repair your credit, do your homework on the companies you are considering and watch carefully for the warning signs listed above. The Internet is full of credit repair scams. Watch for the warning signs and don’t be a victim.