Have you ever wondered exactly how credit repair companies manage to get negative (but accurately reported) information removed from their clients' credit reports? The common advice is that "There's nothing a credit repair company can legally do to remove accurate information from your credit report." But the truth is that credit repair companies come up with all sorts of illegal "loopholes" to skirt the credit reporting laws, like claiming you were a victim of identity theft victim, for example.
That's exactly the secret credit repair method used by Credit Restoration Brokers, LLC, who also did business under the names Clear Credit Sam Sky and Sam Sky Credit Guy. The FTC filed charges against the company for violating the Credit Repair Organizations Act.
Credit Restoration Brokers told their clients/victims they could remove the worst of derogatory credit report entries, even if they were accurate, which is against the law. Clients paid up to $2,199 upfront for credit repair services, which the law also forbids. Then, to get credit bureaus to remove the negative credit report entries, the company and their attorneys told credit bureaus that consumers had been victims of identity theft.
The court ordered a $2.5 million judgment against Credit Restoration Brokers and a $100,000 judgment against the law firm. Both judgments were suspended because of their 'inability to pay.' Credit Restoration Brokers was ordered to stop deceiving consumers about credit repair and to prove their claims in the future. The company is still allowed to do business.
All credit repair companies are required to follow the Credit Repair Organizations Act which says that credit repair companies can't:
They must allow you to cancel your contract within three business days and must let you know about your right to obtain a credit report and dispute inaccurate information.
Credit repair companies don’t have a special relationship with credit bureaus that allows them to clean up your credit report. Instead, they often use illegal and unethical methods to remove negative information from your credit report. Anything they can do (legally), you can do on your own for cheaper or even free.
The legal way to repair your credit is to remove inaccurate information from your credit report using the credit report dispute process. You can lessen the impact of some derogatory entries by paying off those delinquencies. Wait the seven to ten years for negative accounts and bankruptcy to fall off your credit report. Finally, add positive information to your credit report in the meantime by opening new accounts and paying them on time.
Have you ever had success with a credit repair company? Tell us about it in the comments section below.