Did You Know…Credit repair companies can’t “fix” accurate records?

The Fair Credit Reporting Act (FCRA) gives U.S. consumers the right to challenge inaccuracies on credit reports. It further allows consumers to challenge or “dispute” that information at no cost. Nevertheless, a category of companies known as credit-repair organizations have evolved based on the business proposition of disputing credit-report information on consumers’ behalf, for a fee.

VantageScore Solutions generally discourages consumers from engaging such credit-repair services, for the simple reason that you can dispute your own credit reports for free, without anyone else’s help. Nevertheless, the sheer number of credit-repair companies, also known as credit-service organizations, makes it clear that many consumers do hire them. Those who choose to do so should keep the following in mind:

Credit-repair is a legal business, but it’s subject to strict federal and state laws that forbid a variety of unethical practices. Chief among these is a federal statute called the Credit Repair Organizations Act (CROA).

The CROA exists to protect consumers from unethical credit repair companies that seek to take advantage of consumers who have poor credit. The challenge for consumers is to sort between those that follow the law and those that do not. Becoming familiar with the CROA and its provisions can help consumers tell the difference.

The CROA includes the following provisions:

Many consumers who turn to credit repair companies would be better served by seeking credit counseling services, available free through nonprofit organizations in many communities. For counseling focused on housing issues, including avoidance of mortgage default or foreclosure and mortgage-modification assistance, the Homeownership Preservation Foundation (HPF) and its 24-hour hotline, 1-800-995-HOPE, are excellent resources. The U.S. Department of Housing and Urban Development (HUD) also publishes a directory of sponsored counselors at its website.
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