Beware of credit repair

This article is for informational purposes only and is not intended as credit repair.

It’s almost impossible to open your email or surf online without stumbling across ads to “repair your credit” or “fix your credit.”  Generally speaking, companies that pledge instant and remarkable improvements to your credit cannot deliver on their lofty promises. 

These days, with credit at a premium, families are suddenly finding that they may be rejected for credit cards, loans, and mortgages, and the temptation to pay for services to “fix” the problem on their credit report can certainly be enticing. While there are steps that consumers can take to repair bad credit, all of these steps require little to no money, just time.  There’s usually no reason to pay someone to do these things for you, and no one can or should promise to improve your credit.  The majority of these credit repair company offers cost significant money, and they often are unable to deliver on their grand promises.

Furthermore, these “credit repair” companies often recommend or use fraudulent and illegal methods to repairing credit.  For example, some companies will send multiple credit disputes of negative (but accurate) records to the credit reporting agencies, claiming that information is incorrect, under the law that information must be verified as accurate within 30 days or should be removed from your record. Accurate, negative information should not be disputed, and this information can be added back to your record once it’s verified as accurate.

Another fraudulent method they may recommend is that you open a new social security number or employer identification number.  This is also fraudulent and does not work.

The FTC website offers recommendations on how to recognize a credit repair scam.  Beware companies that require money up front and recommend that you do not contact credit agencies yourself, among other things.

Keep in mind that any legal, ethical method to repairing credit can be done by you, without any fee.  This includes sending a 100-word statement to the credit agencies, explaining your delinquencies, disputing any inaccurate information, and continuing to pay bills on time. 

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.