Boastful advertising claims promising to remove bad credit and raise credit scores are found on the Internet by companies that claim the ability to clean your credit history. Many of these claims are false, the actions taken to “repair” your credit may actually do more harm than good, and credit repair could impede your ability to raise your credit score. Given that you can dispute inaccurate information on your credit report for free, I do not believe that consumers need to hire a credit repair company. Moreover, the Federal Trade Commission often prosecutes unscrupulous credit repair companies under the Credit Repair Organization Act (CROA), and therefore, in my opinion, a consumer is really taking a chance when hiring one of these companies.
The CROA is a federal law that regulates how a credit repair company contracts and performs its credit repair services for consumers. The stated purpose of the CROA is “to protect the public from unfair or deceptive advertising and business practices by credit repair organizations.” 15 U.S.C. 1679(b). To achieve this purpose, the CROA requires that a credit repair organization provide mandatory disclosures at the the time of contract. Among the required disclosures are: the total cost of the services as well as the payment requirements; disclosure as to all promises related to performance; and a description of what the credit repair organization will do for the consumer. In addition, the CROA prohibits the credit repair organization from receiving payment for services until those services are fully performed. The CROA also requires that the credit repair organization provide a prospective purchaser of its services with a three day right to cancel after the consumer signs the contract. For more information on the pitfalls related to credit repair organizations, I recommend that you visit the FTC’s website at
An unrealized problem for many consumers that hire credit repair organizations is that credit reporting agencies are prepared for the tactics employed by the credit repair company, and consumers may hurt their credit file as result of engaging in “credit repair.” Many credit repair organizations try to game the credit reporting system by engaging in numerous and repeated credit disputes in an effort to trip up the credit reporting agency or furnisher based upon the timing requirements of the FCRA reinvestigation duties. In the long run, these activities can hurt a consumer because the efforts are often associated with deceptive statements regarding legitimately past due debt. A consumer should never make a deceptive statement about a credit account or allow a deceptive statement to be made on their behalf by a credit repair organization. Moreover, consumers with legitimate inaccuracies on their credit report and victims of identity theft are better suited to write their own credit dispute letters with attachments supporting their arguments. Credit repair organization letters that I have seen are often short generic form letters that do not describe properly the consumer’s credit dispute. You will get much better results in the long run by writing your own dispute letter without the cost of hiring a credit repair organization. For my previous post on how you can write your own credit dispute letter, please see