A reader writes that she has made some mistakes in taking care of her debts when they have
come due and now has a credit history that is preventing her from obtaining credit for the
things she needs (wants?). She has seen and read several advertisements for firms that
will repair or provide new credit for a fee. She has contacted two and been given
basically the same pitch; "for $750 to $1500 they will either remove all the bad
stuff or provide her a new credit report". She wants an opinion as to whether this is
a sound investment.
Not having all the facts or what her credit report looks
like, I will provide the official opinion of the Federal Trade Commission, "Don't
bother". According to the FTC, "the customer winds up with less cash and the
credit report remains unchanged". According to the FTC The U.S. Attorney in
conjunction with States Attorneys General have launched an operation code named Operation
Eraser. This operation is designed to identify and close down what law enforcement
considers one of the biggest scams being conducted against the American public, repairing
credit histories. To date 31 companies, throughout the U.S., considered to be bogus have
been sued. The FTC reports that thousands of consumers are bilked out of millions of
dollars annually and have nothing to show for their payments. The FTC claims there is no
such thing as a legitimate credit repair company and that if one ever presents itself to
them then they will retract that statement. So far they have not had to worry about a
A credit report can legally be restored if the information reported is either
incorrect or older then 7 years from the date that default is reported. This, however, can
be done by the debtor for little or no cost simply by requesting a copy of your credit
report and reviewing the information for accuracy.
The U.S. Attorney states that it is illegal for a credit repair firm to promise that
they can have truthful, timely remarks deleted from a credit report. What law make this
illegal? The Credit Repair Organization Act of 1996.
The U.S. Public Interest Research Group found that 40% of all credit reports
generally contain some type of error. Therefore, it is sound advice to get a credit check
up annually just as you would a medical check up.
I wish you well.