Services That Rebuild Credit

The Credit Repair Organizations Act provides the legal definitions and regulations that apply to services that rebuild credit. The enormity of the credit crisis has led to the formation of several companies that prey on consumer vulnerability and ignorance of their rights and protection under the law. Consumers can protect themselves and save money by knowing what to look for in companies that promise to rebuild credit.

Better Business Bureau Rating

With so many companies promising credit repair services, it is important to know if a company has a good reputation. Reputable companies are most often Better Business Bureau (BBB) members in good standing and with high ratings. The bureau grades organizations based on the number of complaints about their services and how the complaints were resolved. BBB representatives will explain company ratings to consumers requesting information.

Types of Services

Organizations that rebuild credit only provide services to clean up credit ratings, scores or histories and help consumers obtain new credit. They cannot misrepresent their services, make false claims or promise to create a new credit identity. According to the Federal Trade Commission, credit repair companies that promise to erase bad credit, bankruptcies and liens, or create a new identity, are not truthful and most likely operating a scam. No individual or company has the right to have accurate information removed from a credit report, including negative credit information such as liens and bankruptcies.

Contractual Obligations

The Credit Repair Organizations Act specifies that a contract with a credit repair service will have the company's name and address, a detailed description of the services, how long it will take to realize the results, any guarantees offered by the company and the cost of services. The company or individual providing credit repair cannot perform any services without a signed contract and must complete a three-day waiting period after signing before performing any services. At any time during the waiting period the consumer can cancel the contract without paying any fees. Do not sign a contract with a company that promises to start immediately or that does not provide the required information on the contract.

Rights Disclosure

A reputable company will inform consumers of their rights and tell them what they can do for themselves free. The Credit Repair Organizations Act requires companies to provide a separate, written disclosure of the consumer's rights before a signing a contract.

Payment Policy

The Credit Repair Organizations Act specifies that credit repair or rebuilding services cannot charge a customer until the promises specified in the contract have been completed. Any company that requires upfront payment, in full or part, is in violation of federal law, and may also be in violation of specific state laws regulating credit repair companies. Furthermore, credit repair organizations must disclose the total cost to the consumer in a contract.