Almost All Credit Repair Services Are Scams.  Don’t fall for them.

In fact, in my years of representing debtors and counseling people in financial trouble, I have never seen a credit repair service that was not a scam.  But if they’re all scams, why are they so popular?  There are two reasons: 1) The average consumer has no idea that the “services” provided by folks like Lexington Law and Creditrepair.com are services that anyone can do on their own, and no specialized training or certification is required.   And 2) the negative consequences of hiring a credit repair service are often not seen until years later.

Credit repair services don’t do anything you can’t do yourself.

The nation’s most prominent credit repair service claims to “leverage your consumer rights with our unparalleled experience to engage your individual creditors, and the credit bureaus.”  Whatever that means.  Though they are not lawyers, they use legalistic-sounding language to make it appear that they know what they are talking about.  More importantly for their purposes, they want to make it appear as though credit repair is something too big and complex for you to understand, that you’ll have to devote hours and hours of reading and forum trolling and sifting through bad internet advice just to get started.  They are wrong.

Credit repair is very simple, if you’re not trying to be fraudulent or cheat the system.  It goes like this:

1. You have a legal right to not have false statements published about you.
2. If somebody publishes false information on your credit report, then you have the right to request that they fix it.
3. If they don’t fix it, you can take them to court to require them to fix it and compensate you for the loss their false publication caused you.

And how do you actually do it?  You write letters.  And they don’t have to be complex or say crap like “THIS IS A DISPUTE PURSUANT TO 15 U.S.C. Sec. 1681 (The Fair Credit Reporting Act).”  They don’t have to cite any laws, or sound ominous or threatening or like they’re written by an amateur lawyer.  They just have to do 2 things:

1. Tell them what is wrong.
2. Tell them what they need to do to fix it.

That’s it.  Literally.  You have just learned all you need to know to remove the false items on your credit report.  And I didn’t charge you a dime.  But Lexington Law and Score Cure can’t make a ton of money by telling you something that simple.  They need to cultivate an aura of impossibility about their work, so as to convince you that their sage ‘advice’ is really worth the money they demand for it.  Don’t fall for it.

Frivolous Disputes Have No Rights Under the Fair Credit Reporting Act

OK so maybe they’re selling me a service I could do myself, but doesn’t a plumber do the same thing?  Can’t I just pay someone to do the legwork because you don’t have the time?  Not if you want the job done right.  There are still negative consequences to using a credit repair service.  Here’s why.

15 U.S.C. Sec. 1681i(a)(3) allows credit reporting agencies to ignore disputes that reasonably appear to be frivolous.  And what is considered a “frivolous” dispute?  The FTC has said that disputes sent in a common format or using a form letter which indicates that the dispute was drafted by a credit repair organization is evidence of frivolity.  See FTC Official Staff Commentary Sec. 611, Item 11.

And if a credit repair organization sends disputes directly to the credit bureaus, they have no obligation to respond because the FCRA only applies to disputes sent by consumers.  And credit repair services are not lawyers, even if they have the word “Law” or “Legal” in their name.  They can’t conduct business on your behalf.

In other words, the system is designed to allow credit reporting agencies to ignore the junk that credit repair services create.  The only way to send effective, legally actionable disputes is to make them real.  And this takes time.  You are going to have to sit down and read your credit report.  You are going to have to find the items that are false.  You are going to have to gather all the evidence you have to prove those items are false.  You are going to have to write complete sentences telling the credit bureaus what they are doing wrong and what they need to do to fix it.  It is not hard.

For example, your TransUnion report shows an account on your credit report to Midland Funding, reporting $367 past due and owed on an account that originated with Chase Bank.  You know that you settled that account with Midland a few months ago for $200.  How would you frame that dispute?

“Dear TransUnion,

It has come to my attention that you have published on my credit report an Account XXXXXX1234 owed to Midland Funding in the amount of $367 and past due for $367.  In January of 2014, I paid Midland $200 in full and final settlement of that account.  Please either delete this account or update your reporting to show the truth: that I am not past due and that I owe $0.00.  Thank you.”

Do you think you can handle that?  Of course you can.  Pay yourself that $80/month.