What is a credit repair organization?
Credit repair companies, formally known as credit repair “organizations” in the Credit Repair Organizations Act (hereafter “CROA”), act on behalf of consumers and attempt to get negative, or otherwise offensive information, removed from their credit reports. In general, the credit repair industry, which is over two decades old, tends to have a fairly bad reputation, warranted or not. In fact, the Federal Trade Commission has called credit repair a “scam” and credit repair operators “con artists.”
How is the industry regulated?
These aforementioned rules are straight out of the CROA, which is the Federal law that defines how credit repair organizations must do business in order to stay out of the FTC’s crosshairs. If the credit repair company charges you in advance for their services, or promises to get your bankruptcy deleted from your credit reports, then they’re violating Federal law. If they counsel you to dispute everything that’s bad on your credit reports, or they don’t tell you you can do it on your own for free, that violates Federal law, too.
How much does credit repair cost?
Most credit repair services are billed under one of two pricing structures: subscription and pay-per-deletion. The subscription pricing is, obviously, a monthly fee charged against a credit card meant to cover services rendered during the prior month. The pay-per-deletion model is a newer pricing structure and is the brainchild of the creator of a credit repair facilitation software.
Under the pay-per-deletion model, the client is only charged after a credit repair organization has successfully had negative information deleted from their credit reports. According to one company, “Pay-per-delete makes it easier for credit repair organizations to be fully compliant with CROA’s restrictions against charging fees prior to services being performed.”
Credit repair subscriptions generally run between $49 and $79 per month, but that can vary depending on the company. The average number of months consumers stick with the subscription is all over the place, but it seems to be somewhere between 8 and 18 months, depending on whom you ask. That means consumers are paying, on average, $64 per month for about a 13 months, or $832, for credit repair
Read more: http://www.mint.com/blog/credit/is-credit-repair-right-for-me-062012/#ixzz1yH6rpuiS
Understanding the Methods Used in Credit Repair
Legit and Not-So-Legit Methods of Credit Repair Companies
Open up the yellow pages or do an online search and you will discover that there is no shortage of credit repair companies to choose from, and with more and more Americans suffering from poor credit scores, it is not hard to see why.
Today, good credit is a must as lenders are just not as willing to take a risk on someone with a mid-range credit score as they used to be. For many people on the cusp of a 700 credit score, the temptation to use a credit repair company to help them get over that hurdle can be great, and for those who sit stagnant with a score in the 500s or 600s, it can be downright irresistible.
But, not all credit repair firms are the same. Some credit repair companies use legitimate methods to improve their clients’ credit, while others use shady tactics that can even be considered illegal. Understanding the methods they use will help you choose the best credit repair company for your needs.
Illegitimate Methods of Credit Repair
Some credit repair companies can be very creative when it comes to cleaning up a client’s credit report and this should be a clear indication that the organization may be fraudulent. These types of companies promise to clean up your credit, require a substantial payment upfront and then use illegitimate methods that provide temporary improvements to the credit score. These types of companies tend to use the following methods of repairing credit scores.
All of this yeah or neah stuff can be terribly confusing. Do you need a credit repair agency or do it yourself?
Learn the secrets to Legally Manipulate Your Credit, Do It Yourself Credit Repair