Why Credit Repair Services are a TOTAL SCAM!
UPDATE: If you would like more evidence of the scammy, spammy, and, dishonest nature of the credit repair industry, check the comments of this story :)
People often wonder why I dedicate countless hours to educating people about managing credit when the market is seemingly flooded with and avalanche of services and subscriptions promising to rectify your credit history and boost your score for you. The truth is, the term “Credit Repair” is a misnomer that lures consumers into shelling out thousands for outcomes that are far from guaranteed.
Here are four reasons why entrusting your credit repair to these companies is about as wise as purchasing your bottled water from Disneyland.
1. Credit Repair is 100% FREE
The first thing to understand is that anything a credit repair service claims to do for you, you can do yourself for free. The process of disputing errors on your credit report doesn’t cost a cent. The only thing you’re investing is your time and energy. The Fair Credit Reporting Act (FCRA) mandates that each of the major credit bureaus provide you with a free copy of your credit report every year upon request. It is your legal right to dispute any inaccuracies you find, without the need for a middleman.
Moreover, there are numerous resources available online that provide guidance on how to navigate the credit repair process independently. From sample dispute letters to step-by-step instructions. While preforming the credit repair process without expert guidance does come with a risk, understanding that the process is typically free, highlights that expensive monthly credit repair services are not the practical solution.
2. Anyone can ‘Repair’ Their Own Credit
Another misconception perpetuated by these companies is that credit repair is a complex and arduous legal task that requires professional expertise. The truth is, while there is effort and consideration involved, anyone can learn their rights and the facets of the credit reporting system to effectively files disputes and improve their credit score.
The term ‘repair’ is somewhat misleading when it comes to credit. If there are mistakes on your credit report, you have the right to have them corrected. This isn’t a special service; it’s a right. Learning how to read a credit report and how to file a dispute is straightforward. Resources from the Federal Trade Commission (FTC) and non-profit credit counseling services can walk you through the process. If you want to take a more comprehensive approach or have special credit issues there are affordable alternatives to monthly services.
If your poor credit score is a result of past financial mistakes, remember that only time, patience, and good credit habits can truly ‘repair’ it. No company can magically erase mistakes on your credit history.
3. Credit Repair Services Have Had SERIOUS Issues
Many credit repair companies have been under fire over the years for deceptive practices. These include making false promises, charging illegal fees, and not delivering on the services they claim to provide. The Consumer Financial Protection Bureau (CFPB) has shut down several fraudulent credit repair operations. Moreover, these companies often engage in dispute flooding, a tactic where they bombard credit bureaus with dispute letters in the hope that some will slip through the cracks. This technique can actually harm your credit further as legitimate lenders see it as a red flag.
Even mainstream services have not evaded these issues. Lexington Law was famously part of a recent and massive settlement with the CFPB for violating consumer protection laws and charging illegal advanced fees.
While there are some reputable services out there, its important to do a significant amount of research and truly understand the cost of hiring a service vs doing it yourself.
4. There’s NO SUCH THING as “609 Repair”
The biggest tell that the credit repair industry is based in deception is the overwhelming presence of companies, services, and guides claiming they will use “Section 609” a supposed legal loophole to remove negative and accurate accounts from your credit history.
Some credit repair agencies may mislead you to believe that Section 609 of the FCRA can be used to challenge the credit bureaus to produce documentation they likely don’t have, and therefore have negative items removed.
However, a 609 letter is not a magic tool to remove negative information from your credit, it is simply a request for documentation. If a Section 609 letter fails to compel the credit bureaus to provide documents for an accurate report, they are under no obligation to delete it. The FCRA aims to protect consumers from false information, not to expunge accurate, verifiable data from their credit reports.
Disputing accurate entries through a “609 letter” is not only a fruitless strategy but can actually harm your credit by misusing your legal rights. This is just one of the many ways consumers are tricked into expensive credit restoration options.
A Real Solution
The Credit Course is an all-in-one resource offering the tools you need to repair credit, eliminate debt, and build wealth. Learn how to restore credit like a pro, negotiate and settle your debt, and build your financial future all for less than the cost of one monthly subscription payment to a credit repair company.
