FTC targets credit repair companies with law suits

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Mortgage and Lending

With tightening mortgage guidelines, increasing foreclosures, growing credit card delinquency, credit standards have become more and more important. In response to growing consumer need,  numerous companies now offer "for fee" credit repair. I had written about concerns with some of these services in a previous post.

A recent NPR story addressed the growing industry that offers to "power wash" consumer credit scores. Many companies promise to increase credit scores over 100 points by removing negative references, including items that are correct and accurate. Most companies even advertise to remove bankruptcy, foreclosure, and judgment references.

In the interview, Charles Helms with non- profit Consumer Counseling North West, points out that credit repair companies cannot do anything that a consumer cannot do on their own.  An informed consumer hiring a repair company to do something that the consumer could do themselves does not bother me.

Disputing credit report items can be tedious, and it may very well be worth it to hire a service. The problem for me is that so many of these services advertise to remove legitimate derogatory items. This would basically make the credit report grossly inaccurate. In cases where accurate bankruptcy, foreclosure, and judgment references were removed, it would either invalidate the credit report  for mortgage purposes or would encourage false disclosure on an application.

The FTC has recently coordinated efforts with many states to crack down on credit repair companies for false advertising, unfair and deceptive practices, violations of the Credit Reporting Act, and violations of various state laws.

List of companies sued by FTC and various states.

The NPR report indicated that federal law provides for a free, relatively easy way for consumers to dispute items on their credit report." I have helped many clients with their credit disputes. In most cases, I have found that it is not so "easy."

The important matter for a consumer is to have an accurate credit report.

Here is a link to some FTC information on credit  .

My process to help clients with credit repair is to start with a detailed review of each reference, verifying that the information is accurate. We determine what the target credit rating is, what the client resources are, and develop a step by step plan.

Possible steps can include paying collections, requesting a deletion letter, issuing disputes with the credit repositories, rapid rescoring.

Clients who need an immediate improvement in their credit scores should be careful not to take well intentioned steps that might actually lower the scores. 

Credit is one of the most significant barriers to home ownership, more so in the current lending environment. Credit repair can be done, but it must be done right.

Richard Smith
American Acceptance Mortgage, Inc
Toll Free 888-474-9920 Cell 423-280-0345
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Rainmaker
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Brady Howard
Keller Williams West Sound - Gig Harbor, WA
Managing Broker, Mega Agent, KW Recruiter!

Richard, our office gets calls by these people all the time.  They all promise the same thing.  I have never seen anyone get rid of something legit, I don't see how its possible.  There is a reason for bad credit and time will heal.  Usually time is required to get yourself out of the mud anyway's.  Brady

Nov 13, 2008 06:22 PM #1
Rainmaker
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Vickie Nagy
Vickie Nagy, Broker Associate Realty ONE Group BMC Associates | BRE#01363932 - San Ramon, CA
Broker for San Ramon, Danville, Dublin, Pleasanton

I think it's about time the FTC stepped in and stopped these companies from making misleading claims.

Nov 13, 2008 06:23 PM #2
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Roland Woodworth
Keller Williams Realty - Clarksville, TN
Short Sale and Foreclosure Resource- SFR - Clarksv

Richard .. this is very intersting information. thank you for taking the time to post

 

Nov 19, 2008 11:54 PM #3
Anonymous
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repairing credit report

In this recession time , more such events will occur.

Nov 24, 2008 01:47 AM #4
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Richard Smith

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