Dear Consumer Ed:
I saw a sign on a telephone pole that promised to erase my bad credit. I contacted the company and paid them $100.00. The only thing they are doing is writing letters for me to the credit reporting agencies. None of my debt has been erased or reduced, and my credit score has not improved. Can I get my money back?
Consumer Ed says:
Under the Federal Credit Repair Organizations Act, before a credit repair company is allowed to accept any money from you, it has to do several things:
- Explain your rights and tell you what you can accomplish for yourself for free;
- Provide you with a written contract that spells out your rights and obligations, including your right to cancel in the first three days without any obligation;
- Complete the services it has promised to perform.
Because this company did not comply with these requirements, you are entitled to your money back.
Before you think about hiring another credit repair company, keep in mind that no one can legally remove accurate and timely information from your credit report. It can only be removed by the passage of time. Companies that promise to “erase” your “bad credit” are probably perpetrating a scam.
Watch out for these “red flags” when choosing a credit repair company:
- Promising to remove negative but accurate information from your credit report;
- Encouraging you to establish a new credit identity by applying for an Employer Identification Number to use instead of your Social Security Number.
- Telling you to stop making payments to your creditors;
- Suggesting that you dispute all the information in your credit report, even if it is accurate.
- Telling you to ignore the IRS, collection letters or other legal documents.
- Encouraging you to make false statements on a loan or credit application.
You should also be aware that only certain regulated professionals or entities are allowed to make credit repair promises in the state of Georgia. These include banks, savings and loan associations, attorneys, real estate brokers and certain nonprofit organizations. If the company in question does not fit that description, it is not an authorized credit repair service organization and is therefore in violation of Georgia state law.
You can report credit repair violators to the Federal Trade Commission and to the Georgia Attorney General's Consumer Protection Division by calling 404-651-8600 or 1-800-869-1123 (toll-free in Georgia, outside of the metro Atlanta calling area).