So now that we know, in general terms, what Credit Repair is, it’s time to cast a discerning eye on those who work in this profession. The combination of high demand and low barrier to entry has resulted in hundreds, if not thousands of self-proclaimed credit repair organizations (CROs) that deliver all sorts of promises on how your credit problems will disappear quickly and easily if you sign on with them. What a great deal, right!? Sadly, the truth is that the credit repair industry is overflowing with con artists and fly-by-night operations that will take your money and do nothing for your credit.

While working as a Paralegal for a credit repair law firm, I often heard horror stories of people who had been suckered out of hundreds, sometimes even thousands of dollars by fraudsters posing as CROs. As a matter of fact, scam artists are so prevalent in the credit repair industry that an entire legislation (The Credit Repair Organizations Act) was introduced to regulate the affairs of these businesses in 1996.

That being said, I can personally attest to the fact that not every CRO is an illicit operation. So the question is, how do you know whether the CRO you’re considering is the real deal? The answer is by looking for red flags such as the following.

Red Flag #1 – They Promise to wipe your credit clean by establishing a new credit identity

Any firm that makes this promise is either flat-out lying to you or is advocating an illegal procedure called file segregation. File segregation entails you abandoning your old social security number and taking on a new credit identity via an employment identification number. As I mentioned earlier, file segregation is totally illegal and any firm which practices it is operating on the wrong side of the law.

Red Flag #2 – They claim to be able to remove negative, accurate information from your credit report

While it is technically possible to remove negative, accurate information from one’s credit report, it is illegal to do so. The laws which allow you to dispute negative information on your report only allow for said disputes to be filed against inaccurate items on your report. Thus, if you dispute accurate, negative information, or allow a CRO to do so on your behalf, you are committing fraud and can be subject to prosecution.

Red Flag #3 – They require payment before providing any services

Not only is it inherently risky to pay a stranger up front for services which they may or may not provide, in the case of credit repair, CROs aren’t legally allowed to collect payment before providing any services. Thus, if a CRO is requesting any sort of payment for credit repair services prior to actually doing anything, take it as a red flag and steer clear.

Red Flag #4 – They do not tell you your legal rights and that you can repair your own credit

Again, the Credit Repair Organizations Act requires that CROs disclose your legal rights to repair your own credit before you sign on as a client. Any CRO that fails to do so is in violation of the law and isn’t worth your time or money.

In our next article, we’re going to jump into the nuts and bolts of the credit repair process itself, examining the most common methods used to legally remove negative, inaccurate items from one’s credit report.

Related posts:

1. Is Credit Repair for you?
2. Credit Repair Part I
3. Credit Repair III: The Credit Repair Process
4. The bad credit repair guide
5. Investigating Old or Inaccurate Addresses on Your Credit Report and Why You Should