There are many credit repair scams that lure the public by offering an easy fix. This series of videos will help give you clarity on credit repair/debt collection scams and avoid major pitfalls in solving your credit problem.
Few important links for you to refer to:
https://www.experian.com/blogs/ask-experian/credit-education/improving-credit/credit-repair/
https://www.consumer.ftc.gov/articles/fixing-your-credit
Please ensure that you do your own research and be well informed. Being well informed would certainly decrease the chances of being affected by a scam.
Understanding CROA:
The US Credit Repair Organizations Act (“CROA”) is Title IV of the Consumer Credit Protection Act.
Despite its name, it is not actually an act; Section 401 states, however, it can be referred to as “Credit Repair Organizations Act”. The statute was signed by President Bill Clinton on September 30, 1996.
The law was intended to prevent credit repair organizations from engaging in unfair business practices which may result in financial hardship for consumers, particularly those of limited economic means or who are uneducated.
The purposes of the Credit Repair Organizations Act is to ensure that prospective buyers of credit repair services from credit repair organizations are provided with the information necessary to make an informed decision. It intends to protect the public from unfair or deceptive advertising and business practices by credit repair organizations. It enumerates prohibited practices, required disclosures, contract requirements, liability, and penalties for non-compliance and procedure to report non-compliance.[3][4]
One of the more important areas covered by CROA is how credit repair organizations can get paid. It is the general consensus that a credit repair company can only be paid after services have been rendered.
This can be done using a monthly fee model where companies charge clients on a monthly basis after services are rendered or on the more modern pay after deletion model where clients only pay after items are deleted from the credit report.
Companies that charge excess “setup” fees or all of their fees upfront violate the provisions of CROA
What Is Credit Repair?
Credit repair is the process of fixing poor credit standing that may have deteriorated for a variety of different reasons. Repairing credit standing may be as simple as disputing mistakes information with the credit agencies – identity theft and the damage incurred may require extensive credit repair work.
Another form of credit repair is to deal with fundamental financial issues, such as budgeting, and begin to address legitimate concerns on the part of lenders.
Credit repair is the act of restoring or correcting a poor credit score.
Credit repair can also involve paying a company to contact the credit bureau and point out anything on your report that is incorrect or untrue, then asking for it to be removed.
A number of businesses claiming to do credit repair have sprung up over time, and while some may provide services that can assist consumers, the actual results of their efforts may be questioned. In some cases, credit repair may require legal as well as financial expertise.
Depending on the extent of the problem, it may require simply cleaning up misunderstandings, while in other cases professional intervention is needed.
When considering the fees, it’s important to weigh what you’re getting in return. According to the Federal Trade Commission (FTC), credit repair firms can’t legally do anything for you that you can’t do for yourself.
You just have to be willing to spend the time reviewing your credit reports for negative or inaccurate information, reaching out to the credit bureaus to dispute that information, and following up on those disputes to make sure they’re being investigated.
Credit counseling (known in the United Kingdom as Debt counseling) is commonly a process that is used to help individual debtors with debt settlement through education, budgeting, and the use of a variety of tools with the goal to reduce and ultimately eliminate debt.
Credit counseling is most often done by Credit counseling agencies that are empowered by contract to act on behalf of the debtor to negotiate with creditors to resolve debt that is beyond a debtor’s ability to pay. Some of the agencies are non-profits that charge at no or non-fee rates, while others can be for-profit and include high fees. Regulations on credit counseling and Credit counseling agencies varies by country and sometimes within regions of the countries themselves.
In the United States, individuals filing Chapter 13 bankruptcy are required to receive counseling.
Sources: FTC.Gov, Investopedia, Experian, Wikipedia
#creditRepairScams #creditCardDebt #debtCollectionScams
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