CROA – A Few Bad Apples (Credit Repair Companies Gone Bad – A Case Study)
CROA – A Few Bad Apples
Credit Repair Companies Gone Bad – A Case Study
Most people know bad credit brings trouble. Poor credit reports and low credit scores block access to cheap loans, apartment rentals, and even responsible job positions. Some have the guts and time to fight credit bureaus, but many others don’t feel up to this task.
The thriving credit repair industry offers hope of easy credit rating repairs with all the advantages this brings. Many of these firms charge hefty fees, but the advantages of a good credit rating tempt customers to hire their services. Some respectable credit repair agencies do well for their clients, but a few dishonest operators give this business a shady reputation.
Legal Controls on Credit Repair Services
The Credit Repair Organizations Act (CROA) targets deceitful credit repair services. It limits the kinds of claims they can make. It prevents them from demanding payment in advance. It also makes it illegal for them to supply inaccurate credit details to credit bureaus or the customer’s creditors.
Despite the law, the temptation of quick gains continues to attract fraudsters. They come with outrageous claims of completely clean credit records. CROA forbids credit agencies from taking fees in advance and allows customers to cancel their agreements within three business days. Nevertheless, dishonest businesses persuade the customer to pay a credit analysis fee in advance. They describe this as a ‘refundable fee’, but they don’t return the money when the customer cancels the agreement.
Hire a Credit Repair Service and Go to Prison!
In old cowboy films, the bad guy usually wore the black hat. Identifying credit repair cheats from legitimate businesses is a little harder, but there are obvious give aways.
To begin with, don’t respond to advertisements offering a new credit profile in return for a small fee. On the surface, this sounds like a golden opportunity to correct an appalling credit record. However, it is just another scam. Once the fee is paid, the customer receives what looks like a new nine-digit social security number. The scammer might call it a ‘credit profile number’ or use another impressive title. The customer believes this credit profile number will help escape bad credit history. The fraudulent credit repair agent tells them they can use the number to open a new credit line.
The client then discovers, to their horror, that they were cheated. The special ‘credit profile number’ that cost them so much is a social security number stolen from someone else. They end up losing the fee paid to the fraudster and find themselves an unwilling participant in identity theft! This attempt to improve their credit rating carries a heavy cost. Extenuating circumstances will reduce the legal penalty, but they have committed a federal crime. Imprisonment or a heavy fine becomes a real possibility.
More Signs of Credit Repair Bad Apples
The Federal Trade Commission has a list of signs to help consumers detect fraudulent credit repair offers. Requests for payment in advance are the first warning signs to stay away from. Rogue credit repair agencies often ask their clients not to contact a credit bureau directly. They may also suggest the customer contests credit report data even though it’s accurate. They advise clients to make a false declaration on a loan application. Most people will instantly recognize these actions as illegal, but those in dire financial straits may be persuaded to go along –a terrible mistake.