Should You Use a Credit Repair Company?

If you're thinking about using a credit repair company, watch out for scams. Even a real company could charge you hundreds of dollars for things you could have done yourself.

"Often, these organizations charge for things that consumers can do themselves," says Barry Coleman, vice president of program management and education at the National Foundation for Credit Counseling. "There's nothing that really replaces just good credit habits," like making payments on time.

The Federal Trade Commission says that a company is selling a scam if it does things like ask for money before providing services or tell you not to talk to the credit bureaus directly.

The Credit Repair Organizations Act makes it illegal for credit repair companies, among other things, to charge you before they do any work or make false claims about your credit
Yates says that companies could also use a "jamming technique" in which they send too many disputes to the credit bureaus. The Consumer Financial Protection Bureau says that credit bureaus usually have 30 days to look into disputes.

Yates says, "If the credit bureau can't verify the negative information, they have to take it off," which can make a consumer's credit look better than it should. "But if the creditor sends a new file with the same bad information, it just goes back on," she said.

Because of this, this strategy only works in the short term. Also, Yates says it is illegal to give credit bureaus false information on purpose.
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