Negative information that does not come off your credit report after the first dispute letter is probably going to stay there unless you file a lawsuit. Credit repair companies make money by charging you fees, month after month. Some credit repair companies also limit the number of negative items that they will dispute to keep you paying more monthly fees. Sad part is that is that most people don’t know that writing the right letters is the key.
Many credit repair companies assert phony disputes to negative items that appear on their customer’s credit reports. This is illegal. Credit Repair companies are governed by a federal law known as the Credit Repair Organization Act (“CROA”). Under this law, it is illegal for them (or you) to lie to a credit bureau. By asserting a dispute to a properly reporting negative item on your credit report, you may be lying to a credit bureau. Credit repair companies typically draft dispute letters for you to sign and mail so that they don’t get caught. If the CFPB discovers that you have written a bogus letter to the credit bureaus, you are left hold the bag.
Many credit repair companies assert frivolous or baseless claims to properly reporting negative information. Disputes such as “not mine” or “does not agree with my records” are simply frivolous. In our years litigating credit repair cases, we have learned that all of the credit bureaus maintain a department to review frivolous letters. They match up the kinds of disputes asserted, the language used, and even the font to determine weather a dispute letter has come from a credit clinic. They have the right to ignore or otherwise treat such a dispute as frivolous.
No Credit Repair company can assure you of the items that they will remove or that your score will even increase. Sometimes, you will see ads from sleazy credit repair companies that say “We can remove all negative items from your credit report…guaranteed.” Or they may make a boast that their credit repair services may increase your credit score to the point that you become eligible for a mortgage. These claims are baseless and, yes, illegal. First of all, credit scores are fluid and depend on many variables. If you get some negative items removed from your credit report and yet increase the balances on your available credit, your score could potentially go down. That is not something that they want you to know.
Charging you fees on a monthly basis is probably illegal. The FTC has created rules called the Telemarketing Sales Rules. Mention the acronym “TSRs” to any credit pro who has been doing this work for a while, and they will freeze up. The TSRs prohibit a credit repair company or individual from charging fees to a consumer until 6 months after all of the work has been completed by them and they produce a credit report to show it. The vast majority of credit repair folks do not comply with the TSRs and for that reason, like to operate in the shadows.