In Part 2 of our series, we covered how to identify and correct inaccurate information on credit reports. In Part 3, we will discuss the businesses that offer these services professionally: credit repair agencies.
Overview and Concerns
A “credit services organization” (or agency) is defined under Colorado law as, “any person, including a nonprofit organization exempt from taxation under section 501 (c) (3) of the federal “Internal Revenue Code of 1986″, who, with respect to the extension of credit by others, represents that such person can or will, in return for the payment of money or other valuable consideration by the buyer, improve or attempt to improve a buyer’s credit record, history, or rating.” CRS § 12-14.5-103(2). It should be noted that attorneys acting in their normal capacity are excepted from this definition.
Not only has the State of Colorado taken the time to define this occupation legally, but an entire series of laws (known as the Colorado Credit Services Organization Act, CRS § 12-14.5-101, et seq.) has been written with an eye to protect consumers. The state legislature has summarized their concerns, “[c]ertain advertising and business practices of some credit services organizations have worked a financial hardship upon the people of this state, often those who are of limited economic means and inexperienced in credit matters. Credit services organizations have significant impact upon the economy and well-being of this state and its people.” CRS § 12-14.5-102(1)(b).
The savvy consumer should be aware that bad actors are present within the field of credit repair. At a minimum, remember that nobody can promise results. Other things to look out for include: payment up-front, offers such as “guarantee plans,” agencies that sell advice, etc. Most of the time when a credit report contains an inaccuracy, a savvy consumer will be able to address the issue themselves, provided they are willing to see the process through to its end.
Complex Matters
This series has been aimed at educating consumers on how to obtain their credit report and how to challenge inaccurate credit report information. A great deal of the time, a credit repair agency will not be able to offer you anything you cannot get for yourself. That said, every credit situation is different, and complex issues can arise regarding liens, taxes, and collection actions. If the credit repair task ahead of you is complex, credit repair agencies do have the benefit of repetition, and a reputable agency is one possible way to resolve complex issues.
Selecting a credit repair agency, should you decide you need one, is beyond the scope of this series. However, at minimum, savvy consumers should use the usual due diligence before selecting anyone to help them with any financial issue. A partial list of research tools appears below:
(you can search business reviews in the Google Local section of your Google+ account)
Do your homework before contacting an agency: the last thing your credit horror story needs is a sequel. In the end, remember that when it comes to credit repair you will always be your primary advocate. Stay credit vigilant, and good luck.