Credit Repair: The Next Boom Industry?

by | Sep 20, 2014 | Financial Featured

We wrote, recently, about the link between student loan debt and a person’s ability to obtain a mortgage. In that same piece we touched on a few things that you could do to make your student debt actually help your credit score. It was only a matter of time before the idea of credit repair hit the news again.

Credit repair has become the vogue topic once again (though, really, does credit repair ever not interest people?) because it turns out that there is a company out there scamming people and using the President’s name to do it.

As reported in Consumer Affairs, there is a company out there calling itself The Bill Payment Government Assistance Program and claiming to be governed by the federal Recovery Accountability and Transparency Board. The company was charging customers between $900 and $1100 to clean up their credit and promised to be able to clean up to $75K in debt and credit problems within thirty days. They even used a recording of President Obama saying “I approve this message.”

It’s a problem that is prevalent within the credit repair industry—companies promise people the moon and then not only don’t deliver it but scam people out of thousands of dollars by the time the customer realizes that the company is lying about its capabilities and intent.

It is partially in response to this, and the fact that most credit reports contain a multitude of errors (which adversely affect a person’s score) that has encouraged Congress to introduce a bill that would change the way credit is reported and scored. If it passes, this bill will also require creditors to keep records on hand to prove that a person has defaulted or missed payments.

With all of this attention being directed toward scam artists and how credit is reported (and the multitude of errors contained in most reports), it is no wonder that the credit repair industry is facing some potential pitchforks and torches. It makes you wonder, is credit repair really worth it?

Most financial analysts agree that the answer is yes, Credit, Lexington Law reminds us, is a fluid thing. It changes as a person’s circumstances change. Furthermore, often repairing a credit score is simply a matter of verifying debts and erasing mistakes. As of today’s laws (who knows what will happen if the new laws get passed), if a debt cannot be verified within thirty days it must be removed from a person’s report completely.

Verifying debts and correcting mistakes is definitely something a person could do if he or she had some time on his or her hands and an infinite pool of patience. Most people, though, don’t have the time, patience or mindfulness of details to improve their own credit with any sort of expediency. This is why they hire professionals.

A professional credit repair caseworker knows exactly what legalese to use and which forms to mail to properly verify a debt or correct a mistake in a timely manner. Some will even help consumers better manage their existing debts to help them build up a solid and positive credit history.

The best way to do this is to verify a company with that company’s local Secretary of State and the Better Business Bureau. It’s also possible to verify a company’s “nature” by calling the credit reporting agencies. If a company bills itself as a credit repair company but is listed with Experian as a janitorial company or an accounting company, it is best to move on to something less sketchy.

To sum up: yes, hiring a professional or company to repair and manage your credit is definitely worth exploring, especially if your credit is a mess. You just have to make sure that you choose the right company.