Let's face it, credit repair is complicated and it also takes time. Most other tasks that include these two components are regularly hired out to professionals, but why not credit repair? Well, it all has to do with a conspiracy (yep, another conspiracy theory) between the three major credit bureaus and our federal government. Back in the 1990's one of the businesses I owned was a credit repair service and we did a lot of good for people. I can remember that at any one point time we would have at least 20 to 30 active files we were working on. All that changed when the credit bureaus convinced the federal and state governments to categorize credit repair firms as scams and started forcing them to shut down with overwhelming new rules and regulations.
Honestly, I did not need the headaches and had multiple other thriving businesses, so I followed suit with many others and stopped taking on clients. The Credit Repair Organizations Act was signed into law by President Bill Clinton in 1996. The new law for most practitioners was so onerous that most (like me) just closed up shop.
From Wikipedia -
In the United States, 90% of credit reports provided by credit bureaus contain inaccuracies. According to the U.S. General Accounting Office (GAO), common causes of errors broadly fall into one of two categories: inclusion of incorrect information and exclusion of correct information. Reasons for the inaccuracies include consumers providing inaccurate information to the credit bureaus; incorrect or incomplete data input by furnishers, or failing to provide data to the credit bureau; and incorrect or incomplete data (or data applied to the wrong consumer) by the credit bureau. According to Avery, Calem, and Canner in Credit Report Accuracy and Access to Credit, "the parties that bear the costs of correcting errors or providing more timely and complete information [data furnishers and credit bureaus] may not receive much benefit from the improvement in accuracy."
The Re-Emergence Of Credit Repair Services
Well, there are a ton of new rules to follow but that has not completely wiped out the credit repair business. In fact, the reason I am writing this article is to share with you two companies that have outstanding reputations in the credit repair field.
They have an A+ rating with the BBB and offer an affordable basic credit repair service for $49 initial and $49 monthly. They offer a 90 day unconditional guarantee. In fact, you don't even need to have a reason to get your money back.
They are an actual law firm and have worked with more than a half a million individuals on their credit reports. They have an A rating from the BBB and charge and initial $99.95 and $59.95 monthly.
I found a very helpful online comparison between the two firms - Lexington Law compared against Sky Blue Credit Repair.
Bob Yetman and I have authored what I believe to be one of the most insightful books on credit repair strategies that you can use on your own - Credit Scoring Secrets. Bob and I owned a mortgage brokerage firm together for several years and at that time we offered credit repair services for free to our clients. The book shares our experiences and lessons we learned with real clients on how to quickly improve a credit score to help them to get approved for a mortgage loan.
Why not let experts on credit repair and restoration hang out a shingle and offer their services? There was never any need for a new law to regulate credit repair. Any firm lying to their clients or defrauding them could have been prosecuted under hundreds of existing state and federal laws.
The Bottom Line Is That The Credit Bureaus Don't Want To Hear From You
Despite the large amount of errors in credit files, the credit bureaus do not want consumers to dispute this information. It only means work them and that translates into increased costs. The credit bureaus have formed their own trade organization to lobby Washington - Consumer Data Industry Association (CDIA). This lobbying group has one primary focus; massaging the laws to keep life as easy as possible for themselves and difficult for anyone trying to challenge their power structure (e.g. credit repair firms). Check out this report on their lobbying expenditures, which are more than $10 million dollars since 1995.
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By the way, neither of the above firms have paid me a dime to list them in this article. If you have a good or bad credit repair story or experience to share, please use the comments section below and we can start a conversation.
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