Ever wonder how credit repair services work? According to the FTC, they take your money, often illegally, and then perform services that are available to any and all consumers. The shops start by charging an initial registration fee from $20 to $100. This is against federal law, which prohibits payment until the repair has been performed. The shops then charge a fee to obtain your credit report, even though you can access one free copy of your report each year at AnnualCreditReport.com.
The actual work of repairing your credit seldom involves more than filing a dispute with the credit agencies. Anyone can dispute a credit report item; if the dispute is valid or the charge can’t be substantiated, it is removed from the report.
The FTC has already cracked down on 70 credit repair shops, though over 92% of fraud goes unreported because people are too embarrassed to admit they have been defrauded. Don’t fall for credit repair promises. If your credit is ailing, check out our useful roundup and be your own credit repair service. — CAREY GREENBERG-BERGER