NFAN Alerts Consumers to Credit Repair Scams

Executives at the National Financial Awareness Network, a Dallas-based financial literacy company, are encouraging consumers to become familiar with credit repair regulations and avoid credit repair scams.

Two federal laws, the Credit Repair Organizations Act and the Fair Credit Reporting Act, dictate what a credit repair organization must, can and cannot do. For example, CROA requires credit repair organizations to provide prospective clients with a copy of the “Consumer Credit File Rights Under State and Federal Law” before signing a service contract. All credit repair contracts must also be in writing and must spell out the consumer’s rights and obligations such as payment terms, detailed description of services and any guarantees.

NFAN President John Janney warns consumers against advertisements from companies claiming to completely erase bad credit, create a new credit identity or remove legitimate credit marks like bankruptcy or liens.

“Some advertisements lead people to believe that a credit repair company can get all negative marks removed from their credit report, even if those marks are accurate,” said Janney. “Credit bureaus are not required to remove accurate information, so consumers should be suspicious when they see such credit-cleaning claims.”

Janney explained that the Fair Credit Reporting Act gives consumers the right to access their credit report and dispute inaccurate information with each credit bureau. The FCRA also requires credit bureaus to respond to disputes in a timely manner and to remove inaccurate or unverified information from credit reports. Credit bureaus also provide online dispute forms that make filing disputes easy for consumers.

“Anyone can get one free credit report per year from each of the three credit bureaus, review the reports to make sure all the information is correct and then file a dispute if the consumer finds an error,” Janney continued. “The FCRA gives consumers the power to do this themselves, without the need to hire a professional credit repair company.”

Consumers can get their free annual credit reports by calling 1-877-322-8228 or going to annualcreditreport.com and can dispute credit report errors through each of the credit bureaus’ websites: Equifax.com, Experian.com and TransUnion.com.

Janney also explained that advertisements for creating a new credit identity may actually be promoting illegal credit repair scams and, according to the Better Business Bureaus’ website, consumers who follow illegal advice and commit fraud “may be subject to prosecution.”