Is Credit Repair Illegal

It is important that YOU have the right information at the right time for the right reason. Credit repair is a great financial fitness tool when you are able to use it properly. Unfortunately, many credit repair companies try to snare consumers by offering credit repair through illegal or unethical tactics. … The Credit Repair Organizations Act (“CROA”) is a federal law that protects consumers from unfair and deceptive practices by credit repair organizations.

What is the Credit Repair Organizations Act? The Credit Repair Organizations Act (“CROA”) is Title IV of the Consumer Credit Protection Act. Despite its name, it is not actually an act; Section 401 states, however, it can be referred to as “Credit Repair Organizations Act”. This clearly identifies and acknowledges what can and can’t be done in credit repair.

Does it work? A good amount can actually effect your credit, so if you believe there are errors in your credit report, you can benefit from one of the best credit repair companies correcting those errors for you. … This is a loophole that credit repair services will use to raise your score.

You can do this yourself as well. What you need to understand and know if you are going to do it yourself is

  1. Have a full understanding of the law and be able to write your letters properly.
  2. Take the time to do the proper due diligence and research what letters are used.
  3. Follow up, Follow up, Follow up.

Now, a do it yourself effort also has many unfortunate pitfalls. Firstly, you must know what type of information on your credit record is causing any potential damage. You must write the letters per the law and make sure to reference the law. The credit bureaus easily identify good letters from time wasters. The other consideration you must undertake is the value of your own personal time. Are you worth $20, 50, 100 per hour, if so how much will it truly cost you to do it yourself?

The most efficient differentiator in choosing a credit repair service is to identify the most reasonable and average costs involved in successfully repairing your credit. Beware the large ticket services, as this process is not a massively expensive or time consuming process. Therefore the first sign of a scam is exorbitant fees. This process is mostly letter writing and cut and paste elements. Of course experience counts for much, so a service that has a long successful track record is ideal. New players, self-constructed web portals are simply potential scammers who have paid a generic service to provide web based templates and sites. The law is very clear, upfront fees are illegal other than a few key exemptions

  1. Law firm / Lawyers are exempted
  2. 501C3 Non-Profit organizations which provide credit repair services are exempted.

In conclusion, credit repair can make a huge difference in your financial fitness as your credit is a foundational financial tool which can dramatically impact your ability to become financially independent. Speak with a specialist before determining what is your best option. Of course that includes doing it yourself. Lastly, do your due diligence regardless of what process you decide to use. Due diligence is key whether you do it yourself or you choose an outside service. Your credit record is a complex vehicle which is pieced together through a very opaque formula. The credit bureaus are overwhelmed with a potential database of 250m+ people. There are going to be a percentage of mistakes and the only one who can assure your record is in proper condition is YOU. There is no process the credit bureaus  have that identifies mistakes and correct them for you, it’s your record and your responsibility. Always, always remember the key of any smart decision about money is DUE DILIGENCE. Proper due diligence is Full Disclosure, Total legal and regulatory compliance and Clear transparency. Any service, investment, purchasing decision that passes through these 3 lenses successful is most likely a smart decision about money.

Credit Scams

The most important part of our financial lives is the credit record. The Banks and financial institutions control us through our credit record. Sadly, the incidence of financial illiteracy that exists in our nation is the core problem. The existing problem with debt is directly related to financial illiteracy. The solution is education, but that education has to be simple and easy. People want an easy button but the financial services industry and the banks, lenders and securities industry doesn’t want to provide any education and they certainly don’t want to provide a solution.

As a nation we have been educated to believe in the securities industry, the message is how mutual funds are the best place to put your retirement savings. The risk and reward of such is never exposed, it’s always somehow a safe investment. Yet the market is speculative, all speculative investments carry the highest level of risk. Any other persistent storyline is simply untrue. Yet the world of ERISA (qualified retirement plans) such as 401k’s IRA’s etc are all fully invested in speculative investments which carry exorbitant hidden expenses. Those are always opaque and you never know how much you are losing in potential gain due to expenses and fees. That’s how the banks and financial institutions make out like bandits. They take zero risk with their money and earn billions on the speculative investments of the middle class along with the huge amounts of interest payments from debt which is stealing the middle classes opportunity for financial independence.

If this is hard to believe, just look at the facts: 95% of everyone who reaches 65 or older ends up dead, dead broke or financially dependent at best. This 95% has been the same for almost 100 years now. It hasn’t changed because we are taught to accept it. Go to school, get a good education, that leads to a good job which you spend 30+ years and retire with a gold watch, pension and then you ride off into the sunset. This was never true, it was always a fantasy based upon the statistical truth of how many people end up financially dependent.

Today, there is $8T+ in mortgage debt, $4T+ in auto financing debt, $2T+ in student loan debt and a whopping $875M in credit card debt. Look at those numbers, and then go ask 10 people which of the 4 has more debt outstanding. Is there more mortgage debt, auto loans, student debt or credit card debt. Most people would guess mortgages were #1 but they would be way off on the other 3.  In fact people would greatly over estimate credit card debt becasue they sense that is their #1 problem. Financial wellness is attained through financial literacy education and some systematic approach to build a financial game plan. That game plan needs to be built around the reduction of debt and the improvement and consistent health of a credit record. Then the risk management needs such as Home, auto, Life insurance and then the consideration of wealth accumulation. The reduction of debt stops the loss of money running out the window in the form of interest payments. Those future dollars then can be used to earn interest for wealth accumulation.

This type of financial planning is especially necessary for the forgotten middle class. Those families earning $50 -175K can attain financial independence. They are not going to reach it without education and a systematic approach. A new paradigm in financial planning.

This is what the Advocacy Network does. We work with the middle class by creating awareness, providing financial literacy education and helping people attain financial independence. Our financial concierges are all trained and professionally developed to provide a simple and easy financial game plan for the middle class client. We provide the type of services that are missing in this market place. While the financial services industry chases the high net worth clients we can provide the basic fundamentals for the middle class. The potential for financial independence is available to every American, regardless of class, gender, education, family wealth, social circle or any other supposed need for such independence. It’s all about money and making smart decisions with money, most Americans waste well over 60-70% of the dollars they earn or obtain via other sources. This is a simple lack of fundamental truths about money. It’s a lack of awareness of the 3 dimensions of life (Past, Present and Future) we all have past YOU, present YOU and future YOU. Each has money flowing through their hands and the pathway to financial independence is the complete awareness of how money and time forge together. That is what our workshops are all about.

YOUR Best Interest IS OUR ONLY Concern!