What are the risks of using a credit repair company?
credit repair company
Credit repair companies claim to be able to help consumers clean up their credit reports and improve their scores so they can get more affordable loans, lower their mortgage rates and qualify for other types of credit. However, these companies often charge large fees for their services and often deliver minimal results. They also may be violating federal laws and misleading consumers. The Consumer Financial Protection Bureau (CFPB) recently settled with several credit repair companies that charged thousands of dollars and didn’t do anything to raise their customers’ credit scores. The settlement will ban the companies from telemarketing and compensate victims.
Many Credit Repair Coral Gables promise to fix errors on a consumer’s credit report, including deleting inaccurate information such as accounts that don’t belong to the consumer, bankruptcies or tax liens that don’t belong to the individual and misspellings that cause negative entries to reappear when they should not. The law requires credit repair companies to provide a firm total on the costs of their service and how long it will take to see a result, but many don’t do so. Those that do should be able to explain their process clearly, explain your rights as a consumer and give you three business days to cancel without charge.
A reputable credit repair company will likely be able to point out inaccuracies in your report such as erroneous addresses, mismatched accounts that have been reported to the wrong reporting agency and even identity theft problems. They can also help you negotiate with lenders and creditors to change the terms of your existing debt and help you manage your finances so you can avoid credit issues in the future.
What are the risks of using a credit repair company?
The risk of using a credit repair company lies in the fact that many of these businesses target people who are already struggling financially. They work with clients who are often desperate to obtain loans and credit cards, which makes them high-risk to banks and credit card processors. This is because they are more likely to be charged back for disputing charges or simply not paying their bills, and this creates a spiral of costly fines that hurt everyone in the payment processing ecosystem.
Using a credit repair company can be expensive, but it’s also risky for the consumer because of the possibility that they will be scammed. The CFPB warns consumers to be careful and only work with reputable companies that follow the law.
If you’re a credit repair company looking for a payment processor that can reduce your risk and help you save money, contact us. We can connect you with the right partner and help you grow your business safely and securely. We’ve helped numerous credit repair companies cut their costs and improve their bottom lines with a better, safer payment processing experience. Learn more about our merchant services for the credit repair industry here.