Beware of "Credit Repair" Schemes
FTC experts say that no one can repair credit or wipe away truthful records of bad payments. "While it's theoretically possible that there could be legitimate service, the FTC has never seen a legitimate credit repair service," said Steven Baker, director of the FTC Chicago regional office. The Federal Trade Commission estimates there are about 1,000 "credit repair" companies in the United States, but none of them do what they promise. Under a new law that has recently taken effect, credit repair services are barred from taking any money at all from consumers before successfully repairing the credit. Background information on credit repair is available on the FTC's World Wide Web site at http://www.ftc.gov/.
The new federal law provides to consumers who have been defrauded by the promise of credit repair the power to go into federal court and win their money back - along with attorney fees and unlimited punitive damages.
Consumers with bad credit - often desperate for credit cards - pay hundreds or even thousands of dollars to companies that claim to be able to "repair" their credit.
"We hope that consumers who have been victimized by credit repairs have success in getting to court, getting damages and ultimately shutting these firms down," said David Medine, of the Federal Trade Commission's Division of Credit Practices. "An individual lawyer can be very effective in costing a credit repair clinic enough money to shut down."
Excerpts from a Reuters News Service article by David Lawsky.