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Hello, my name is Kent Greenfields and I am a Managing Member of Liberty Credit Consulting, a consumer credit education service.
Formally, my company offered a paid credit repair service to our clients, however we recently made the decision to stop offering a paid service and focus on providing free consumer credit repair materials including dispute letter templates, step-by-step instructions and a downloadable dispute letter tracker as part of a free credit repair kit so that consumers can fix their credit themselves.
Can a credit repair company help? Absolutely. (Some) credit repair companies know the ins and outs of the industry and can help consumers under certain limited circumstances, however I do not believe that the price that 99.9% of the credit repair companies out there charge their clients is a good value to individual consumers.
Credit repair as an industry is a tricky venture. Those of us who are involved in it know that he biggest companies in the industry are currently being sued by the FTC, (Consumer Financial Protection Bureau Files Suit Against Lexington Law, PGX Holdings, and Related Entities | Consumer Financial Protection Bureau), (FTC Stops Operators of Fake Credit Repair Scheme), that banks, the credit bureaus and credit card companies do not like credit repair companies, and that the service itself can be considered to be on the fringe of legitimacy.
The reason I say this is because although there are millions of errors on Americans’ credit reports (40 Million Mistakes: Is your credit report accurate?), the way credit repair companies remove these items is often “frowned upon” by the upper tier of entities who operate in the space. These entities include organizations such as the Federal Government, State Governments and almost all credit card and bank processors, which makes operating a business in this sector risky.
Major credit card processors will generally not work with credit repair companies because credit repair is a high-risk industry. Although it is possible to find “high-risk” credit card processors, (merchant account for credit repair) many of those are fly by night, charge much more than regular processors, and are also at risk of being shut out by the credit card companies themselves at any moment based on their transaction history and the fact that many credit repair companies are trying to remove legitimate, legal debt and negative credit items from consumers’ credit reports. From a credit card company’s standpoint, which is in the business of extending credit to consumers based upon their credit profiles, companies who try to artificially improve those profiles are very dangerous to their business model, and if they could stop accepting all credit card payments from credit repair companies tomorrow they would.
Does this mean credit repair companies won’t be able to accept payments? Not necessarily. Things like BitCoin and eChecks will still be available, however credit repair businesses should prepare now as they will likely be operating within an environment which becomes increasingly hostile as it relates to accepting payments moving forward.
In the near future, it is very likely that the credit bureaus will lobby for legislation that will allow them to completely ignore any dispute filed by a credit repair company instead of the individual consumer as part of emerging credit reporting reforms (Overhauling Our Nation’s Broken Consumer Reporting System). To a certain extent, the bureaus can already do this, which is why credit repair companies send dispute letters to the credit bureaus that look like they came from the individual consumer, and not the credit repair company. This practice in and of itself should serve as an important indicator that credit repair businesses will continue to face opposition, potentially unknown to them, that could greatly impact their ability to provide a legitimate and valuable service and generate revenue.
Part of this reform process includes giving individual consumers much more power in taking charge of their own credit information, reducing the need for credit repair companies to act on their behalf.
Another problem for credit repair companies is accepting payments from consumers for the service they provide. The problem with processing payments for a credit repair company is that many consumers who seek the services of a credit repair company are in the position they are due to bad decisions they have made in the past, and from a percentage standpoint as far as fraud and illegitimate disputing are concerned, will continue to make in the future.
Don’t take that to mean that everyone who seeks out the service of a credit repair company is trying to commit fraud, that certainly is not the case. It is the case, however, that as a whole the industry of credit repair operates with a substantially higher degree of those types of activities than other industries do, meaning any individual credit repair company is constantly at risk of being shut out by their credit card processor with very little advanced warning. Even when a credit repair company fixes a legitimate error on a client’s credit reports, the odds are much higher that that particular client will engage in fraud or other deceptive practices to try and stiff the credit repair company, including initiating charge-backs and disputing legitimate charges that they have agreed to.
When this happens, the credit repair company is the one who pays the price, and if it happens enough (which in our experience it does), then credit repair companies can have their merchant accounts canceled without warning, they can have their paid advertising shut down for being involved in credit repair, or as also happened in our case, they can spend a large amount of time and resources developing an online course only to have it deplatformed simply because it deals with credit repair and the credit card processors for those platforms have a blanket aversion to accepting any credit repair related payments at all, even for educational courses.
The credit bureaus themselves also have the ability to stop processing disputes from consumers if they believe that the disputes came from a credit repair company, which means a consumer could face an even bigger uphill battle if trying to remove legitimate errors by using a credit repair company. And, of course, a substantial percentage of people who are looking to use a credit repair service are trying to have legitimate debt and bad credit “erased” from their credit reports, which skirts legality to say the least.
Real-estate agents in many states risk losing their licenses if it is discovered that they are working with a credit repair company to get their prospective mortgage buyers into a new home, and credit repair companies are forbidden from collecting payment from a consumer until after they have completed the service they are providing (further increasing the likelihood of consumers defrauding the credit repair business). This is the reason that all credit repair companies offer a monthly payment plan. They are legally forbidden from accepting any payment up front. Typically they can get around this by charging an account setup fee initially, followed by automated monthly payments which the consumer pays after the credit repair company has “processed” their client’s file each month.
These types of regulations don’t mean that a credit repair company can’t be successful, it just means that starting and operating a credit repair company is more of a headache, there’s more hoops to jump through, and there’s more risk as opposed to offering different types of products and services.
Due to all of the above reasons, and others, our company decided to discontinue our paid service after almost 4 years. We now offer only free credit repair educational materials to consumers as we truly believe that a consumer’s best chances to fixing their credit is learning how to do it themselves.
Although the industry is going to further clamp down on paid credit repair providers in the future and change the landscape of disputing credit reporting errors (to make many of the things that fringe services such as credit repair companies provide even more difficult), there will still be many credit repair operations in existence. At face value, the service of credit repair can be beneficial to certain consumers, however the risk and cost associated with it will need to be carefully balanced to make sure it aligns with the consumer’s goals.
Liberty Credit Consulting has taken the time to make a comprehensive free credit repair course available to any consumer who wants to fix their own credit. There is no login, email address or credit card required.
DIY Credit Repair Course Module 1: How To Fix Your Own Credit For Free – Liberty Credit Consulting | Consumer Credit Education
Also, please feel free to instantly download a copy of our complete dispute letter library. It includes 90+ professionally written, attorney reviewed dispute letters that can be customized and used immediately for almost any credit situation once a basic understanding of the credit repair process is obtained. It is also provided free of charge.
DIY Credit Repair Kit | Credit Repair Dispute Letter Library Download
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