The Business of Credit Repair

There are many different credit repair companies. You can hire a credit repair “consultant”, a credit repair “law firm” or visit a credit repair “clinic”. There are some major differences in the services provided by these companies. There are also many similarities. There are many things you can do yourself and some “experts” will advise you never to pay for anything that you can do yourself, but if you can afford to pay a company to do all or most of the work for you and if they have other attractive services, then go for it. But, remember to check them out first, before you pay them for anything or give them any personal information.

A credit repair law firm usually employs several lawyers and a large group of paralegals that do most of the work. A credit repair consultant may or may not be associated with a law firm. There are really no special requirements for setting up a credit repair business. Anyone who has the time, patience and just a little bit of experience could technically become a credit repair consultant.

If you choose to hire a credit repair law firm, you can be confident that they will not advise you to take any action which is illegal. A credit repair consultant could advise you to do anything. There have been companies which have advised customers to apply for an Employer Identification Number or EIN. An EIN is an official number used by the Internal Revenue Service to identify a business.
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If you are not a business owner, then you should not apply for an EIN. Creating a small business simply to repair credit issues will only cause you more problems. A credit repair consultant could advise you to use and EIN rather than your social security number when applying for credit. This is sometimes referred to as file segregation. Making false statements of any kind on a credit application is illegal. A reputable credit repair law firm would never advise this type of strategy.

A common service provided by the credit repair consultant and the credit repair law firm is letter writing. While the credit bureaus will only communicate with you directly, credit repair companies can supply you with effective sample letters and assist you in filling in the blanks. There are also some software programs which may be effective for a do it yourself program, if you have the time and the patience to do the research and take action on your own. Other services offered by a credit repair law firm may include identity theft insurance. Identity theft is becoming more and more common. If you invest the time and money to build and repair your credit, you do not want to lose it to a thief. Identity theft insurance is a good investment. A credit repair consultant may or may not offer identity theft insurance. It is a good idea to compare the services offered and the fees charged by different companies before you choose one.

The Federal Trade Commission advises that consumers should beware of any credit repair consultant which claims to be able to make instant improvements in your credit score. They may be doing something illegal or they may take your money and close up shop. There have been many complaints to the FTC about credit repair clinics. Some have ended in the credit repair consultant being required to make restitution to some of the damaged customers, but it is ultimately your responsibility to investigate these companies before you sign up for anything. Look for companies that have been in business for several years and belong to the Better Business Bureau. If you choose a credit repair law firm, ask for a list of satisfied clients. In other words, protect yourself, don’t become a victim of a credit repair scam or scheme.

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