For the second time this month, the FTC has sued a credit repair operation that it says combined false promises to quickly and substantially increase people's credit scores with the offer of a false opportunity to make money selling credit repair services. If your credit score is low, the promise of a solution that can help you quickly realize the money-saving benefits of a high credit score can be attractive. And, if the company offering the solution also says they can make a lot of money selling their credit repair services, the offer may seem perfect. But the FTC says that the credit repair services offered by Financial Education Services (FES) are a sham and that its supposed money-making opportunity is a pyramid scheme.
And, says the FTC, in the classic style of pyramid schemes, FES encourages the recruitment of new agents rather than the sale of credit repair services. As with personal credit, you can pay a credit repair company to clean up your business credit, or you can do it yourself. CROA is a federal law that aims to protect consumers from scams by establishing guidelines for what credit repair services can and cannot do. Let's say you request a copy of your free annual credit report from the three major credit reporting agencies: Experian, Equifax, and TransUnion.
Suspicious companies claim they can remove bankruptcies, liens, and bad loans from your record, or even completely erase a bad credit history, helping you start over with a new credit identity that will make you look like a better risk to lenders. The District Court for the Eastern District of Michigan has temporarily closed the credit repair plan. Many of these companies offer legitimate credit repair services, but unfortunately, many more are essentially a scam. In response to a lawsuit filed by the FTC, a federal court has temporarily closed the extensive and bogus credit repair plan.
The lawsuit alleges that the company's practices violate the FTC Act, the Credit Repair Organizations Act, and the Telemarketing Sales Rule. It's worth noting that even the most reputable and trusted credit repair services can't legally do anything you can't do yourself. FES says it can increase people's credit scores by hundreds of points quickly by permanently removing negative information from their credit reports and adding positive information. Send the letter to your creditor and credit bureaus, as some creditors don't report information to credit bureaus.
Unlike a personal credit report, if you reach an agreement with a creditor to settle a debt for less than the outstanding balance, you can have it removed from your company's credit report.