Facts Consumers Should Know Before Using A Credit Repair Company

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Facts Consumers Should Know Before Using
A Credit Repair Company

-by Terry Price

(C) Copyright Terry Price
All Rights Reserved

http://rbreid0520.niesong.hop.clickbank.net
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Have you ever wondered about those
ads you see from companies and law
firms which offer to fix your credit
for a low monthly fee? People with
credit problems often ask me when it
comes to improving their credit score
whether they should hire a credit
repair company or do it themselves?
Unfortunately, there is no simple or
universal answer to this question.
However, I will shed some light on the
subject if you're in need of a little
enlightenment.

According to the Federal Trade
Commission (FTC) "Everything a credit
repair clinic can do for you legally
you can do for yourself at little or no
cost". While I agree with the FTC I
also understand some consumers do not
have the time, patience (or knowledge)
to do the work themselves and the
thought of "drive-thru-we-do-it-all-for-
you-credit-repair" becomes very
appealing. After all, everything a
mobile oil change service can do for me
I can also do myself at little or no
cost (but you won't find me changing
the oil in my car this weekend!).

Although some things are better
done yourself, only you can determine
if doing your own credit restoration
work will be one of them. This is why
understanding both the advantages and
limitations of a credit repair company
and the structure from which it
operates are VERY important.

REFERENCES: Any legitimate company or
individual doing credit restoration
work for consumers will be able to
provide you with at least half a dozen
references. If the company or person
is local you should be able to call
these references. This is without
question the most important point of
consideration when hiring a
professional to do the work for you.

If possible, I suggest you ask
friends, family, relatives and
professional contacts if they know of
someone who does credit restoration
work as a side business. By far the
highest percentage of successful
stories I hear from consumers are those
which come from those who found a
credit consultant via personal
referral. I cannot stress this enough.
It's the difference between going on a
vacation with a close friend instead of
a stranger.

CONTRACT: Unlike painting a house or
putting in a driveway, credit
restoration work (and results) are
extremely broad. Therefore, the use of
a contract is imperative. Most likely
your credit challenges didn't occur
overnight and they won't be improved
overnight either. A good contract
protects you as well as the service
provider. The contract should be easy
to understand without an Attorney and
spell out the actual services which
will be rendered as well as the service
providers' limitations (i.e. they
cannot guarantee the removal of any one
particular item but can guarantee an
overall increase in score overtime).

MONTHLY FEE: One of the most critical
elements which affects "how" a credit
restoration company operates is
determined by its' payment structure.
One of the most common payment
structures of large companies or law
firms doing credit restoration is that
of the monthly "auto-debit" fee. In
this structure the consumer usually
pays $49 to $99 up front and then a
monthly fee of $39 to $49 per month.
While there is an advantage to this
method (affordability) with it comes
many disadvantages.

1.) The first disadvantage this
structure creates is that it gives the
company absolutely no incentive to work
quickly or aggressively on behalf of
the consumer. In fact, the opposite is
true. The longer they take the longer
they will continue to collect their
monthly fee! In most cases this
structure leads to slow results over a
very long period of time. Looking at
it logically, this shouldn't come as a
surprise.

2.) The other challenge within this
structure is the actual amount of time,
effort and resources which a company or
law firm can reasonably allocate on a
consumer's behalf. Remember, any large
business has a tremendous amount of
overhead which quickly chews up most of
that monthly fee. Out of that $39 to
$49 there are monthly expenses
including but not limited to:
Advertising, Office Rent and Utilities,
Employee Payroll and Taxes, Health
Insurance, Phone Service, Office
Supplies, Refunds, Computer Maintenance
and Programming, Website
Administration, Office Supplies and
let's not forget postage for mailing
letters to creditors, collection
agencies and credit bureaus. A much
simpler way to think of this is by
imagining if you had a client paying
you $39 a month; how much work would
you be willing to do?

3.) One of the biggest challenges
credit repair companies charging low
monthly fees run into is being forced
to rely on the use of Automated "Boiler
Plate" Dispute and Correspondence
Letters. Boiler Plate Letters are
simple form letters which are used for
ALL consumers (one format fits all).
Once set up in a computer program with
the consumers' information they are
"shot out" automatically based on
the consumers needs (i.e. late pay,
charge-off,
judgment etc).

The problem here is that when a
credit repair company has thousands of
clients they are shooting these form
letters out for, the creditors,
collection agencies and credit bureaus
can take notice of these letters being
used over and over and discover your
correspondence is coming from a third
party (i.e. credit repair company or
law firm) and in some cases ignore it
or (worse yet) mark the dispute
frivolous and flag your credit report.
I spoke with a man recently who was on
the inside of a large credit repair
company who informed me they had an
archive of over 10,000 boiler plate
letters on file to avoid this problem.
Of course, they charged customers by
the month.

NON-DISCLOSURE OF METHODS: One of the
most troubling issues with 95% of large
credit repair firms (especially law
firms) is their non-disclosure of
dispute tactics and methods. As a
consumer it is vital that you are made
aware of the methods they are using in
dealing with your creditors,
collections and the credit bureaus. If
the organization or law firm violates
laws or makes errors (I have witnessed
both) you could be held liable for
their negligence. In addition, this
can actually make your credit worse and
create problems which are very
difficult to clean up. Anyone doing
credit restoration for you should
disclose "what" they are doing since
you are paying for a service. If they
won't, you better run the other way as
they could be pouring gas on a blazing
camp fire.

LOCATED IN HOME STATE: This is one of
the most overlooked keys to successful
third party credit restoration which
consumers miss. It is absolutely vital
when having someone else do your credit
restoration work for you that they
operate within your home state. Here's
why: if a credit repair company or law
firm mails dispute letters or
correspondence on your behalf from
another state, that mail will be
postmarked from that state. If the
credit bureau catches this they can
(and in many cases will) mark the
dispute as frivolous and flag your
credit file.

It is known that many Credit Repair
Companies and Law Firms will resort to
or create a method to avoid and out of
state postmark in order to get disputes
postmarked from the consumers' home
state (potentially violating postal
regulations). For example. If they are
in NY and you are in CA they will first
have to mail your dispute letters
inside an envelope from NY to CA. Once
in CA someone opens the envelope and
then mails your dispute letters from CA
so they postmarked from your home
state. I am not an expert on postal
regulations but had one postal employee
tell me the concept sounded extremely
shady at best.

CUSTOMIZATION: It's for this reason
that some of the most advanced forms of
credit restoration are done completely
customized for the client and even (in
many cases) by hand. The best credit
restoration companies I've seen are
usually run by one person or a small
number of people and are extremely
customized for each client. The is the
most effective but with effectiveness
comes cost. Every one of these
services I have seen charges a very
large upfront fee and works entirely
off of referrals. This type of service
is simply impossible to perform for $39
or even $49 a month.

Unfortunately, if you are unable to
find someone in your area (preferably
an individual) by way of referral
through a friend, relative or
professional contact, then I recommend
you take matters into your own hands
and do it yourself. I realize most
consumers do not want to hear this but
the good news is that it will almost
always turn out to be the highest paid
work you will ever do in your life.
How high? How does $500 to $2500 an
hour sound? I understand that's a bold
claim but not one I am unable to back
up.

If you're ever going to finance a
first or second home (which everyone
eventually should for the tax breaks)
the difference between good credit and
poor credit will affect your interest
rate. If you secure a $200,000
mortgage on a 30 year term and your
interest rate is only 2% lower because
of a high credit score, that 2% will
save you $96,934.11 over the course of
the loan (just because you had better
credit). Take that $96,934.11 and
divide it by the 30 to 50 hours you may
spend working on your credit situation
and you'll quickly realize credit
restoration when done properly does not
cost - it pays!

(END)

This is the end of our "7 Article
Series" for the "Credit Secrets Bible".
Hopefully this convinces you to buy it.
Order your copy now by going to the
website below. After all, you deserve
it!

http://rbreid0520.niesong.hop.clickbank.net

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Terry Price is the founder of Consumer
Education Group which publishes the
Credit Secrets Bible (in print since
1994).

For more information on the CREDIT
SECRETS BIBLE you may visit:

http://rbreid0520.niesong.hop.clickbank.net
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