Think Twice Before Signing Up for “Credit Repair”

January 22, 2009

A Louisville consumer wanted to improve his credit score before buying a home.  The consumer hooked up with a “credit repair” business located in Elizabethtown, which signed him up for a six month program at $89.95 per month to improve his credit report and credit score.  There was an upfront payment of about $150 and  the total cost of the six month program was supposed to be $695. 

After six months passed, the Louisville consumer says his credit score and credit report have not improved.  At the end of the six month period, the Elizabethtown-based credit repair business sent the consumer an e-mail saying he could “go month-to-month” at $99 per month for further credit repair efforts.  The consumer says he signed nothing agreeing to month-to-month payments after the six month period expired.  But at the end of the initial six-month agreement, the credit repair business began charging his credit card the higher $99 per month rate.  Still, the firm appears to have done nothing to improve the consumer’s credit report and credit score.

The consumer contacted the Better Business Bureau, asking, “What should I do?”  BBB advises:

  • The first step should be to notify the credit repair business in writing that you are cancelling any future service with the business and that monthly charges to your credit card should stop immediately.
  • In addition, the consumer should request a refund of any unauthorized charges to his credit card, especially the charges after expiration of the initial six-month agreement. 
  • The consumer may write his credit card company, at the address on the back of the credit card statement, to dispute any charges on the credit card which he believes were unauthorized or for which promised service was not provided.
  • If the consumer feels that he was misled by the credit repair firm and that promises made by the firm were not fulfilled, he should file complaints requesting a refund of previous charges with Better Business Bureau (, Federal Trade Commission ( and Attorney General (

The consumer may find that the original six-month agreement included language that authorized “month-to-month” service charges at the end of the initial six month enrollment unless the agreement was cancelled in writing.  Still, the consumer’s belief that he had become involved with “a shady company” appears a fair description of what’s going on in this case.

The bottom line is that credit repair companies frequently “over promise and under deliver.”  Fact is, consumers can take action on their own to improve their credit reports and credit scores, without incurring the fees charged by credit repair businesses. 

The Better Business Bureau and Federal Trade Commission know that improving your credit score and credit report takes time and work.  Any “credit repair” business that tells you otherwise can leave you deeper in debt, while doing little or nothing to improve your credit report. 

You should also beware that some credit repair businesses engage in illegal practices such as advising you to dispute all the information in your credit report, regardless of its accuracy or timeliness.

The Federal Trade Commission says, “If you follow illegal advice and commit fraud, you may find yourself in legal hot water, too: It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses. You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to apply for credit and provide false information."

The Federal Trade Commission offers excellent information for consumers seeking to improve their credit records.  CLICK HERE to view this information on the FTC website.