Many know the impact a low credit score can have on their lives. From being turned down for a car loan, or having a rental application rejected due to a poor credit history to being denied a mortgage, having a low credit score can be very detrimental to your ability fulfill many basic needs. It’s these essential needs that help to create a huge demand for credit repair services.“The Credit Services Act of 1984” (California Civ. Code § 1789.10 et seq.) was enacted by the California Legislature to provide consumers with information necessary to make informed decisions when purchasing credit repair services and to protect them from unfair or deceptive practices within the industry. In 1996 the Federal Government signed a similar statute into law known as the Credit Repair Organizations Act.According to the California Act, Credit Services Organizations (CSOs) are defined by the services they advertise, including: offering to improve a consumer’s credit record, history or rating; offering to obtain a loan or credit extension for the consumer; and/or offering to provide assistance with either of these things. To be considered a CSO, the company must request payment for their services. An organization that does not charge for their services would not be considered a Credit Services Organization covered by the Act. Similarly, banks, companies that are licensed by a California or Federal Agency to provide loans, real estate brokers performing their regular duties, and most 501(c)(3) non-profit organizations are also not subject to the Act. The Credit Services Act regulates this industry by making specific requirements of Credit Services Organizations. Here are some of the most important regulations under the Act you should know before hiring a credit repair service:CSOs must be registered with the California Department of Justice, obtain a $100,000 surety bond, and keep a copy of the bond on file with the California Secretary of State. Prior to executing a service agreement, the CSO must inform you of your right to proceed against their bond.Advance fees are prohibited. A CSO may not charge any fees before fully completing the services they have been contracted for. A CSO cannot make untrue statements to or advise you to make any untrue statements to creditors or credit reporting agencies.Similarly, a CSO is prohibited from assisting you to remove accurate information from your credit record.In a 2012 study conducted by the Federal Trade Commission one in four participants were able to find errors on their credit reports that had the potential to negatively impact their credit scores.By law, you have the right to dispute any inaccurate or erroneous information on your credit report yourself. Credit reporting agencies must then investigate and report your dispute to your creditor within 30 days - unless your dispute is found to be frivolous. In this way, inaccuracies can be removed from your credit report; often resulting in a raised credit score.Many CSOs claim to be able to improve your credit score by challenging negative information on your credit report without distinguishing between whether that information is accurate or inaccurate. Many actually even advertise that they can remove accurate information, claiming that if the creditor doesn’t affirm the information, it must be removed for your report. However, according to the Act, a CSO may not challenge accurate information on your credit report. Legally, any company advertising that they can remove derogatory items from your credit report may only assist you if there are inaccuracies on your report. A CSO may not assist or advise you to create a new credit record by using a different name, address, social security number, or employee identification number.Some companies claim to be able to provide you with a “Credit Privacy Number,” “Credit Protection Number,” or a “Secondary Credit Number” to use instead of your Social Security Number. Like an SSN, these numbers, known as CPNs, are nine digit numbers that can be used to identify you. CPNs have very few legitimate uses, but are thought to be useful in protecting a person from identity theft. CSOs advertising CPNs, however, claim that this number can be used in place of a SSN on credit applications. They advertise that using a CPN will give you a clean slate, making you attractive to creditors again. This is illegal. According to the Act, CSOs are prohibited from advising you to apply for credit using anything other than your SSN. In addition to the fact that it is illegal, a credit repair company advertising CPNs might actually be selling stolen Social Security Numbers instead. If you use a stolen SSN, you are involving yourself in identity theft. Finally, it is also illegal for a credit repair company to advise you to apply for credit using an Employee Identification Number (EIN). An EIN is legally issued to a business and can be used to establish credit in the business’s name, but an EIN is always linked to the business owner’s SSN. Unfortunately, there are no quick fixes for a bad credit score. Consumers should always be wary of a company advertising or implying otherwise. A good credit repair company will be up front about this and should work with you to establish a plan for paying your credit balances down, ensuring you make your payments on time, and paying off any accounts sent to collections. Ordered by weight, the factors credit reporting agencies consider when determining a consumer’s credit score are: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and types of credit in use (10%). A good credit repair plan should start with knowledge of how your current credit score has been calculated. For more information and to look up a business, check bbb.org. For more general advice on hiring a credit repair service, check here.