Is “Credit Repair” a Dirty Phrase? – Episode #31

Is “Credit Repair” a dirty word or rather, a dirty phrase. Sort of, thanks to CROA legislation. CROA or the Credit Reporting Organizations Act was enacted in 1996 and it states that you if you are a credit repair organization you cannot charge a fee in advance for a credit repair service. If you do, and call company a credit repair organization, you are in violation of the statute. This was done to protect consumers from businesses that would charge a large upfront fee and then weeks or months later, say “sorry, we couldn’t raise your credit score”.

Sadly, the internet had barely been invented so all the companies that offer online credit products or services cannot call themselves credit repair organizations. The fallout from this, is that the more reputable companies don’t call themselves credit repair organizations. Instead, many good companies don’t call themselves repair organizations and choose the moniker of “credit counseling firm” or “credit product” company. Meanwhile, many smaller companies ignore the statute and call themselves a credit repair company.

Here’s my acid test to prove this point. Do a google search on “credit repair”. Notice anything interesting? None of the credit bureaus, Equifax, Experian, Trans Union, many of which have good credit education offerings are listed. myFICO, with its great credit education area, not listed. Credit.com, with it’s editorial staff giving tips, not listed. The largest credit counseling company, Money Management International, not listed. Any of the major CCCS chapters for San Francisco, Atlanta, New York, etc. …not listed.

Why are these not listed? They follow the statute and avoid using the term “credit repair” and thus, when the gogglebot scours their sites, they don’t match to the term “credit repair”.

Let’s take a look at the top 10 results on Google. Well, Google leads off with a winner — The FTC’s site which recommends self-repair as the strategy. Fraud.org is the #6 organic result and this is a nice non-profit selection. Nolo.com is a large company and appears legit because it doesn’t have a service, it sells a product and that appears to be compliant. Lexington Law has been around awhile. A few of these other sites really look like affiliate sites — i.e. they don’t have a product, they market someone else’s.

Videocreditscore agrees with the FTC approach of self credit repair but in some cases, credit counseling is needed and you want to find a non-profit, NFCC or AICCIA approved credit counseling firm.