INDIANAPOLIS - A lawsuit that resulted in a recent settlement carries a good reminder that you should be doubtful of anyone who promises they can completely clean your credit score of bad information.
According to the Federal Trade Commission, Financial Education Services (FES) was preying on people with low credit scores and promising they could permanently remove all negative information on their credit history. According to the lawsuit, the network of companies would post ads on websites and social media, promising a quick fix for an upfront fee of hundreds of dollars.
That’s actually committing two crimes.
First, the upfront fees were illegal. Second, while you can dispute possible mistakes or outdated information on your credit history, you can’t legally remove information that’s correct and up to date.
In addition, FES promised “customers” they could make thousands of dollars by recruiting other customers to sign up. But they never made good on that promise, so the whole thing amounted to a pyramid scheme. In the end, FES was required to pay back more than $12 million to victims who paid for services that never happened.
The FTC has some good reminders about this:
You can do the same things a credit repair company can do legally, and it will cost you little or nothing. Here’s how:
- Get your free credit report from AnnualCreditReport.com. Equifax, Experian, and TransUnion offer free weekly reports online.
- Read the reports. If you see a mistake, write to the credit bureau and the business that reported the information. Use this sample dispute letter.
- Keep paying your bills on time, pay off debt and don’t take on new debt: it will improve your credit.
If you have a problem with a credit repair company, or see a scam, fraud, or bad business practice, please tell the FTC at ReportFraud.ftc.gov.