CREDIT REPORT: Be Beware of Credit ‘Repair’ Companies!

People struggling with loan payments and falling credit scores may be tempted to seek a quick fix. But they should be wary of so-called credit repair companies that promise...
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People struggling with loan payments and falling credit scores may be tempted to seek a quick fix. But they should be wary of so-called credit repair companies that promise to scrub credit files and improve credit scores for a fee, consumer watchdogs say.

The Consumer Financial Protection Bureau filed suit this month against Lexington Law and CreditRepair.com, two of the largest credit repair brands, and a related network of interconnected businesses.

The suit alleges that the companies illegally charged customers upfront for credit repair services in violation of the federal Telemarketing Sales Rule. Under that rule, companies can charge fees for credit repair services sold through telemarketers only after documenting that their promised results have been delivered.

The complaint also alleges that several of the companies, referred to collectively as Progrexion, used deceptive marketing to lure clients, in violation of the Consumer Financial Protection Act.

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The complaint, filed on May 2 in Federal District Court in Utah, said people paid the credit repair companies hundreds of dollars in fees, seeking to improve their credit scores and get better access to loans on improved terms.

But the businesses used misleading methods, including false advertising, as “bait” to attract credit repair clients, the complaint said. Progrexion, for example, paid an affiliate that advertised nonexistent home loans with down payments as low as zero percent, even to borrowers with “bad” credit. Interested consumers were then required to enroll in credit repair services, through Lexington Law. “In reality,” the complaint said, “the affiliate did not provide any loans at all.”

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The Consumer Financial Protection Bureau didn’t respond to a request for comment on its suit.

Eric M. Kamerath, a spokesman for Lexington Law and Progrexion, which includes CreditRepair.com, emailed a statement in response to a request for comm

Source: nytimes.com

Photo Credit: Credit Repair

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