Credit Repair Contracts – What You Need to Know Before Signing a Credit Repair Contract

Section 406 of the Credit Repair Organizations Act protects consumers by making credit repair organizations provide you with a clear, written contract before performing any type of credit repair service. In a time when gasoline, food prices, and mortgage loan foreclosures are at an all time high, many people have bad credit. A great deal of us are looking for a little help getting our debts under control so we can improve our FICO score. Utilizing a credit repair service can be a step in the right direction to proving creditworthiness.

The problem is, there are deceptive credit repair organizations that prey on good people that are trying to repair their bad credit. You have protection under the law. Beware of any company, organization, service, or individual that does not provide you with a proper contract for credit repair services. The contract presented to you must be written, dated, and include:

The terms and conditions of payment, including the total amount of all payments to be made. You should never have to guess the total amount that credit repair services will cost. You should not have to pay a “retainer” to any credit repair organization that promises ongoing and unlimited credit repair services. The cost for any services that will be provided should be clear, concise, and have an end date.
A full and detailed description of the services to be performed by the credit repair organization, including all guarantees of performance and an estimate of the date when the services will be complete (or the length of time needed to perform services). Do not be tempted to work with any company that claims to have “insider secrets” that they cannot share with you when comes to YOUR credit profile. The services that will be provided by the credit repair organization should be clearly written. Additionally, any guarantees and claims such as increased credit scores should be written and include an end date. Do not accept any verbal warranties, guarantees, or claims.
The credit repair organization’s name and principal business address. Be wary of any credit repair service that will not provide you with a physical business address where your information will be located as they access your credit file. Companies that only list a post office box as their principal business address may be fraudulent, and who knows what they could be doing with your personal information.
Terms of cancellation. A conspicuous statement in bold face type, in immediate proximity to the space reserved for your signature on the contract, must read as follows: “You may cancel this contract without penalty or obligation at any time before midnight of the 3rd business day after the date on which you signed the contract. See the attached notice of cancellation form for an explanation of this right.” The law allows you three days to cancel your contract without penalty. Take this time to thoroughly review the contract and get any questions answered.
A ‘Notice of Cancellation’ form. Each contract shall be accompanied by a form, in duplicate, which must have specific wording and include the heading ‘Notice of Cancellation’. For your convenience, this notice of cancellation form must be included in case you decide during your three day grace period that you do not want any services performed. If your contract does not contain this form, be wary. This may indicate that you are not working with a legitimate credit repair organization.

Visit the official website of the Federal Trade Commission to view the full text of the law regulating credit repair organizations and credit repair contracts.

Legitimate credit repair services can indeed be very helpful as you get your debt under control. When you know your rights a

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