Credit Repair Clinics: No Rx for Bad Debt

Credit clinics promise miracle cures, but only time can heal bad credit. No one can remove accurate negative information from your credit report. If it contains inaccurate information, however, you can dispute it at no charge.

"Turned down because of bad credit? We can help!"

Buyer beware. The miracle cures promised on late-night television and in classified advertisements usually end with consumers as victims of malpractice.

Credit repair organizations, also known as "credit clinics," claim to remove negative information from a consumer's credit report. Or they promise a bankcard "regardless of previous credit history."

Their fees can be substantial, ranging from hundreds to thousands of dollars.

The Credit Repair Truth
Credit clinics would never tell uninformed consumers these facts:

• Virtually everything a credit repair clinic does legally can be done by consumers themselves for free or at minimum cost.
  
• No one can legally remove accurate information from a credit report. Federal law provides that negative information can remain on the credit report for up to seven years (up to ten years for bankruptcies). So only time can erase bad credit.
  
• Any consumer can dispute inaccurate information at no charge.
  
• There are no miracle cures for bad credit. If you need help repaying creditors, managing debt or setting up a personal budget, consult with a reputable, nonprofit credit counseling agency in your area.

Lenders Want to Say 'Yes'
Remember that credit grantors are in business to lend you money. However, their livelihood depends on extending credit to consumers who repay their debts.

Accurate credit reports are one tool they rely on to make sound, impartial decisions. If credit repair clinics' actions distort credit histories, creditors risk increased losses from bad debts. These losses may be passed on to other customers like you.