When it comes to credit, many individuals are usually so engrossed with the problems they have in hand that they forget to check further and concentrate on the solutions that credit repair companies offer.
This however can prove to be a risky move as shady or fly-by-night operations can just take advantage of you promising you results and then leaving you in mid air after payment has been made.
In this particular article we'll be discussing one of the most concerning facts regarding these companies, which is the issue of payment and whether it is legal to ask for it upfront.
To start, one will be able to get an idea regarding these payments just by looking at the Credit Repair Organizations act or CROA, which regulates the services associated to credit repair.
In essence, CROA is designed to: • Ensure that prospective clients of these repair organizations are provided with the necessary information that they need to make an informed decision regarding the services that they are about to get and; • Protect the public from unfair or deceptive advertising and practices by such organizations.
There is also a certain paragraph in the guidelines that you will need to further understand as it has been the cause of many problems for other people in the past.
The line goes like: "No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the organization has agreed to perform for any consumer before such service is fully performed.
" At a glance, this appears to be saying that unless a repair of credit service is able to render his duty completely by either improving their scores or sending out massive dispute letters, the client is not in any obligation to pay.
This is inaccurate.
What it really means is that, for each service that is provided by the credit repair service, you will not be billed until that action has been completed.
This is where things get a little bit muddy though as only the credit repair company will be able to dictate when that service is completed.
One good example would be the fact that while repair services may not be able to accept your payment upfront, they can bill and receive that payment as part of setting up your account with them which is why your contract should be able to clearly state the definition of completion.
Various arguments can stem from the misinformation or misunderstanding of the above mentioned paragraph of CROA as well.
Bottom line - read what you are signing into first carefully.
Don't assume that each company you run into will have the same definition of the word "completion" as you do.
Finally, to answer the question regarding upfront payments for credit repair companies? The answer would be a definite NO.