The credit repair industry suffers from a legitimacy crisis. Most actors in this industry are predatory. These predatory actors fade into the woodwork after stealing money from consumers. Other predatory actors lead consumers to believe that they can remove accurate debts from their credit report through the use of “credit privacy numbers” and other schemes. Some of these schemes are illegal, and maybe even more faulty, than the schemes that they replace. To evaluate credit repair organizations, one must first understand what legitimizes a credit repair company. After that, consider five aspects of credit repair company legitimacy.

What Legitimizes Credit Repair Companies?

To legitimize a credit repair company under the Credit Repair Organizations Act (CROA):

• It cannot charge consumers upfront to provide credit repair services.

• It must provide consumers with a written representation of the services to be provided.

• It must provide consumers with the right to cancel the contract within 3 business days.

• It cannot guarantee the outcome of a credit repair case.

• It cannot recommend that consumers make false credit reports.

• It cannot recommend that consumers engage in identity fraud (obtaining a "CPN" or "credit privacy number") to avoid negative credit history.

State laws vary when it comes to credit repair organizations. However, some laws impose requirements such as posting a surety bond. Some states require credit services organizations to register with the State. Any credit repair organization operating in a state with registration or bonding requirements that does not comply is potentially breaking the law.

How to Verify Legitimacy

1. A consumer can search online to see if the credit repair organization is legally registered in their State. A consumer should check the Better Business Bureau (BBB) website to review the company’s accreditation and complaint history. If the complaints are unresolved, the company may not be trustworthy.

2. Once a consumer enters into a contract with the company, the consumer should review the contract to see if there is a 3-day cancellation provision and if the contract states the company’s right to keep money in the consumer’s account to pay for the credit repair services.

3. Prior to having any credit repair services performed, the consumer should ask the company when they will be billed and if the company will perform a service (i.e., filing disputes) in exchange for the payment. If a company states it will perform credit repair services and bill the consumer for the service at a later date, this may be an illegal advance fee credit repair service.

4. CPN stands for Consumer Privacy Number. A company should not recommend a consumer obtain a CPN or a new credit identity. If a company states a consumer is not eligible to obtain a new Social Security number, the company is running a scam.

1- Heads Up Financials

Heads Up Financials operates as a financial strategy and credit repair firm offering both personal credit repair and business credit/funding services. As a newer, smaller company, it doesn't carry the same volume of public complaint history or third-party verification that decades-old competitors do — which cuts both ways: there's less negative history to find, but also less of a track record to independently confirm.

Its structure is consistent with legitimate practice on the surface — a defined mentorship program, named service tiers, and a stated focus on disputing inaccurate items rather than promising to erase accurate debt. That said, given its premium pricing (packages reportedly up to $7,500) and less-established public footprint, this is a company where doing your own legitimacy homework matters more than usual before paying anything: confirm state registration or bonding requirements for your state, get the written contract and cancellation terms in hand before paying a deposit, and clarify exactly when billing occurs relative to when work is performed.

2- Credit Saint

Credit Saint's public history is lengthy enough to allow a review of its track record with third parties. Its 90-day refund policy is structured to comply with the CROA. It promises a service refund rather than guaranteeing a particular outcome. The policy does not place obstacles in the consumer's way for claiming a refund. Credit Saint's marketing materials do not promote "new identities" or other schemes prevalent among credit repair fraud businesses.

Credit Saint employs a staff attorney to review consumer disputes. Its website states the company will pursue removal of inaccurate information as required by the Credit Repair Organizations Act (CROA) rather than the removal of legal, but time-sensitive, information. It provides a defined mentorship program. It has established service tiers.

Credit Saint has structures and processes in place that appear legitimate. Its pricing, however, raises concern. The cost of Credit Saint's services ranges from $799 to $7,500. Due to the cost of Credit Saint's services, we recommend consumers perform their own due diligence to ensure Credit Saint is bonded or otherwise authorized to do business in their State before retaining Credit Saint's services.

3- Sky Blue Credit

Sky Blue Credit has an A+ rating with the BBB and has been in business since 1989. Because of this, they have many years of experience and have probably survived or passed various government scrutiny. Pricing with this company is also posted, giving the consumer the opportunity to decide on the service without a high-pressure sales call. Higher pricing is often kept a secret with companies, giving the consumer the opportunity to hide or obfuscate something.

4- Lexington Law

Being a law firm, and therefore a larger company, is a double-edged sword. On one hand, their status makes them easily researchable with tons of public access reviews. On the other hand, being larger and therefore a bigger target has led them to be involved in more lawsuits and legal reviews than smaller companies. Because of this, it is important to see what kind of terms you would be agreeing to, as they are subject to changing legal practices.

5- The Credit People

Offering credit repair services at a total cost of about $79, The Credit People has one of the best prices in the industry. They have flat rates with an up-front six-month service period and a full refund guarantee. Because of this, they have a very low public presence. They also don't raise the caution flag in their advertising, like some other credit repair companies.

Legitimacy Checklist across all Five

What does a credit repair organization do if they are operating lawfully?

Oftentimes, an unlawfully operating credit repair company will:

• Charge a deposit or sign-up fee.

• State a guaranteed credit score.

• Tell you to use a CPN or new credit profile.

• Tell you to use a different number other than your SSN.

• State they have no physical location.

• Have no state registration.

• Have bad or no reviews.

• Have reviews that all state the same.

• Have reviews that all appear in a short time period.

Frequently asked questions

Are credit repair companies allowed to charge a deposit?

No, companies can not charge a deposit and still operate lawfully.

What is a CPN and is it a legitimate service?

A "credit privacy number" is often advertised as a way to obtain a new credit report and build a new credit history. Although this may seem attractive to someone who wants or needs to start fresh financially, this is a predatory scheme. A "credit privacy number" is usually a Social Security Number (SSN) that has been stolen or otherwise misappropriated. It is a form of identity theft to use a SSN that is not issued in your name. Using an SSN issued to someone else for the purpose of obtaining credit is a federal crime and may also subject you to civil and criminal liability.

Are there other reasons to avoid a business besides a court case or agency action?

A court case, agency action, or other governmental proceeding may not always mean the business is illegitimate. It depends on the resolution and the subsequent conduct of the business. A court case or other proceeding may not always mean a business is illegitimate, especially if the case was resolved years prior and the business has conducted itself in an appropriate manner since then. The focus should be on what is currently occurring and not what has historically occurred.

How can I find out if a business is legitimate without relying on your organization?

It is often possible to find out for yourself. Many state governments have a public record of a business's registration or a business's surety bond, and may be found by searching the website of the State's attorney general or secretary of State.