Credit repair companies

Credit Management, Dec 2008

Credit repair companies have been causing concern for some time. Many of them entice people who cannot obtain credit by legitimate means by making false or misleading claims about their ability to remove consumers' adverse information from credit records and reports. The fees charged can typically run well into three figures. They are preying on people who are already in financial difficulty.

In 1999, the Finance & Leasing Association (FLA) and Experian set up a cross-industry working group on the subject, which has done much to educate consumers about the damage some credit repair companies cause, and it has lobbied for legislation to help protect vulnerable consumers.

That lobby has borne fruit. New powers under the Consumer Credit Act 2006 say that from 1 October 2008 anyone providing credit repair services will need a specific consumer credit licence from the Office of Fair Trading. In obtaining that, they will be required to satisfy tough new competency tests.

The Director General of the FLA, Stephen Sklaroff, has said, "Consumers need to think carefully before using credit repair companies. These reforms will introduce some much needed governance."

James Jones, Consumer Education Manager at Experian, commented, "People should be extremely wary of any company claiming to be able to erase accurate information from a credit report. It simply cannot be done and if a service sounds too good to be true, it probably is."