No one can deny the importance of a good credit score. Low credit scores are associated with higher interest rates, credit obtaining challenges, higher insurance rates, larger deposits for apartments and utilities, and other difficulties related to anything that involves payments.
That’s the reason why people turn to credit repair companies so often to have their credit “fixed”, or have their credit score significantly improved. However, not all credit repair companies can prove to be trustworthy.
Repairing Your Credit
There are 2 main credit scoring systems that most creditors rely on when assessing the creditworthiness of an applicant. The most famous system is called FICO. It was developed by Fair Isaac Corp and represented the 1st scoring model developed for banks, which began to be widely used in 1989.
The other scoring system is called VantageScore 3.0 and was developed by the three Credit Reporting Agencies (CRAs) to compete with FICO. The 3 major CRAs, Experian, TransUnion, and Equifax are called to do the same thing ─ store your information and provide it, on demand, to lenders.
Back in June 2017, the Consumer Financial Protection Bureau (CFPB) announced that Prime Credit, IMC Capital, Commercial Credit Consultants, and Park View Law (formerly known as Prime Law Experts), and several executives in charge of the various companies would pay over $2 million for the alleged illegal actions they had performed. The CFPB is an agency of the US government responsible for consumer protection in the financial sector.
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CFPB Shuts Down Prime Marketing Holdings
The CFPB filed a lawsuit against Prime Marketing Holdings, claiming that the company had charged illegal advance fees and provided misleading information about the cost and effectiveness of its services and the nature of its money-back guarantee.
The CFPB reports that between Oct. 1, 2014, and at least June 30, 2017, Prime Marketing charged more than 50.000 consumers over $20 million for credit repair services. The final judgment would impose a ban on the company, prohibiting it from continuing its business in the credit repair industry. The company will be charged a $150.000 civil money penalty. If approved by the US District Court for the Central District of California, the proposed final judgment will go into effect.
According to the CFPB, Prime Marketing allegedly made false promises to its customers, such as:
- Charged illegal advance fees
- Misled consumers about its credit repair services benefits
- Misrepresented the costs of its services
- Didn’t disclose the limits on “money-back guarantee”
Today, you can find a large number of credit repair companies out there. However, there a lot of scams that go with them. To find the more reliable ones, you should focus on longevity, reputation, and money-back guarantee offered by these companies.