Guide to Credit Repair Companies: Safe Practices in How to Fix Bad Credit Rating Scores

Getting cheap loans and deals on mortgages, as well as other types of credit, often depends upon the customer or businesses’ credit score. A free credit report can be obtained by applying to certain credit agencies’ credit monitoring programs (Experian, Equifax or CallCredit) and canceling before the free trial period expires. But if any of the following applies, the credit rating could be detrimentally affected:

  • Records of IVAs (Individual Voluntary Arrangements) and/or CCJs (County Court Judgments)
  • Bankruptcies
  • Numerous credit searches
  • High number of store cards and/or credit accounts taken out
  • Default on payments
  • Absence of records on the electoral roll
  • Living in temporary accommodation
  • Not having a job or frequent job changes
  • Younger people are viewed as higher risk

Being refused credit can get in the way of obtaining cheap loans, and this could cost the customer or business hundreds or even thousands of pounds in the long run. The reasons for poor credit scores may not always be clear, as loan companies may be using different credit agencies, which often use different scoring systems.

Can Companies Providing a Credit Repair Service Help?

Companies claiming to erase bad credit have sprung up to meet this demand, and for a fee, purport to provide a credit fix, but according the National Debtline’s Fact Sheet, “Credit Reference Agencies,” (March 2009), these companies should be approached with caution as the following could apply:

  • Credit repair companies may be charging a fee, where customers could clean up their credit scores for free.
  • All credit repair companies must possess a consumer credit license from the Office of Fair Trading (OFT). If it doesn’t, the company must be avoided.
  • A company that claims it can remove a country court judgment should be approached with caution. An application to the county court to remove a judgment without proper reason could land the applicant in trouble.
  • The Financial Ombudsman Service (FOS) is a good port of call if the customer has a complaint about the credit repair company’s practices and serves to raise awareness of debtors’ powers over financial disputes.
  • Alternatively, the office of Fair Trading (OFT) can be approached. Both the OFT and the Local Trading Standards offices are undertaking investigations into the practices of credit repair companies.

Information About Credit Repair

Credit companies and Trading Standards have developed an online resource CreditRepair, which gives advice on what to be wary of when approaching a credit repair company. MoneySavingExpert is another helpful source of information on how to clean up credit scores for free.

Credit Counseling

Customers and businesses may at some point find themselves desperate to find cheap loans in order to save money, and may feel tempted to turn to a credit repair company, but caution should be taken before approaching one, as consumers could repair their own scores for free. Furthermore, the company may not be registered with the Office of Fair Trading which could leave them free to practice without regulation. Unfair practices of credit repair companies must always be reported to the Financial Ombudsman Service or a regulatory body mentioned.