If bad credit is holding you back and you’d like to do something about it, you may be considering hiring a credit repair service to assist you. This is a reasonable idea, as trying to fix a bad credit situation on your own is pretty overwhelming. Unfortunately, however, many credit repair organizations are little more than scams. They charge huge fees and make big promises that they could never have kept in the first place due to state and federal law. If you live in Michigan, you are lucky because the state attorney general has taken such organizations to task. Learn about the laws regarding credit repair services in Michigan to protect yourself.
Beware of Big Promises
Legitimate credit repair organizations make it very clear that fixing credit takes a long time. They guide consumers through a series of sensible steps that slowly but surely improve their credit ratings. Unscrupulous credit repair companies, which are targeted by credit repair laws in Michigan and on the federal level, typically claim that they can restore your good credit standing in an unreasonable amount of time. Some may even advise you to do things that are downright illegal, including falsifying your identity.
The Michigan Credit Services Protection Act
In addition to being protected by federal law, Michigan residents who seek credit repair services are protected by the Michigan Credit Services Protection Act, which was signed into law in 1994. The act lays out a number of important rules and guidelines for consumers and credit repair companies. By familiarizing yourself with the contents of this act, you can more easily protect yourself when trying to repair your credit.
A few key takeaways from the Michigan Credit Services Protection Act include:
- You Have the Right to Cancel Your Contract – Beware of credit repair organizations that claim that you are locked in the second that you sign a contract with them. In reality, the Michigan Credit Services Protection Act states that consumers have the right to cancel a contract for any reason within three business days of signing it. You don’t even need a reason to cancel it, so if a credit repair company says otherwise, they are evading the law.
- Your Rights as a Consumer Must Be Explained to You – According to the act, credit repair organizations must provide consumers with a copy of a one-page document that explains their rights when disputing inaccurate information on their reports as well as their rights in dealing with credit repair companies. This document must be provided to you before you sign a contract. If you aren’t given one, do not sign the contract.
- You Must Be Given a Contract – Before they can provide any services to you, a credit repair organization must provide you with a detailed written contract that outlines your rights and obligations regarding the services that they provide. That way, you won’t have any unpleasant surprises.
- You Don’t Have to Pay Until Services have Been Provided – Finally, the Michigan Credit Services Protection Act of 1994 requires credit repair companies to provide services before collecting payment. All too often, shady credit repair organizations collect payment in full up front and then fail to deliver the services that have been promised. Never pay a credit repair company until they have completed the work that they have promised to perform.
When looking for credit repair organizations in Michigan, do plenty of research. Check their rating with the Better Business Bureau, and look for reviews from past customers online. Stick with credit repair companies that are staffed by trained counselors with proven credentials. Choose an organization that offers personalized services as opposed to “one-size-fits-all” solutions.
If you encounter a credit repair company in Michigan that doesn’t adhere to state and federal laws, do your part to protect other consumers by reporting the organization to the Michigan state attorney general. Also, keep in mind that credit repair services aren’t always necessary. Depending on your situation, you may be able to handle most of it yourself. In particular, consumers are permitted by law to dispute items on their credit reports for free, and all U.S. citizens are entitled to one free copy of each of their three credit reports per year.