The Basics of Credit Repair Laws in New Mexico

New Mexico relies on federal laws to regulate the credit repair industry in the state. Businesses and individuals who want to operate credit repair services in New Mexico are bound by the limitations and definitions laid out by U.S. House Code 15 USC Chapter 14, Subchapter 11-A: Credit Repair Organizations. Before New Mexico residents sign up for or agree to credit relief services, they should learn what can and cannot legally be offered to them and what results they can expect if they use these services to improve their credit.

Defining Credit Repair in New Mexico

new-mexicoAs noted, New Mexico relies on federal laws to define credit repair services in the state. Federal law labels an entity as a credit repair service if the business or individual aims to improve or cleanup a person’s credit rating, history, or record. Likewise, credit repair services can legally offer advice and guidance to people who want to improve or cleanup their own credit ratings, histories, or records.

Some entities are excluded from this law, however. This U.S. code provides exemptions for:

  • ¬†Banks and credit unions
  • Lawyers
  • 501 (c)(3) non-profit organizations
  • Creditors who are helping clients settle or reorganize their debts

Permitted and Prohibited Credit Repair Services in New Mexico

credit-repair-services-in-new-mexico-4Credit repair businesses can legally help clients cleanup or improve their credit ratings, histories, and records by disputing wrongful, misplaced, fraudulent, or outdated information in their credit files at any of the three major credit reporting bureaus. Disputes must be made in writing and comply with the processes outlined on the bureaus’ websites.

By law, however, these businesses cannot dispute information that is negative yet accurate in an attempt to prevent or delay its reporting to a person’s file. Likewise, these entities cannot charge for or collect fees for services until the dispute is submitted and resolved either by the credit bureau or the creditor.

Once the dispute is made, the creditor has the obligation of validating the debt. If not, the debt must be removed from the client’s file. Until the debt is proven to be either accurate or inaccurate, however, the credit repair service cannot demand that the client pay for the dispute service.

Along with not being able to collect prepayment for services, credit repair services also cannot use misleading or fraudulent information when advertising to clients. They cannot guarantee their services or promise that a person’s credit will improve. They also by law must inform clients that they have the right to make disputes and improve their credit on their own without paying for professional credit repair services.

Finally, people are encouraged to report suspicious or fraudulent credit repair services to the New Mexico Attorney General’s office. They can also contact the AG if they have questions or concerns about whether or not a credit repair service is legitimate.

Why Use New Mexico Credit Repair Services?

credit-repair-services-in-new-mexicoWhy should people use professional credit repair services if they have the right to dispute information on their credit files or improve their credit on their own? Some people use these services because they do not understand the required process or they lack the time to see the process through to the end.

The process itself can take weeks or months and sometimes longer to finish. If people have numerous wrongful entries on their files, for example, they may need to file several disputes to get these details removed.

When people are busy with work or family commitments, they may not have the time to keep track of their disputes to make sure the proper action is being taken. When they use credit repair services, they allow people who know the process from start to finish to help them make sure the disputes are resolved successfully.

Good credit is an important component to living well in today’s society. People who have bad credit may want to use credit repair services to get wrongful, fraudulent, misplaced, or outdated information removed. Before they sign up for credit repair services in the state, however, people in New Mexico are encouraged to learn what kind of help can legally be extended to them and what services are prohibited by state and federal laws.