Texas protects its citizens from credit repair scams and fraud. The state has laws on the books that closely monitor the activities of companies that operate as credit repair services.
While Texas welcomes and makes provisions under the law for credit repair businesses that genuinely want to help customers, the state clearly defines what kinds of services can and cannot be rendered to clients. By knowing what the definition of credit repair is in the state of Texas, you can decide if it is right for you.
What is Texas Credit Repair?
Texas regulates all credit repair services in the state under Title 5 of the Texas Finance Code law. Under the title’s Chapter 393 provision, the state outlines its definition of credit repair and what services can legally be offered to people who sign up for them.
The state foremost defines credit repair as any service that is designed to improve a customer’s credit history or rating, help obtain an extension of credit for a client, or provide assistance or advice about credit repair. Credit repair companies likewise must provide a thorough disclosure of information to its customers.
Further, companies must abide by the state’s mandatory opt-out or cancellation policy if customers change their minds or want to discontinue their participation in the services. This policy allows clients up to three full days after signing up for services to opt out of their contract.
Finally, companies that operate as credit repair services cannot demand a pre-payment from clients and likewise must abide by the Federal Fair Debt Collection Practices Act. Failure to comply with these stipulations as well as numerous others listed in this law could result in the credit repair business being fined or dismantled in the state of Texas.
Texas provides exemptions from this law for several businesses and organizations. Most notably, non-profits that are registered as 501(c)(3) charities as well as mortgage brokers/dealers, banks, credit unions, and lawyers are not expected to comply with this title or chapter of the state’s Finance Code law.
Why Utilize Texas Credit Repair Services?
As Texas’s Attorney General’s office points out, good credit is essential for being able to function in everyday society. A good credit history and rating shows that you pay your bills on time and that you can be trusted to pay back a line of credit or loan.
As important as good credit is to your financial security and stability, it is not always possible for you to maintain your rating, particularly if you experience hardships like unemployment, illness, or other unforeseen circumstances. Regardless of what happened to cause you to fall behind in your financial obligations, you could suffer even more devastating hardships if you are unable to rebuild your good credit.
With that, many people in such situations take advantage of the services offered by legitimate and well-intention credit repair services. When you use one of these services, you may be able to dispute wrong information on your credit history and have those false entries removed. After they are removed, your credit score may improve.
Likewise, you may be able to pay off debts that you forgot about or were not aware that you had on your report. Some credit repair agencies offer to consolidate your debts and allow you to make a single monthly payment that will be distributed to your creditors. Once your debts are paid in full, your creditors will update your credit report, which could help elevate your score.
You should note, however, that some debts cannot be addressed successfully through credit repair. Primarily, defaulted student loans, back taxes, owed child support, and civil judgments typically require other methods to resolve. If you have paid off these kinds of debts, but they are still being reported as owed on your credit report, you can dispute them by submitting proof of payments to the reporting credit bureaus.
Rebuilding your credit is important when you want to enjoy better financial stability and security. Before you sign up for credit repair services, you should learn what provisions Texas makes for these companies and what services can legally be rendered to you in the state.