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CFPB sues company for falsely advertising credit repair services and charging illegal fees

The Consumer Finance Protection Bureau took a stand on behalf of consumers Sept. 22 when it sued a credit repair company for misrepresenting its services and costs and for charging consumers illegal fees
9/28/2016 1:43:52 PM

The Consumer Finance Protection Bureau took a stand on behalf of consumers Sept. 22 when it sued a credit repair company for misrepresenting its services and costs and for charging consumers illegal fees, according to a press release from the CFPB.

Prime Market Holdings advertised itself as a credit repair firm and charged customers various illegal advance fees. The company claimed it could fight negative items on a person's credit report and effectively have them removed, whether the information was correct or not.

The truth about removing items

There are times when credit bureaus make mistakes and inaccurate information is included in a credit report, thereby harming the consumer's profile. In these instances, the consumer can and should request the information be removed. However, Experian explained information that is factual will remain on the report until its period of time is up, which depends on the nature of the item. Most typically last either seven or 10 years. Items that typically last seven include:

  • Accounts not paid
  • Late payment history
  • Collection accounts
  • Judgments
  • Paid tax liens
  • Discharged chapter 13 bankruptcies

Items that typically last 10 include:

  • Accounts paid
  • Chapter 7 and 11 bankruptcies
  • Non-discharged or dismissed chapter 13 bankruptcies

Additionally, unpaid tax liens will remain on a credit report indefinitely, and hard inquiries will stay relevant for one or two years. An example of a hard inquiry is when a lender looks at a person's credit score to determine creditworthiness after the consumer applies for a loan.

The correct way to improve your score

People who are looking at taking out a conventional mortgage, credit card or other loan commonly begin to worry about their credit score. A low credit score can prevent a consumer from acquiring financing or result in the consumer being offered an expensive interest rate. Through sales calls and website ads, Prime Market Holdings often targeted consumers who had recently attempted to take out a loan.

Even though this company's claims about their ability to erase negative information from credit reports were ultimately false, there remain some things consumers can do to raise their credit score.

If you are confident everything in the report is accurate, it's time to begin tackling some of your problem areas. The amount you owe is perhaps the most influential factor in your report. Pay down all of your debts as soon as possible. If you can't afford to pay it all off at once, strive for a credit utilization rate of 30%, Money Talks News suggested. This means that if you have a credit card limit of $10,000, your balance should be no more than $3,000. If you owe more than 30% of your limit, your score could be brought down more quickly.

Repairing a damaged credit score will take time. Unfortunately, there are no magic fixes that will increase your score overnight. However, through hard work and careful budgeting, a low credit score can be healed with time, making a mortgage or other loan more attainable. 

Academy Mortgage is one of the top independent purchase lenders in the country as ranked in the 2015 CoreLogic Marketrac Report. Visit www.academymortgage.com to find a loan, get a rate, or calculate your payment today.