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• Mar 21, 2008 9:33 am US/Pacific
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  Credit Repair Complaints On The Rise

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Credit Repair Complaints On The Rise

(CBS 5) As sub-prime mortgages continue to adjust upwards, many consumers are turning to credit repair companies in hopes of qualifying for better loans.

The Better Business Bureau warns consumers that if you have a low credit rating and there are negative items on a credit report that are legitimate there is no way to remove them, no matter how much you pay someone to do it. The only way consumers can legally raise their rates is through challenging inaccurate information on their reports. Consumers can challenge information themselves, they don't need to pay someone else to do it for them.

In Contra Costa county, CBS5 talked with one man who found that out too late. Phil is 63, disabled and on a fixed income. He contacted a Concord based company called California Credit Solutions which he found in the phone book.

"They say your credit score isn't that bad we can take care of this, no problem, 6 months or less we will have your score of 680 or better," Phil said.

Phil paid $700 up front to Tarik Smith, the owner of the company. But, Several months went by, and Phil said his score was stuck at a losing 651.

Next, Smith suggested a trade line. A trade line is when a consumer with bad credit is "piggybacked" onto a credit card or loan of a consumer who has good credit. This practice could be legally risky for consumers, who could be charged with deception and fraud. Phil paid $695 for the trade line. Phil says his score didn't change, and despite paying almost $1400, Phil was not able to avoid a $751 jump in his mortgage. It adjusted to $3002 from $2,222 a month.

Tarik Smith, who has since closed his business, says that his customers sign a contract saying they are paying for a service and not results. Smith says that Phil's credit score did go up but Phil says that he was able to raise his credit score on his own after his contract with California Credit Solutions expired.

Attorney Lon Wixson with the Contra Costa D.A.'s office told CBS5 it is illegal in California for credit reporting agencies to collect fees before raising a client's credit score. Tarik says he met with the Contra Costa County District Attorney's office recently to discuss their concerns.

Lori Wilson with the Oakland Better Business Bureau says they have had a number of complaints about California Credit Solutions.

Wilson has some advice to people whose credit scores are not perfect.

"Consumers have to be honest with themselves and that's not always easy to do," said Wilson. "The first step would be to get your credit report, this takes time and this takes some work and energy. But even if you hire a credit repair company, there's only so much it can do. "


For more information on credit scores and changes in FICO reporting, go to www.bbb.com

(© MMVIII, CBS Broadcasting Inc. All Rights Reserved.)