What’s the first word that pops into your head when you hear the phrase credit repair?  If you’re like me, it’s “scam.”  And I actually work with a credit repair company!

For the past year, as a credit repair compliance officer, I’ve been breaking down credit repair laws, compliance issues, the scams, and really all of the BS involved with the credit repair industry. Credit repair is supposed to be this legitimate financial services regulated by the FTC.

So where exactly did “credit repair” drop the ball?

Well, IMHO that’s pretty simple:

• Increase in Credit Checks – It used to be only lenders checked your credit.  Now if you want to rent an apartment, get a job, or even just get cable, someone’s pulling your credit reports.

• Increase in the Demand for Credit Repair – A few years ago if your credit score sucked, no big deal, you used cash.  Nowadays …no dice.  You fix your credit or you suffer the consequences.

• Enter the Financial Criminal – You put together millions of Americans that need their credit repaired and an industry that largely unchecked into the financial sector and you’re going to have a problem.

Sure, the FTC is in place to regulate the industry, and yes, there are a lot of ethical credit repair companies out there, but a Google search for credit repair yields over 36 million results.  Just to give you an idea of where this ranks with other searches in Google that relate to finances:

• Credit Repair – Over 36 million results in Google
• Personal Investing – Under 36 million
• Checking Accounts – Under 26 million
• Debt Relief – Under 18 million
• Stock Broker – Under 16 million

A Few Bad Apples The government has to be finding it hard to keep up with these fly-by-night companies that make a few dollars off of hard-working Americans before they disappear.  Every now and then they’ll make an example of a company, shut them down or sue them, or whatever it is that the FTC does.  But what happens as a result?  The industry as a whole loses!

The Magic of Advertising You’ve seen the ads claiming to solve all of your credit problems, eradicate your debt or even create a new financial profile for you.  Not only is most of this illegal, but these ads are making a promise that they almost definitely can’t deliver on.  No financial service is ever going to fix all of your problems over night.

Process This… You put all of these things together and that’s why we think of credit repair as a scam.  What was supposed to be a valuable service for us has turned into an industry of disappointment.  The FTC needs to get a better handle on these businesses (along with their overly suggestive advertising), because crooks will continue to make money as long as they see an opportunity.

They are allowing what is supposed to be a beneficial financial service for consumers to be turned into a farce.  And who suffers are the legitimate credit repair companies and the consumers that don’t know where to begin.