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What Should Be In a Credit Repair Contract?

Posted on May 11, 2011

When you work with a credit repair agency, it’s important that you have a contract that spells out what the company will do on your behalf. Read through the contract and ask questions about anything you don’t understand. Here are some things you should expect to be included in a credit repair contract.


Your credit repair contract should include how much you’re expected to pay for credit repair and when your payment is due. Make sure the amount that’s included in the contract matches any oral agreements made. For example, if you were promised a discount on your services, this discount should be reflected in your contract. What you sign up for is what you’re responsible for paying. Handle any discrepancies before you sign.

Services to Be Completed

In your contract, the credit repair company should include a detailed list of all the services they’ll perform on your behalf. This may include preparing and sending letters to the credit bureau, disputing items on your credit report, etc. Just as with the price, make sure all services you discuss are listed in your contract. Credit repair companies are not supposed to misrepresent their services or make promises to do things they can’t legally do.


By law, your credit repair contract must include the amount of time it’s going to take the credit repair company do complete the services that are promised. They can alternatively include the date that you can expect services to be completed. The company may also include details about how often you’ll be updated about the status of your account.

Right to Cancel

Once you sign your contract, you have a waiting period of three business days. A disclosure about the waiting period should be included in your contract. You have three business days, starting when you sign your contract, to cancel your services and not be held liable for payment on your account. The credit repair company shouldn’t start working on your account during those three days. After the three-day waiting period, your contract starts.

No Waiver of Rights

The government requires credit repair companies to include all this information in your credit repair contract. The company is not allowed to ask you to waive your rights or to sign anything that waives your rights. Review your contract to be sure there’s nothing in it asking you to give up any rights guaranteed by Federal law.

Some credit repair contracts will ask you to sign a limited power of attorney allowing the company to contact the credit bureaus on your behalf.

The credit repair contract is a must-have if you’re going to do business with a credit repair company. Not only does it help guarantee that you’re working with a legitimate company, it also gives you something to fall back on if there’s ever a dispute. If things don’t go right, as they sometimes don’t in business arrangements, your contract is the go-to document to let the credit repair company know to hold up their end of the deal.

While there are several companies that provide legitimate services to consumers trying to get out of debt and repair their credit, there are many more that target desperate individuals in an attempt to profit from a bad situation.  Many of these companies have made a practice out of charging clients upfront fees before they provide any type of service.  This billing structure automatically raises red flags that the company with which you are dealing may be less than reputable.  In fact, there have been so many instances of scams involving companies that charge upfront fees, the Federal Trade Commission has established new rules governing how companies can charge for their services.

Federal Trade Commission Rules

The new rules prohibiting upfront fees are designed to protect consumers from companies that would otherwise require payment for fees prior to providing any type of service.  As previously mentioned this was a common practice in the debt relief industry, specifically debt settlement companies.  Since many of these companies provide multiple services including credit repair, many consumers were paying hundreds if not thousands of dollars before any service was provided on their behalf.  In many cases, the client ended up with more financial problems resulting from their contract than they had prior to dealing with the debt relief/credit repair company.

Cash-strapped consumers most vulnerable

Many people ask why a person with an obvious financial hardship would pay for a service before any action has been taken.  The answer is actually quite simple.  Individuals experiencing a financial hardship are often the most vulnerable due to their current financial situation.  With bills piling up and no relief in sight, consumers struggling with debt or trying to rebuild their credit after a hardship are desperate for help.  Companies targeting these individuals know the despair they feel and use that emotion to con clients out of money.

Reputable companies do not charge upfront fees

Before you agree to entrust your financial future in the hands of any third party company, it is important to do a bit of research first.  Credit repair is something that you can do on your own without paying a cent to an outside party.  That being said, if you prefer the help of a professional, take the time to first research the company fully to learn how they have handled client accounts in the past.  Reputable companies will not charge upfront fees because they are confident in their ability to get you the promised results.  To learn more about a credit repair company, look beyond their website and advertising material.  The Better Business Bureau and Attorney General’s Office are great places to start your research.  Both will have information regarding complaints and other issues reported from previous clients.  The Internet can also be a great resource; look for message boards and forums that may discuss how the company handles client accounts.

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