State of Connecticut Department of Banking

Credit Repair / Debt Management

Credit repair scams

Only time, a conscious effort, and a personal debt repayment plan will improve your credit report.

If you have a poor credit history, be wary of companies that promise to "clean up" your credit report for a fee.  If a company claims it can erase your bad credit, don't believe them.  The truth is, they can't deliver.  After you pay them hundreds or thousands of dollars in up-front fees, these companies do nothing to improve your credit report.  Worse, many simply vanish with your money.  

Credit repair companies such as these advertise in newspapers, on television and radio and on the Internet.  You may even get calls from telemarketers or receive fliers in the mail offering credit repair services.  But ignore their claims and beware of companies that:

  • Want you to pay for credit repair services before any services are provided;
  • Do not tell you your legal rights and what you can do yourself for free;
  • Recommend that you not contact a credit bureau directly;
  • Suggest that you try to invent a "new" credit report by applying for an Employer Identification Number to use instead of your Social Security Number; or
  • Advise you to dispute all information in your credit report or take any action that seems illegal, such as creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.

You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It's a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security Number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.

Under the federal Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the promised services.

Have You Been Victimized?  

If you've had a problem with a credit repair company, or believe you've lost money to a scam, don't be embarrassed to report them. While you may fear that contacting the government will only make your problems worse, that's not true. Laws are in place to protect you. Contact the Department of Banking or the Federal Trade Commission immediately.

The Credit Repair Organizations Act

By law, credit repair organizations must give you a copy of the "Consumer Credit File Rights Under State and Federal Law"  before you sign a contract. 

Credit repair companies must also give you a written contract that spells out your rights and obligations. Read these documents before signing a contract. The law contains specific protections for you. For example, a credit repair company cannot:

  • make false claims about their services;
  • charge you until they have completed the promised services; or
  • perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.

Your contract must specify:

  • the payment terms for services, including their total cost;
  • a detailed description of the services to be performed;
  • how long it will take to achieve the results;
  • any guarantees they offer; and
  • the company's name and business address.
Self-Help May Be Best

Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost.

The law allows you to request an investigation of information in your file that you may dispute as inaccurate or incomplete.  There is no charge for this.  According to the Fair Credit Reporting Act:

  • You are entitled to a free copy of your credit report if you've been denied credit, insurance or employment within the last 60 days. If your application for credit, insurance, or employment is denied because of information supplied by a credit bureau, the company you applied to must provide you with that credit bureau's name, address, and telephone number. 
  • You can dispute mistakes or outdated items for free. Ask the credit reporting agency for a dispute form or submit your dispute in writing, along with any supporting documentation. Do not send them original documents.

Clearly identify each item in your report that you dispute, explain why you dispute the information, and request a reinvestigation. If the new investigation reveals an error, you may ask that a corrected version of the report be sent to anyone who received your report within the past six months. Job applicants can have corrected reports sent to anyone who received a report for employment purposes during the past two years.

When the reinvestigation is complete, the credit bureau must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the credit bureau cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the credit bureau gives you a written notice that includes the name, address, and phone number of the provider.

You also should tell the creditor or other information provider in writing that you dispute an item. Many providers specify an address for disputes. If the provider then reports the item to any credit bureau, it must include a notice of your dispute. In addition, if you are correct - that is, if the information is inaccurate - the information provider may not use it again.

If the reinvestigation does not resolve your dispute, have the credit bureau include your version of the dispute in your file and in future reports. Remember, there is no charge for a reinvestigation.

Do-It-Yourself Check-Up

Even if you don't have a poor credit history, it's a good idea to conduct your own credit check-up.

If you are planning a major purchase, such as a home or car, you may want to get copies of your credit report to ensure that the information is correct. Banks, mortgage brokers and other lenders will often look at your credit history to determine whether or not to lend you money.  Therefore, checking in advance on the accuracy of the information in your credit report could speed the credit-granting process.

Mistakes on your credit report can happen.  These mistakes could be simple clerical errors or confusion among family names.  For example, information may be unintentionally mixed up on the reports of family members who share the same name, such as fathers and sons. 

Since negative information stays on your report for seven years, it is especially important to notify credit bureaus immediately if you suspect an error.  Remember, you have the right to challenge any inaccurate or outdated information.

IDENTIFY and CORRECT errors on your credit report:
  • Check your credit report once a year to check for inaccuracies.
  • Check your credit report well in advance if you intend to finance a major purchase, or if you plan to apply for a mortgage or car loan.
  • Report errors to both the credit bureau and to the creditor by sending a WRITTEN explanation of your dispute.  Both the credit bureau and the creditor must investigate.
  • If your dispute is not resolved you may ask the credit bureau to include a statement of the dispute in their files and in future reports.
  • Contact the Department of Banking if you need assistance regarding your dispute.
How to Obtain Copies of your Credit Report

The three nationwide consumer reporting agencies - Equifax, Experian, and Trans Union - provide to consumers, upon their request, a free copy of their credit report once every 12 months.  The three companies have set up a central website, toll-free number, and mailing address through which you can order your free credit report :

For more information, the Federal Trade Commission has further information on Free Credit Reports.

Reporting Negative Information

Accurate negative information generally can be reported for seven years, but there are exceptions:

  • Bankruptcy information can be reported for 10 years;
  • Information reported because of an application for a job with a salary of more than $75,000 has no time limitation;
  • Information reported because of an application for more than $150,000 worth of credit or life insurance has no time limitation;
  • Information concerning a lawsuit or a judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer; and
  • Default information concerning U.S. Government insured or guaranteed student loans can be reported for seven years after certain guarantor actions.
Credit counseling

Professional assistance may be just what you need to manage your debt.

If you are having trouble paying your bills or if you can't resolve your credit problems yourself, you may want to contact a credit counselor.  Credit counselors, also known as "debt adjusters", are non-profit organizations that are required to be licensed in Connecticut.   They try to arrange repayment plans that are acceptable to you and your creditors, and can also help you set up a realistic budget.  The Department of Banking regulates organizations who are licensed to conduct debt adjustment activity.  A list of these organizations may be found on our website.

Licensed debt adjusters may receive your money and disburse such money to consumer creditors on your behalf. Most debt adjusters also offer counseling for persons faced with significant debt or bankruptcy, money management advice and assistance in establishing debt repayment plans and budgets.

For further information feel free to contact the Department of Banking.