CRO or MLM?

When hiring a credit repair company (legally termed a Credit Repair Organization, or CRO), look carefully at what the company really does.  Most credit repair companies are fraud.  Other companies, fraud or not, simply are inappropriate because of conflicting goals.  In this mix are multilevel marketing companies, or MLMs.

The goal of an MLM is to build a “downline” of other sales agents so that a commission is earned off the enrollment fee and sales from the recruited agents.  If the person you hire keeps pitching you about the “great financial opportunity” the business can offer you (for a small entrance fee)- especially if they haven’t even performed the services for which you have hired them, you may want to reconsider.  Their goal is not your financial well being- it’s their own.

MLMs are not bad companies per se, it’s just not appropriate for something as important as the safety of your identity or financial well being.  MLMs have high turnover rates and often little training on the service at hand.  While this may work with coffee or jewelry, preventing you from being sued by an attorney,  negotiating debts, and holding debt collectors accountable to both state and federal regulations should be reserved for someone that doesn’t spend all their training hours learning how to build a downline…not to mention you are sharing with them your social security number, financial information, and often times a fiduciary authority.

Other red flags to look for:

Boasting they can get everything deleted.  It simply isn’t true.  Yes, erroneous items and items being collected through fraudulent collectors are the exception, but sometimes there is a reason, and a right, for items to be on your report- even the derogatory ones.  

Guaranteeing an end score.  This is actually illegal and should be considered fraud.  If they tell you they are guaranteeing a 720 score in 90 days, they are lying.  Period.

Conspiracy rhetoric.  A sales technique often used is to hype an audience to believe they can buck the system and that the debt collectors have no rights.  This will simply land you in a courtroom being sued. 

Charging upfront Fees.  It is illegal for a CRO to charge upfront fees.  In the state of Florida, you have 5 days to cancel without financial obligation.  

Blindly disputing items.  To simply dispute everything on your credit report as “not mine” is NOT credit repair- it’s fraud.  This is how most CROs- especially untrained MLMs,  end up falling into this category.  This is actually a felony.  

Before choosing a credit repair company, ask them how they are compensated.  If they describe themselves as an MLM, take caution and shop around a little more.  If they offer you to join their club, recognize that in most MLM structures, only 7% of individual participants are usually successful, and they are typically people who make a career out of MLM work- not credit repair. 

Make the Choice.   Make the Change.  Delta.