The companies required payment in advance of actually performing their credit services -- a violation of the federal Credit Repair Organizations Act.
In a settlement with the FTC late last month, neither Moore nor the Home Buyers Consulting Network admitted wrongdoing, but they agreed to stop "using any untrue or misleading statements" to pull in buyers looking for credit fixes, as well as to cease collecting money upfront for credit-repair services, and to provide the full disclosures to clients required by federal law.
The settlement imposed a $573,000 civil penalty and a $40,000 restitution of funds to customers. However, when Moore and his companies provided documentation that they were financially unable to pay the penalties, the FTC agreed to suspend all but $10,000 of restitution to customers. As part of the settlement, Moore agreed to intensive monitoring of his business practices.
What's the significance of the settlement for buyers who need to boost their credit scores to qualify for a mortgage in today's tougher underwriting environment? No. 1: If the problems in your credit files reflect actual late payments, nonpayments, tax liens or foreclosures, don't look for magic or miracles. No legitimate "repair" service can make them disappear permanently.
Most serious credit issues are likely to remain in your files for three years to seven years, and bankruptcies and foreclosures for as much as a decade.
On the other hand, if your credit files contain erroneous information, it's a different dynamic. Either you or an organization that specializes in credit assistance can contact the sources of the bad information and get it corrected on your national bureau files.
But under no circumstances should you pay money upfront for credit-repair services. If a company requires you to do so, file a complaint with the FTC at ftc.gov.
kenharney@earthlink.net
